Mortgage activity in Canada has dropped to the lowest level since 2014, falling by $2 billion to $13.7 billion in the first three months of the year, according to Statistics Canada data released Thursday.

The slump in mortgage borrowing is a fresh sign that the effect of Canada’s new B-20 mortgage stress test rules and higher interest rates are taking hold in the country’s housing markets. The value of residential resale activity declined 17 per cent, Statistics Canada said.

Meanwhile, credit-market debt such as mortgages fell to 168 per cent of after-tax income from 169.7 per cent in the prior three months, Statistics Canada said. The measure had climbed to a record high of 170 per cent in the third quarter of 2017.

Credit-market debt rose just 0.3 per cent in between January and March, reflecting the lowest volume of mortgage borrowing in almost four years. Disposable income increased 1.3 per cent.

The report is a sign that the risks from a debt-fueled housing boom over the last decade may be fading. Bank of Canada Governor Stephen Poloz said last week that while financial- market risks linked to consumer finances are easing, the sheer size of their debts mean the tensions will persist for some time.

"The steeper drop to start 2018 suggests we may finally be at a turning point as the one-two punch of stricter mortgage rules and higher interest rates slow household borrowing, while income continues to climb," said Priscilla Thiagamoorthy, economic analyst with BMO Capital Markets, wrote in a note to clients. "The Bank of Canada will look favourably on that shift even as elevated household debt remains a vulnerability."

The decline in the debt-to-income ratio was the biggest in records back to 1990, and the level has now fallen back to the lowest in two years.

Real estate executives and policy makers have said mortgage growth should slow early this year after tougher federal mortgage rules took effect. Some buyers have also been deterred by high prices in Vancouver and Toronto, and by the central bank’s three interest-rate increases since July.

Still, overall household debt remains over $2 trillion, about equal to Canada’s gross domestic product.

Another Statistics Canada report showed Toronto’s new-home prices in April posted the first 12-month decline since 2009, falling by 0.3 per cent. Prices fell by 0.5 per cent in April from March, the fourth straight decline.

With files from Bloomberg News' Greg Quinn