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Banks hit as mortgage growth dips to 17-year low

June 5, 2019

As demand for new mortgages slide, some banks are cutting their earnings forecast while others are scrambling to grow their mortgage business.
CIBC reported May 22 that its profits have been flat for five straight quarters—in sharp contrast to a projected profit growth of 5 to 10 per cent this year. CIBC chief financial officer Kevin Glass cited a slowdown in the housing market for the downturn.
Canada’s two largest banks, meanwhile, are defying the cooling housing markets by posting growth in mortgage loans.
Royal Bank of Canada—the nation’s largest mortgage lender—reported May 23 that its domestic mortgage book expanded 5.2 per cent in the fiscal second quarter from a year earlier, while Toronto-Dominion Bank’s mortgages and amortizing home-equity lines posted a 5.8 per cent increase. Both banks beat analysts’ expectations.
The two lenders are bucking the trend for the overall industry, which has seen year-over-year mortgage growth slide to a 17-year low of 3.2 per cent in March, according to the Bank of Canada.
Canada’s mortgage industry slowdown has been spurred partly by government efforts to calm housing markets. Tougher lending criteria introduced in 2018 and record-high household debt have also had an impact.


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