Bank of China’s mortgage lending soars in Ontario, wanes in BC

A housing development in Oakville, Ont., on May 2, 2021.Christopher Katsarov/The Globe and Mail

Bank of China’s residential mortgages soared in Ontario over the past six years, a new analysis shows, suggesting more Chinese lending shifted to Ontario’s housing market as BC cracked down on foreign real estate purchases.

The Beijing-based commercial bank, which has operations in Canada that cater to Chinese clients, reported its total outstanding mortgages in Ontario reached $1.05-billion in the fourth quarter of last year, an increase of 650 per cent compared with $139-million in the first quarter of 2015, according to the bank’s filings on its website and an analysis by Andy Yan, director of Simon Fraser University’s city program.

In BC, the bank’s outstanding residential mortgages totaled $121-million in the fourth quarter of 2021, an increase of 200 per cent compared with $39.6-million six years ago.

“Data suggest that the various actions by the BC government to deal with foreign money has had an effect,” said Mr. Yan, adding that although the Chinese bank represents a tiny fraction of Canada’s total mortgage market, the lending provides a window into the flow of foreign capital.


Bank of China residential mortgage

lending in Canada

Ontario

Foreign

Buyers Tax

(15%)

Vancouver

Empty

Home Tax

BC Foreign

Buyers Tax

(20%)

BC

Foreign

Buyers

Tax (15%)

BC

Speculation

and Vac-

ancy Tax

the globe and mail, Source: Bank of China and Andy Yan

Bank of China residential mortgage

lending in Canada

Vancouver

Empty

Home Tax

BC

Foreign

Buyers

Tax (15%)

Ontario

Foreign

Buyers Tax

(15%)

BC Foreign

Buyers Tax

(20%)

BC

Speculation

and Vac-

ancy Tax

the globe and mail, Source: Bank of China and Andy Yan

Bank of China residential mortgage lending in Canada

Ontario Foreign

Buyers Tax

(15%)

Vancouver

Empty

Home Tax

BC Foreign

Buyers Tax

(20%)

BC Spec-

ulation and

Vacancy Tax

BC Foreign

Buyers

Tax (15%)

the globe and mail, Source: Bank of China and Andy Yan

The Bank of China disclosures show that BC now represents 10 per cent of its total residential lending in Canada compared with 20 per cent in 2015. Ontario accounted for 90 per cent of its Canadian loans compared with 74 per cent six years ago.

To address an affordability crisis in Vancouver’s housing market, and during a real estate boom in 2016 and 2017, BC and Vancouver took steps to clamp down on foreign buyers and ensure that homes did not sit empty.

The province imposed a 15 per cent tax on foreign buyers of real estate, and Vancouver imposed a 1 per cent tax on homes that were empty for more than six months. The foreign buyer’s tax is now 20 per cent and the empty home tax is 3 per cent. BC also introduced its own provincewide vacant home tax with foreign owners required to pay a higher rate.

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In contrast, Ontario was a bit slower to impose its foreign buyer tax. That rate is 15 per cent and applies to properties in the Greater Golden Horseshoe area that includes Toronto and heavily populated regions in Southern Ontario.

Mr. Yan said the Bank of China’s mortgage growth trend suggests that foreign money is being displaced from BC to Ontario. The most recent data from Statistics Canada appear to show a similar trend in foreign ownership in the two provinces.

Foreign-owned property declined in BC from 2019 to 2020 and was a steady 2.2 per cent in Ontario over the same period, according to the Canadian Housing Statistics Program, which analyzed property assessments, land-registry data and tax filings.

In BC, non-residents owned 3.2 per cent of all residential real estate in 2020 compared with 3.1 per cent in the previous year. In Richmond, the BC city with the highest foreign ownership rate, non-residents owned 6.8 per cent in 2020 compared with 7 per cent in 2019.

In Ontario, Toronto was the city with the highest foreign-ownership rate, at 3.8 per cent of all residential real estate in 2020 compared with 3.7 per cent in 2019, according to CHSP.

The pandemic real estate frenzy of the past two years has been driven in part by intense competition for low-rise houses throughout the country. The typical home price is 52 per cent more in 2022 than two years ago, with places outside of the major city centers up 70 to 90 per cent. It is not known to what extent foreign buying has driven up prices in today’s real estate boom. Bank of Canada research shows that investor buying accounts for more than 20 per cent of all purchases.

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