Debt Indicates Renovation Boom Slowing

The Canadian renovation boom is slowing if the debt to finance it is any indication. Bank of Canada (BoC) data shows loans for home renovations made a sharp drop in the first quarter of 2021. The balance of these loans had seen a surge during the pandemic, but rolled back in the last quarter and it wasn’t just pandemic gains either. The balance fell to the lowest level since 2013. Home renovation loans were climbing pre-pandemic after turning positive in the fourth quarter of 2019. The third quarter of 2020 saw the largest annual growth since 2016. These types of loans are typically used for large renovations and often by flippers. The growth trend in this segment has been on the long-term decline. The balance peaked in the third quarter of 2009 at $5.14 billion. By the first quarter of 2021, the balance dropped 44.16 per cent from the peak.