Total household credit growth in Canada accelerated to 4.3 per cent month over month at a seasonally-adjusted annualized rate in June, according to a report by Scotiabank Economics.
It marked a continued reversal from a period of slower growth, its fastest monthly acceleration since February 2018, according to the report.
The three-month moving average pace of credit growth also accelerated to 3.7 per cent, marking its fastest pace since April 2018.
The financial institution said mortgage loan growth jumped to 5.2 per cent month over month in June, its fastest pace since July 2017.
“Mortgage growth has surely rebounded after a period of deceleration from early 2017 to its mid 2018 trough, which was induced by a series of measures aimed at tackling runaway home prices: foreign buyers taxes in Vancouver and Ontario and OSFI’s tightened mortgage underwriting standards,” said the bank.
“Real estate markets continue to adjust to regulatory changes and are now benefiting from a decline in borrowing rates after reaching an eight-year high in late-2018, alongside a tightening spell by the Bank of Canada. Mortgage lending growth in year-on-year terms also posted a marked acceleration, which had not been observed in this magnitude since early 2017.”
Scotiabank said consumer credit, which constitutes around one-third of total household borrowing, picked up to 2.1 per cent month over month, seasonally adjusted, from last month’s 16-month low of 1.9 per cent, consistent with slowing household consumption growth on goods over the same period while consumption growth on services remained resilient.
The three-month moving average slowed to 2.2 per cent month over month, marking the slowest pace since October 2015. Year on year, consumer credit grew by 3.3 per cent, the slowest rate since March of 2016, it said.