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Canadians' mortgage borrowing has reached its lowest level since 2003, primarily due to the impact of higher interest rates, according to recent data released by Statistics Canada.

During the first quarter of this year, households added a net of C$11.2 billion ($8.4 billion) in mortgage debt, marking the smallest increase in two decades.

The report highlights that increased borrowing costs have started to impact households' access to credit, although residential real estate prices experienced a recovery during the quarter due to limited inventory.

This decline in mortgage debt growth aligns with the Bank of Canada's aggressive campaign to raise borrowing costs.

After a conditional pause in January, policymakers increased the benchmark overnight rate to 4.75% last week, responding to continued growth in household expenditures.

One possible factor contributing to the decrease in net mortgage debt accumulation is households opting to pay down their mortgages in a higher-interest-rate environment.

Additionally, the data release revealed that Canadians remain among the most indebted individuals globally, with the household credit market debt-to-income ratio rising to 184.5%, up from 181.7% in the previous quarter.

The debt service ratio also increased to 14.9%, reaching its highest level since 2019.

Source: Canadian Mortgage Professional