May 10th, 2022 Mortgage Industry Update
The Bank of Canada announced on April 13th that its overnight lending rate will increase to 1.00% from 0.50%. The prime rate has increased to 3.20% from 2.70%. Canadian growth is strong and the economy is moving into excess demand. Labour markets are tight, and wage growth is back to its pre-pandemic pace. The Bank of Canada suggests that they will more than likely continue to raise interest rates over this year to tackle higher than anticipated inflation rates.
Additionally this week:
– More than 7 out of 10 Canadians (72.07%) who do not yet own a home, but want to eventually, think that the federal government’s First Home Savings Account will have little to no positive impact on their ability to buy their first home, according to a poll by fintech Hardbacon.
– Standard home in Canada now costs almost 2x as much as in United States. Average home price in Canada reached record $816,720 CAD in February (according to CREA). Home prices in U.S. over same period climbed 27%, reaching a record average of $480,168 CAD (according to NAR).
– Home Ownership in Canada Study: Nearly half (45%) of Canadians are renting their home or live with family while the other half (55%) own their home. For those renting or living with family, four in 10 (44%) have aspirations of buying a home within the next 10 years.
– Scotiabank’s Housing Poll: Amid the current economic environment, nearly half of Canadians (43%) said that they are delaying their plans to purchase a home. 90% of Canadians in the 18-34 age range believe that housing prices will continue to increase over the next 12 months.
– Speaking with the federal finance committee, Macklem said the Bank was considering a second consecutive 0.5% increase to its trendsetting rate in an effort to tackle runaway inflation, with the annual inflation rate now higher than at any point during the last three decades.
– TRREB: Average monthly rent of one-bedroom unit via MLS system reached $2,145 in the first quarter of 2022; yearly increase of 17.8%. Two-bedroom unit, meanwhile, was up 17.2% and now stands at $2,867. Now nearing the peak reached just prior to the onset of the COVID-19 pandemic.
– CMHC 2022-2024 market outlook: Sales and price growth will continue to moderate more in line with historical averages by late 2023 or early 2024 amid higher mortgage rates but elevated price levels will persist, putting greater pressure on affordability for new homebuyers.
Stay tuned for the next update!
For any questions and concerns please do not hesitate to call Harpreet Singh The Mortgage King at (416) 795-1919.
