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The Canadian residential mortgage market crossed the $1-trillion threshold for the first time this year as higher prices forced many to borrow heavily to finance their new homes and low interest rates encouraged many more to refinance.

The Canadian Association of Mortgage Professionals said in its annual report to be released Monday that there were $1,008,000,000,000 in mortgages outstanding at the end of August, a gain of 7.6 per cent in one year. Over the past 15 years, the volume of outstanding mortgages has increased by 194 per cent.

While mortgage approvals slipped through the recession, a boom in lending has followed as the housing market recovered and buyers rushed into the market. After a frenzy of buying drove average prices to an all-time high of $346,881 in May, things have cooled slightly with prices now at year-ago levels near $331,000.

Canadians have not been shy about using their mortgages to free up extra money - 18 per cent of mortgage holders took equity out of their homes, almost half of them citing a need for "debt consolidation or repayment." The average amount borrowed against home equity was $46,000.

Given that there are 5.65 million mortgage holders in Canada, CAAMP estimates the borrowing at $41-billion, about the same as last year.

"It is estimated that 30 per cent of the takeout was for debt reconsolidation and repayment," the report states. "Therefore, while the amount of outstanding mortgage debt would have increased by this amount, totals for other types of debt would be correspondingly reduced. About $15-billion was taken out for renovations, $6-billion for education and other spending, $7.5-billion for investments and $4-billion for other purposes."

A larger proportion of mortgage holders, however, increased their payments in the last year. Thirty-five per cent paid more than they had to, with 12 per cent making lump sum payments, 16 per cent increasing their monthly payments and 7 per cent doing both.

The report included a survey of 2,005 Canadians, half of them homeowners.

The association asked at what point homeowners would be in trouble if interest rates were to rise. The question was "the amount at which, if your monthly mortgage payment increased this much, you would be concerned with your ability to make your payments."

The average amount of room is $1,056 per month on top of their current costs, the report states.

"There is a sizable minority, about 350,000 out of 5.65 million, or about 6 per cent, who would be challenged by rate rises of less than 1 per cent, and a further 225,000 (5 per cent) have thresholds in the range of 1.00 per cent to 1.49 per cent. However, most of these have fixed-rate mortgages: by the time their mortgages are due for renewal, time will have increased their financial capacity and reduced the amount of mortgage debt being financed. There are about 100,000 borrowers who are susceptible to short-term moves of interest rates, which is a quite small share (less than 2 per cent) of the 5.65 million mortgage holders in Canada."





















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