June 14th, 2022 Mortgage Industry Update
The Bank of Canada announced on June 1st that its overnight lending rate will increase to 1.50% from 1.00%. The prime rate has increased to 3.70% from 3.20%. Inflation globally and in Canada continues to rise, largely driven by higher prices for energy and food. Canadian economic activity is strong and the economy is clearly operating in excess demand. 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:
– Nanos Research Group survey: Asked what they think annual inflation will be in 12 months, majority of respondents said it would be above current level of about 7%. Median estimate was 8%. About 45% expressed doubts about the Bank of Canada’s commitment to achieving its 2% target.
– TorontoRentals(.)com rent report: Average monthly rent increased by 12% in April to $2,204 from $1,974 in April 2021 when all property types were taken into account. Toronto condominium rents saw the largest gains, surging by more than 24% to $2,583 from $2,077.
– TRREB: Toronto home prices fell for a third straight month. The average selling price for a home fell 3.1% in May to $1.18M. Prices have now declined nearly 9% from their February peak. Home sales sank 38.8% monthly to 7,283 total sales. Represented a 9% monthly decline.
– Nearly half (47%) of Canadian Generation Z adults living in the nation’s urban areas have ranked proximity to their workplaces and offices as a top priority when it comes to purchasing their first homes, according to a new survey by Sotheby’s International Realty Canada.
– National Bank of Canada: Housing affordability deteriorated across Canada by 4.9 points in Q1 2022, marking fifth-straight quarterly fall. That marks the “worst decline for housing affordability in a generation,” or 27 years ago, the bank said.
– Chartered Professional Accountants of Canada: Only 21% of non-homeowners think that it’s very likely that they’ll make a home purchase, while 29% see it as somewhat likely. This is despite average home price falling from a peak of over $816,000 in February to $746,000 in April.
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.