Key Takeaways:
- Learn why people in the U.S. are borrowing less money and what it means.
- See how Canada’s debt trends are similar and why it matters.
- Understand how rising rates and prices change the way people borrow.
- Know what slow borrowing means for investors like you.
- Find new ways to invest in mortgages safely and smartly.
What Slower Borrowing Tells Us About Today’s Economy
Something’s changing in how people handle their money—especially in the U.S. Credit card balances aren’t growing like they used to, and folks are applying for fewer loans overall. These shifts aren’t flukes. Inflation is squeezing budgets, and interest rates have climbed, making debt a lot more expensive. Generally, people seem to be pulling back and playing it safe.
“Okay,” you might think, “but I’m in Canada. Why should I care?” Great question. The U.S. and Canada have deeply connected economies, so trends down south usually show up north not long after. And sure enough, similar patterns are taking shape here, too. Slower borrowing, rising household debt—it’s all in the mix.
Here’s where it gets interesting for anyone thinking about mortgage investing. These trends may seem like warning lights, but they could also be flashing opportunities if you know where to look. Thoughtful investors know how to ride the waves, not get wiped out by them.
In this blog, we’ll break down what’s really going on with borrowing habits in the U.S. and Canada, why it matters for investors, and how you can use this knowledge to invest in mortgages with confidence—even when the economic weather is cloudy. Let’s dive in.
U.S. Borrowers Are Hitting the Brakes—Here’s Why That Counts
Over in the United States, people are pumping the brakes on debt. Credit card spending has cooled off, mortgage levels haven’t budged much, and overall consumer borrowing looks like it’s easing up. What’s behind it? Simple: people are feeling the pinch. With food, rent, and just about everything else costing more and interest rates climbing, it’s no surprise that borrowers are hitting pause and focusing on paying down what they already owe.
This isn’t just a budgeting hiccup—it’s a shift in how people are thinking. Borrowers are less interested in spending and more focused on staying financially nimble. It’s a move from “grow fast” to “stay strong.” And while that might cool economic momentum in the short term, it sets the stage for more stability among households long term.
Now, why should Canadian mortgage investors care? Because we often end up tracing these same patterns. What happens in the U.S. has a way of crossing borders. So when you see American borrowers becoming more cautious, it’s time to ask what that might mean up here. (Source)
Slower credit growth doesn’t mean doom and gloom for investments. In fact, it might mean a more stable environment with fewer reckless borrowers. If you’re investing in mortgages, knowing that people are borrowing more carefully could help you find stronger, more reliable lending opportunities. It’s not about avoiding change—it’s about seeing it coming and stepping ahead of the curve.
Debt Trends North of the Border—Canada’s Parallel Story
Back home, Canadian households are following a familiar script. Total consumer debt is still going up, but not as quickly. That tells you something: people are starting to hesitate. Borrowers aren’t jumping at every loan offer—they’re slowing down, watching rates, and thinking twice before adding more to their balance sheets.
Big-ticket items like cars are a major contributor. Prices have surged, so auto loans are swelling with them. And credit cards? Those are getting more love than they should, thanks to inflation driving up everyday expenses. It’s a bit like using a band-aid for a broken leg—helpful for now, but not sustainable long term.
What does that mean for mortgage investors? Plenty. Rising non-mortgage debt—like credit cards and car loans—can squeeze a borrower’s ability to repay their home loan. If someone’s monthly obligations are already stuffed full, their mortgage might feel the strain. That’s your red flag.
But let’s flip the script. This could also be a signal of opportunity. If the big banks start tightening their belts, alternative lenders and investors have a chance to meet the moment. Offer smart, flexible solutions and you could attract borrowers who are careful with money, but still in need of support. Just make sure you know how to spot the good ones—and avoid the rest. (Source)
Credit Card Use Is Slowing—A Warning or a Win?
If you want a snapshot of how people feel about their finances, watch their credit card habits. Lately, across both the U.S. and Canada, people are swiping less—and that speaks volumes. Where credit cards were once a fallback option when budgets got tight, today they’re being treated with more caution. Higher interest rates and stubborn inflation will do that to a person.
In the U.S., the number of new credit card accounts is dropping, and balances are growing slower than before. North of the border, we’re seeing much of the same—fewer transactions, more focus on paying down existing balances. In short, people are trying to get ahead of their debt, not drown in it. (Source)
For investors, this trend is a double-edged sword. On the one hand, less credit card use means consumers are trying to improve their financial health. That’s good news. On the other, it might also suggest that people are feeling cash-strapped and hesitant to take on any type of new debt—including a mortgage.
What’s important is that this behavior helps you spot the difference between a struggling borrower and a smart, stable one. If someone is managing their credit well in a tough economy, chances are they’re going to handle a mortgage responsibly too. So don’t just focus on credit scores—look at the story behind them.
Delinquencies: Calm Waters or Warning Signs?
Let’s talk about delinquencies—those missed payments on credit cards, car loans, and mortgages. Right now, things seem stable, but maybe a little too stable. That murky calm could be the market holding its breath before a shift.
Across both the U.S. and Canada, delinquency rates haven’t spiked dramatically, and that’s encouraging. Most borrowers are still managing to keep up with their payments. But dig a little deeper, and you’ll see a divide. Homeowners with mortgages, especially those with solid financial history, are holding steady. But non-mortgage holders—renters and those with more unsecured debt—are starting to feel the heat.
This matters a lot if you invest in real estate-backed loans. Why? Because higher-quality borrowers—those with a home and a solid payment history—are proving to be more reliable even during economic hiccups. But the broader consumer signals can’t be ignored.
If inflation keeps climbing or if rates stay high for too long, today’s “stable” could quickly become tomorrow’s “stress.” This is why your investment strategy needs a layer of realism. Know your borrowers. Lean in to thorough vetting. And don’t just assume calm means safe. Sometimes it’s just the eye of the storm.
Rate Hikes and Rising Costs—The Push and Pull
Let’s not dance around it—interest rates and inflation have made borrowing kind of a pain lately. Between central bank hikes and grocery bills worth gasps, everyday life has gotten pricier—and loans, of all kinds, have followed suit.
In both the U.S. and Canada, we’re seeing the same two-step: raising rates to tame inflation, and consumers pulling back in response. Borrowing’s more expensive, so people are more hesitant. Whether it’s a new car, home reno, or even just juggling basics on a credit card, fewer are jumping into new debt waters.
Now, if you’re a mortgage investor, this dance between cost and caution adds a wrinkle—but not necessarily a bad one. Higher lending rates can mean better investment returns. But here’s the flip side: with wallets stretched thin, borrowers may be more likely to stumble on repayments.
The key is finding the borrowers who are weathering the storm without skipping a beat. Think: solid jobs, reasonable debt, realistic repayment plans. This is where your underwriting process has to shine. In today’s market, smarter beats faster. Quality control could be the difference between a solid return and an avoidable headache. And remember—just because interest rates go up doesn’t mean your standards should come down.
The Youth Factor: Why the Job Market Matters
If you’re wondering how someone’s going to pay you back, look at their job. Simple as that. And right now, it’s young workers—those in their 30s and early 40s—who are both the biggest potential clients and the biggest source of insights.
This is the crowd jumping into homeownership, starting families, building equity—or trying to. But for many, stable jobs are harder to come by. Sure, Canada’s unemployment rate isn’t terrible, but when you dig into who’s working—and how—you’ll find a lot of contract gigs, part-time hours, and unpredictable income. Not exactly mortgage-friendly, is it?
Here’s the thing: this group also drives housing demand. So if employment becomes more stable for them, mortgage lending and repayment odds improve significantly, too.
So what’s an investor to do? Look past just age or income level. Focus on consistency. A younger borrower with steady, ongoing employment may actually be lower risk than someone older with shaky finances.
Diversify your exposure across different borrower types and property locations. Mix things up so you’re not tied to one type of economic outcome. That extra bit of planning could protect your investments down the line—and keep you from having to worry about economic rain clouds every time the job report comes out.
Smart Investment Moves in a Cautious Market
When people tighten their borrowing belts, some investors might get nervous. Others? They spot the sweet spot. In a calmer credit environment, you’re not fighting over risky, over-leveraged borrowers. You’re dealing with more thoughtful, responsible ones—and that can lead to more sustainable returns.
The name of the game here is quality. Prioritize people who have solid income, manageable debt, and a clean repayment history. Then, back that up with tight underwriting practices. It’s not glamorous, but it works. Good borrowers pay back loans—even when things get bumpy. That’s the kind of resilience you want in your portfolio.
Now would also be a great time to rethink where your money is going. Spread your investments around—not all into one project or one neighborhood. The more diversified you are, the better you can absorb shocks. No one likes surprises, especially financial ones.
But don’t make it all about defense. Opportunity is still out there. It’s just about knowing where to look and being a few steps smarter than the average investor. This mindset—cautious optimism with a side of due diligence—could be your winning edge in today’s market.
Tech’s Quiet Revolution in Lending
Let’s be real—financial tech is doing some heavy lifting these days. If you’re still making investment decisions based on gut feeling or spreadsheets from 2005…well, you might be missing out.
Today’s fintech platforms can use smart data, AI, and automation to size up borrowers in ways traditional lenders never could. They’re not just peeking at credit scores—they’re looking at job consistency, spending habits, and even rent payment history. Pretty clever, right?
And it’s not just useful—it’s necessary. With tougher lending rules and banks turning away borrowers left and right, fintech is stepping in to fill the gap. Younger Canadians especially are benefiting, as modern lending platforms help them access mortgage financing they might’ve been denied just a few years ago. For you, the investor? That’s your golden window.
Even better, fintech improves how you manage your investments. Real-time dashboards, performance highlights, early risk signals—it’s all there. No more flying blind.
Bottom line: embracing new tech tools as part of your investing strategy isn’t just “forward-thinking”—it’s becoming the new baseline. And if it helps you grow your money while supporting more Canadians on their path to homeownership, that’s a win worth taking.
Where Do You Go from Here?
So, what did we learn? People are borrowing less, both in the U.S. and Canada. That tells us something about where the economy’s headed—and how people are adjusting. But for investors like you, this isn’t the time to sit on the sidelines.
We’ve talked about everything from credit card trends to delinquency stabilization, from youth employment shifts to how tech is changing lending for the better. It’s a lot, sure—but it boils down to this: the borrowing landscape is evolving, and if you move with it, there’s money to be made.
That said, success requires smarter strategies: better borrower screening, sharper use of data, and a willingness to embrace change. Mortgage investing is still a powerful tool for long-term wealth—but the days of “set it and forget it” are behind us. Today, it’s about thinking critically, diversifying wisely, and staying flexible.
You’re not just parking cash—you’re building something. So the real question is: will you lead or follow?
This is your moment to commit, adjust, and grow with confidence. The tools are in your hands. How you use them is up to you.
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