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Determinants of Mortgage indebtedness in Canada


  • Mario Fortin

    () (GREDI, Département d'économique, Université de Sherbrooke)

  • Andre Leclerc

    () (Secteur sciences humaines, Université de Moncton, campus d’Edmundston)


Mortgage indebtedness has risen considerably in Canada in recent years, pushing households’ debt-to-income ratio to an all time high. In order to identify what variables explains these changes in the stock of debt, we analyze the inflow and outflow of mortgage financing. We show that the number of new mortgage loans is mostly influenced by nominal interest rates while their average value reacts only to housing price. As to the outflow of debt repayment it is sensitive to more variables. Since housing price is also strongly influenced by nominal interest rate, we show that the main driving force towards higher Canadian households’ mortgage debt is the reduction in nominal interest rate.

Suggested Citation

  • Mario Fortin & Andre Leclerc, 2007. "Determinants of Mortgage indebtedness in Canada," Cahiers de recherche 07-11, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
  • Handle: RePEc:shr:wpaper:07-11

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    Cited by:

    1. Lobna ABID & Zouari Dorra & Zouari Ghorbel Sonia, 2012. "Household indebtedness in Tunisia," E3 Journal of Business Management and Economics., E3 Journals, vol. 3(10), pages 341-350.
    2. repec:etr:series:v:3:y:2012:i:11:p:341-350 is not listed on IDEAS

    More about this item


    mortgage demand; indebtedness; housing;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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