High Mortgage spending is Slowing Canada’s Economy Down

Canadians are spending 8.1% of their disposable income on mortgage payments, whereas U.S. consumers are allocating roughly 4% for theirs. This difference in consumer spending In the realm of Canadian economics, the dynamics of mortgage debt have emerged as a significant factor influencing the country’s economic growth compared to its U.S. counterpart. BMO’s senior economist, Sal Guatieri, draws attention to the pivotal role of mortgage debt in delineating the contrasting growth trajectories between Canada and the U.S.

Guatieri highlights a critical distinction in household expenditure patterns, citing how Canadian real consumer spending stagnated while the U.S. experienced a 3.6% annualized increase. The disparity arises from Canadian households allocating double the share of disposable income towards mortgage payments compared to their U.S. counterparts. This trend suggests a potential for continued increase in Canadian mortgage payments, especially as rates reset at higher levels post-pandemic, while the U.S. benefits from relatively stable payments due to long-term fixed-rate contracts.

This discrepancy not only delineates economic performance but also hints at relative downside risks for the Canadian economy and its currency. Guatieri suggests the likelihood of earlier rate cuts from the Bank of Canada compared to the Federal Reserve in response to this scenario.

Shifting the focus across borders, Morgan Stanley’s U.S. equity strategist, Michael Wilson, emphasizes the dominance of liquidity over fundamentals in market performance. He questions whether the Fed will counter the bond market’s rate cut pricing, considering a potentially uneven path toward disinflation alongside stronger-than-expected jobs reports.

Despite negative trends in earnings revisions for major indices like the S&P 500 and Russell 2000, a buoyant liquidity environment continues to support valuations, acting as a counterbalance to fundamental dynamics.

In a broader perspective, TD Cowen’s Theme’s 2024 report touches upon multifaceted themes spanning geopolitical shifts, U.S. elections, demographic changes, technological advancements, and healthcare landscapes. Notably, the resurgence of U.S. manufacturing emerges as a particularly actionable theme.

TD Cowen’s insights shed light on the profound implications of nearshoring, citing perspectives from North American railroad networks and industrial players. The extensive integration of these networks with factories indicates a significant long-term growth opportunity, with a surge in industrial development projects. Echoing this sentiment, Eastern Class I NSC anticipates a considerable influx of projects, primarily in the Southeast and Midwest, emphasizing an uptick in U.S. factory constructions compared to the last decade.

The narrative of industrial resurgence finds validation in the import/export volume data from the Port of Lázaro Cárdenas, showcasing robust volume growth. These indicators, like the 42% year-over-year increase in 3Q23 volumes, serve as proxies for North American industrial growth, reaffirming the renaissance in the manufacturing landscape.

The intricate interplay of mortgage debt, market liquidity, and the industrial landscape presents a vivid tapestry of economic movements, offering glimpses into the intricate gears that drive the economies on either side of the border. As Canada navigates its mortgage challenges and the U.S. witnesses an industrial reawakening, these insights pave the way for informed economic decisions in an ever-evolving financial landscape.

Tembo’s debt consolidation loans can offer a valuable solution for those seeking to consolidate debt and enhance their financial stability. This is a useful tool that has helped a number of our clients reduce the total amount of interest they pay to free up money for other purposes. By consolidating multiple high-interest debt payments into one convenient and flexible loan, individuals can simplify their financial life, clear bad, high interest debt, with the hopes of contributing to an improvement in credit scores. A better credit score today means that your leverage with a bank in getting you the best possible mortgage rate will increase. Or if you can’t qualify for a traditional mortgage from a big bank today, because of poor credit, our debt consolidation loan can improve your score and put you in a better spot.

One significant advantage of using a private mortgage for debt consolidation is the rapid enhancement it can bring to credit scores. When debt is consolidated into a single, flexible loan, monthly interest payments decrease. This facilitates faster repayment of the debt principal, leading to a reduction in outstanding debt. A lower outstanding debt, coupled with timely payments, positively impacts credit scores. Many clients who have chosen Tembo’s private debt consolidation loan have told us that they now can qualify at a big bank because their credit score is improved.

Moreover, enhancing one’s credit score through debt consolidation opens doors to other financial benefits. For many individuals, refinancing their mortgage becomes a more attractive option, allowing them to free up cash, reduce monthly payments, or expedite debt repayment. Consolidating debt and boosting credit scores through a private mortgage transforms refinancing into a more viable and attractive option for securing one’s financial future. Rapidly clearing multiple high-interest debt products makes a prospective borrower more appealing to big banks.

Bridge the price gap with a reno loan

The rise in interest rates has reshaped the market. The impact of such rapid and significant hikes has shifted the psychology of many buyers, and has pushed some developers to freeze their building plans. The situation could have evolved in a more incremental and healthy way but the BOC panicked and took too long to realize the immensity of the inflation problem. What we are beginning to see are some price slowdowns and declines, especially in those markets that were most stimulated by COVID demand (Durham, Caledon, Peterborough, and others). Some financial institutions have released analysis of the rate hikes (Desjardins), and predict price declines in the range of 15-20%, but overwhelmingly outside of major downtown cores. Desjardins saw cities like Peterborough and Orangeville and cottage country suffering the most from price declines. What we are seeing now is that buyers who scooped up property at the height of COVID demand are now being left with less equity as their values decline from higher rates.

For example, let’s take a retired couple who sold their downtown Toronto condo for $750,000 and moved to a large home in King County they paid a hefty premium for. They wanted space, quiet, less traffic, and comfort. After buying they saw their new neighbours sell their homes for $1.1 or $1.3 million, reinforcing the sense of value and desirability of the large suburban home they just bought. But now, with high inflation, high rates, and fear of COVID having largely subsided, their large suburban home wouldn’t sell for more than $900,000. What do they do? Weak prospective buying demand lowers the couple’s options. Higher rates mean an appraisal won’t mark them down as highly as they had expected. What a neighbour sold for 6-9 months ago is irrelevant now. One potential option is a renovation loan with Tembo. Why not spice the property up before a re-sale? In less than 2 days, Tembo can approve a renovation loan. Money can flow quickly without straining your line of credit, savings, or credit cards. Finishing a  basement, upgrading a kitchen, or marbling up another bathroom can add tens of thousands to the value of a home. A smart, well thought out renovation can dramatically shift the value equation of a home.

There are plenty of contractors looking for work in an increasingly bearish real estate market where people are strained for cash or spending more disposable income on higher mortgages. A more luxurious home can attract higher end buyers who are looking for good deals in the current environment. Turning an average suburban basement into a separate potential rental unit (vacancies are low, rents are high, and there’s tons of jobs out there) can attract buyers looking to rent property out and can turn one home into many. Renovation possibilities are endless. In March we wrote about a homeowner who received considerable media coverage for renovating their Little Italy home in Toronto to be environmentally friendly, energy efficient, and modern. The home was completely transformed and modernized, and its value skyrocketed. Remember that even a basic, standard overhaul of a kitchen with new appliances and marble finishes can add tens of thousands of dollars to the value of your home and can be accommodated quickly and affordably at Tembo. Do not underestimate the potential of your home and the home renovation options you have at your disposal in this market. A Tembo home renovation loan can be a complete game-changer that bridges the gap between pre-inflation prices and the reality today.

Consolidate and wipe out your debt with Tembo Financial

Credit card debt in Canada soared to over $90 billion just before the onset of COVID-19, but has fallen to below $74 billion. More and more Canadians are increasing their savings or reducing and eliminating their credit card debts given the uncertainty the pandemic has unleashed. Within as little as 48 hours, Tembo Financial can provide you with an equity advance on your home value to help you join the crowd and wipe out high credit card debt and lower your interest payments*. With Bank of Canada interest rates set to rise this year, higher credit card rates on many cards are inevitable – call Tembo today to consolidate your debt and ease your monthly cash flow.


The same COVID related pressures that will see interest rates go up will affect every debt product: from car loans, personal loans, and student loans. All of these products could see rates rise if the Bank Of Candaa acts and now is a good time to head off that risk. Total outstanding car, personal, and student debt in Canada has quintupled since 2000. In a low interest rate environment that we’ve lived through for many years, this was reasonable, but with the strong possibility that rates will go up soon – consolidation is a good option. Consolidating your debt with Tembo will save you in reducing your monthly interest payments and could improve your credit score.


If you’re interested in exploring the possibility of consolidating and clearing some of your debt please visit www.tembofinancial.com and give us a call at 1-844-238-6717!

*Subject to Qualification

Debt Consolidation Loans Ontario

Many Ontario homeowners are juggling multiple credit card and loan payments. With home prices and the costs of goods steadily increasing, it appears that household debt will continue to rise.

A debt consolidation loan with Tembo Financial is an easy and cost-effective way to free up your cash flow and manage increasing debts while allowing consumers to save money over the long run.

What is a debt consolidation loan?

Debt consolidation is a type of debt refinancing where a client acquires a new loan to pay off multiple high-rate consumer debts into one simple payment. Interest rates are often much lower with the single loan versus balancing multiple high interest debts like credit cards.

Oftentimes, people who are struggling with large debt often see a significant drop in their overall credit score. This ripple effect makes things very complicated for the individual whenever they are looking to purchase large ticket items like financing a car or refinancing their homes.

A debt consolidation loan from Tembo Financial allows you to leverage the equity of your home to pay down debts faster while simplifying your finances.

Advantages of Debt Consolidation Loans

A debt consolidation loan is an excellent tool for an individual with multiple debts with high interest rates and/or steep monthly payments – especially when amounts are upwards of $10,000+. Getting a debt consolidation loan combines these multiple payments making it much easier for the individual to manage just one monthly payment. The individual often pays a lower interest rate which ultimately lowers their monthly interest payments.

One of the greatest advantages of a debt consolidation loan is the potential for an individual to increase their credit score. This is extremely important because many companies such as cell phone providers, car dealerships and even gyms look at a person’s credit score to determine if they have a strong history of repaying debts. Having a high credit score allows individuals to be approved for many essential purchases they make in their everyday lives.

To summarize, the main benefits of debt consolidation loans are:

  • Save Money (By lowering overall monthly interest rates) *
  • Avoiding Bankruptcy or Consumer Proposal
  • Maintaining and improving your credit score*
  • Putting your home equity to work for you

*All debt consolidation loans are subject to credit and underwriting approval. Loan amounts and interest rates change based on a borrowers situation. There are no guarantees that the outcomes from a debt consolidation loan will be the same for all clients.