UPDATE 1-Canadian mortgages held by foreigners grow, says housing agency

(Adds definition of non permanent resident, data on non-resident mortgages)

OTTAWA, Feb 6 (Reuters) - The share of Canadian mortgages held by foreigners living in Canada has risen in the last two years, particularly in Vancouver and Toronto, driven in part by young home buyers bankrolled by parents overseas, the federal housing agency said on Tuesday.

Nearly 10 percent of mortgages issued to people under the age of 25 in Canada's two hottest housing markets in 2016 went to non-permanent residents, the Canada Mortgage and Housing Agency (CMHC) said "signifying some younger NPR (non-permanent residents) may be receiving parental support to purchase homes."

A backlash against foreign investors, particularly those from mainland China, has spurred provincial governments to impose a foreign buyers tax in Vancouver in 2016 and in Toronto in 2017, despite data showing offshore buyers are a small part of the market.

The markets in both cities have cooled since double-digit price increases in early 2016 sparked fears of a bubble. Analysts are divided over whether the Canadian housing market will crash or re-inflate in the months to come.

The CMHC report on mortgage issuance by Canada's five largest banks showed 3.9 percent of mortgages issued in Vancouver were held by non-permanent residents in 2016, up from 3.3 percent in 2014. In Toronto, 2.7 percent of mortgages issued in 2016 were held by non-permanent residents, up from 2.1 percent in 2015 and 2.0 percent in 2014.

For the report, non-permanent residents included foreign workers, students, refugee claimants and other non-Canadians living in Canada legally.

While the number is a fraction of overall mortgage issuance, the rapid growth of foreigners aged 18 to 44 is shifting the home-buying demographic in Canada, the CMHC said.

Foreigners tended to buy more expensive properties, according to the report, with the average single detached home purchased by a non-permanent resident valued at C$1.09 million in Toronto and C$1.65 million in Vancouver.

That was above the average C$902,000 and C$1.42 million bought by permanent residents in those cities, respectively, according to the report.

The report also showed the proportion of mortgages held by non-residents - which includes both Canadians and foreigners not living in Canada - also rose between 2014 and 2016, particularly in Vancouver and Toronto. (Reporting by Andrea Hopkins; Editing by Jeffrey Benkoe and Andrew Hay)