House made from Canadian $20 bills.
Barclays Capital analyst John Aiken has sifted through the most recent loan data, gathered by Canada's banking regulator, and found that mortgages continue to be the story of the day for the big banks.
One reminder the credit crunch is long gone: the banks once again gave out more money in loans than they took in in deposits during the month of January.
"Overall lending was quite strong in January, with the highest growth in the mortgage segment," Mr. Aiken wrote in a note to clients. "Residential insured mortgages were up just over 4 per cent in the month and alongside gains in personal lending and commercial mortgages, these offset declines in business lending and uninsured mortgages."
Insured mortgages are a no-brainer for the banks. Borrowers with low down payments are required to carry mortgage insurance, but the banks have also been buying policies to cover swaths of their mortgage portfolios that were previously uninsured. Whether it's from the crown corporation Canada Mortgage and Housing Corp. or one of its private sector competitors, mortgage insurance comes with a government guarantee that ensures Ottawa will be on the hook for the vast bulk of losses if the borrower ever defaults on their mortgage.
While it's clear that the turmoil in credit markets is over for the time being, there's still a small element of uncertainty about turmoil in the economic environment. So banks continue to shift their lending businesses towards less-risky products.
"Commercial and business lending in the month was mixed," Mr. Aiken wrote. "Commercial mortgages grew over 1% across the big six banks and business lending declined 0.35%, however year over year volumes are still down significantly."