Why has the mortgage debt increased by so much in Canada? /

The results show that the nominal interest rate is the main source of change in the number of new loans while real housing price is the main determinant of the value of new loans. [...] A fall in the inflation rate accompanied by a concomitant reduction in the interest rate is in average the main source of increase in households’ mortgage debt, because it increase the flow of new loans and at the same time reduces the rate of repayment of existing loans. [...] Given the long time period covered by the model, the review will look back to the conditions prevailing in the 70s and the 80s, with the focus put on the changing impact of two borrowing constraints, the loan-to-value ratio (LTV) and the debt-service-ratio (DSR) on the demand for mortgage loans. [...] Because of the high inflation that prevailed during most of the 70s and the beginning of the 80s, the impact of expected inflation on the demand for owner-occupied was intensively studied. [...] Mechanically, the lowest is the interest rate the largest is the impact of lengthening the amortization period.