Home sales hit their highest level since April 2016, gaining 5.2% in February compared to January, reveals statistics from the Canadian Real Estate Association.
The national average price for a home sold in February was $519,521, up 3.5% from a year ago.
Excluding Greater Toronto and Vancouver, the national average price was $369,728.
But though many Canadians consider their homes their greatest assets, they can thank mutual funds for an increase in their net worth — at least in the last quarter.
Overall, net worth rose 1% for the last quarter of 2016, reveals StatsCan in its fourth quarter balance sheet and financial flow accounts. Per capita, household net worth was $281,300.
The leading contributor of rising net worth was a 1.2% increase in financial assets, as “the value of equity funds and investment fund shares, particularly mutual funds, benefited from stronger domestic and foreign securities markets,” says StatsCan.
Canadians borrow more, but not so much for mortgages
StatsCan data also shows Canadians borrowed more for mortgages last quarter, but less so than you might think, considering housing prices.
For instance, mortgage borrowing represented $18.9 billion last quarter, an increase of $1.2 billion over the third quarter.
That’s practically peanuts compared to the increase in consumer credit and non-mortgage loans. Those loans represented $9.5 million in borrowing — an $8.5-billion increase from the previous quarter.
Overall, households borrowed $28.4 billion in the fourth quarter, up substantially from the $18.7 billion borrowed in the previous quarter.
The relatively small increase in mortgage borrowing means the share of mortgage liabilities to total credit market debt is unchanged at 65.5%. (Total credit market debt comprises consumer debt and both mortgage and non-mortgage loans.)
And the household debt service ratio edged down slightly to 14.0% in the fourth quarter from 14.1% in the third quarter. (The ratio measures principal plus interest as a proportion of household disposable income.)
But these indicators could change with any increase in interest rates.
“The historically low interest rate environment prevailing since 2008 has allowed the household sector the opportunity to increase mortgage principal payments,” says StatsCan. “At the end of the fourth quarter, household mortgage payments were split almost evenly between the interest and principal portions.”
More details on StatsCan’s national balance sheet and financial flow accounts are here.