A rerun of mortgage trends during the 1990s housing downturn is how RBC Capital Markets characterizes the coming slowdown in Canadian mortgage growth rates in a new note.
Growth will slow to about 2% to 4% in the next two years from 5.4% as home sales and prices cool, according to Geoffrey Kwan and Sean Adamick, analysts at the Royal Bank of Canada unit. Loan growth reached a recent peak of 13% in May 2008, the analysts said.
Mortgage loan losses will remain low partly due to employment growth, they said.
Canada’s banks hold a 65% to 70% market share of the $1.2-trillion residential mortgage market, RBC said.
Almost 65% of the mortgage debt is insured, through the government’s Canada Mortgage and Housing Corp., Genworth MI Canada Inc. and Canada Guaranty Mortgage Insurance Co.
