Bucking trend, Ottawa residents rush to sign new mortgages

housing

In the latest sign of strength in the local real estate market, the number of Ottawa residents signing up for new mortgages spiked in the first quarter of the year, bucking a national trend, according to a new report.

Credit reporting agency TransUnion said Wednesday that 3,876 new mortgages were initiated in Ottawa during the first three months of the year. That’s a year-over-year increase of 8.4 per cent – the largest increase among all Canadian cities.

Nationally, TransUnion recorded a 3.4 per cent decrease in mortgage originations in the first quarter. That comes on the heels of a 8.8 per cent year-over-year decrease in the fourth quarter.

“This trend suggests that the new mortgage rules may be impacting consumers who are either no longer qualifying, or are unable to get the amount of mortgage they want, or are simply waiting to see how the market reacts to the new rules,” TransUnion said in its report.

The company said the biggest decline among Canadians taking out new mortgages were younger homebuyers. Conversely, there was a significant increase in new mortgages among Baby Boomers and senior citizens – likely a result of existing homeowners re-mortgaging or borrowing against the equity in their properties to support retirement or financially aid younger generation family members.

Debt load rising, delinquencies falling

Setting aside mortgages, Ottawa residents are adding to their debt load at levels that are on par with the national average.

Ottawa residents were carrying an average of $27,586 in non-mortgage consumer debts in the second quarter, up 3.7 per cent year-over-year.

Despite the rising debt levels, Ottawa’s delinquency rate – defined as non-mortgage accounts that are more than 90 days past due – dropped to 4.8 per cent, a decrease of nearly half a percentage point.

TransUnion says the latest figures support its research that suggests the impact of rising interest rates on consumers may not be as significant as some have suggested.