June 23rd, 2020 Mortgage Industry Update
The Bank of Canada announced on June 3rd that its overnight lending rate will remain at 0.25%. The prime rate remains 2.45%. The possibility of further rate reductions remains unclear at this time as the economy deals with the COVID-19 pandemic.
Additionally this week:
– New Bank of Canada Governor Tiff Macklem on COVID-19 and interest rates: Rates would only go up once Canada is well into an economic recovery, which is still a long way off. “But we’re in a deep hole, and it’s going to be a long way out of this hole.”
– RE/MAX Canada survey suggests that sales activity will return with 56% of respondents who are planning to engage in market expecting to do so within less than year. 44% believe market will return to pre-pandemic levels by 2021, with 29% expecting it to do so by the end of 2020.
– The Bloomberg Nanos Canadian Confidence Index, based on a random survey of Canadians, rose to 42.86 last week from 41 a week earlier. While the index still remains well below the historical average, it has continued to inch higher from record lows in April.
– CREA: Canadian home sales saw 57% increase to 26,111 in May from April. Still down 40% from a year earlier and at the lowest level for May since 1996. Average price of a home sold in April was $488,000. In May, it was $494,500; slight increase from April but 2.6% lower than 2019.
– Equifax: A sharp decline in the use of credit cards due to stores and restaurants closed at the end of March led to the first drop in consumer debt balances in more than a decade. Average balances on debt excluding mortgages dropped 0.5% to $23,386 in Q1 from 2019.
– According to a new analysis of wealth and debt from TD Economics, Canadian net worth dropped 3.8% in the first quarter of 2020, taking the average from $309,735 to $297,266 on a per capital basis.
Stay tuned for the next update!
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