Canadian mortgage borrowing is suddenly surging, despite tepid home sales. Bank of Canada (BoC) data reveals uninsured mortgage originations rose to the second-highest June on record. Rapid credit growth typically signals rising confidence, but this spike likely reflects completions from the pre-construction boom during the pandemic-era low-rate frenzy. With near-record housing under construction, originations are poised to climb even further.
Canadian Mortgage Originations Surge 27%, Second-Biggest June On Record
Canadian uninsured mortgage originations for June. In billions of Canadian dollars.
Source: Bank of Canada; Better Dwelling.
Canadian uninsured mortgage borrowing is picking up at a fast pace. Mortgage originations jumped to $40.7 billion in June, a sharp +27.5% (+$8.77 billion) increase from last year. If that sounds like a lot, that’s because it is—this was the second biggest June on record, only behind 2021, which saw a record surge due to record-low rates.
Canadian Mortgage Borrowing Is Back With a Vengeance As Pre-Construction Completions Arrive
The 12-month rolling sum of uninsured originations for Canadian mortgages.
Source: Bank of Canada; Better Dwelling.
The latest data reinforces the emerging trend of increased borrowing. Lenders originated $436.44 billion in new loans in the 12 months ending in June. This represents an increase of 38.5% (+$121.3 billion) over last year, hitting the highest dollar volume since March 2022. It may seem like a large amount considering tepid existing home sales, but this is most likely due to completions. Investors who purchased pre-construction during the boom are now taking possession and need financing.
Canadian Mortgage Rates Are Lower, But Far From Low
The average interest rates for Canadian uninsured mortgage originations.
Source: Bank of Canada; Better Dwelling
Canadian mortgage lending rates are falling, helping to increase the leverage borrowers can take out. Uninsured mortgage originations averaged a rate of 4.59% in June, a slight uptick of 4 basis points (bps) from the month prior—but 102 bps lower than June 2024, providing roughly 10% more leverage in the process. The average borrowing rate in June is a little over the halfway point between the recent high in 2023 and record low in 2021.
Most Canadian Mortgage Borrowers Opted For 3-Year Or Variable Rates
The share of mortgage originations in June 2025, by term and rate type.
Source: Bank of Canada; Better Dwelling
Canadian mortgage borrowers are opting for the cheapest mortgage term they can find—3- to under 5-year fixed terms. This segment represented 36.9% of originations in June, with an average 4.13% interest rate—the lowest of any product. Being the cheapest rate with a medium-term lock-in, it’s easy to see why this is the winner in the current market of rate roulette.
The second largest share went to variable rate mortgages, which captured 31.5% of loans in June. Since reaching its peak of 60% of originations in 2022, its popularity collapsed to more historical levels once rate hikes began. However, variable products are back as rates fell to 4.53% in June—below the average for all segments—and borrowers bet on further rate cuts.
Canadians traditionally seek to avoid volatility, usually betting on 5-year or longer fixed terms. That changed in 2020, with the segment representing 14.7% of originations in June, putting it in third place. It kicked off 2025 with its market share at a record low, but an average interest cost of 4.25%—the second-lowest of any segment—has since helped more than double its share.
Short-term fixed-rate mortgages are incredibly expensive, so it’s unsurprising that they represent such a small share of the market. Fixed rates for 1- to under 3-year terms represented 12.1% of originations in June, a modest but second-smallest share of the market—though this makes sense with an average interest rate of 5.34%, the second-highest of any product.
Fixed-rate mortgages with terms less than one year represented a minor 4.8% of June originations. At an average rate of 7.61%, borrowers should have a very specific short-term need. Bridge financing and waiting for a sale to close are rare examples where the premium paid for flexibility can make sense. Just betting on lower rates means the next 6-month term would need to fall 465 bps to breakeven against a 1-year fixed rate.
Canadian Mortgage Originations Surge: A Sign of Consumer Confidence or Ghost of Speculators Past?
Rising mortgage originations are typically a strong sign of consumer confidence. People usually only take out large amounts of debt when they’re confident that they can repay it, not when they’re worried about potential job losses. However, this may be atypical fallout following the low-rate-fueled frenzy in the early 2020s.
The rapid surge of mortgage originations is a direct follow-up to the wave of investor pre-construction purchases from 2020 to 2022. As these homes finish construction, buyers who require financing must secure a mortgage to complete the transfer. With a near-record volume of homes under construction, it’s safe to assume a lot more mortgage originations are in the pipeline. It’s not clear this will be a sign of consumer confidence, but more likely the ghost of speculators past.
English (US) · 