June 21st, 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:
– The US Federal Reserve has made its most aggressive move on interest rates in 28 years, hiking its benchmark rate by 0.75% in a bid to tackle the mounting inflation crisis in the US. That brings the short-term rate to a range of 1.5% to 1.75%.
– Statistics Canada: Investment in building construction nationwide increased by 2.7% annually to reach $20.9 billion in April. The residential construction segment saw its seventh consecutive month of increases, posting a 3.2% gain to reach $15.7 billion.
– Re/Max Canada Survey: Revealed that three quarters of those living in recreational markets said they were happy with their quality of life, while nearly 40 per cent of Canadians living in these markets said they were interested in purchasing property because of its affordability.
– TRREB: Average resale price for detached homes in Peel Region markets down from January peak. Brampton down $296,868 (18.3%) to $1,355,22 from $1,652,088. Mississauga down $285,544 (14.5%) to $1,678,533 from $1,964,077. Caledon down $239,923 (11%) to $1,947,235 from $2,187,158.
– Desjardins Senior Director of Canadian Economics Randall Bartlett and Senior Economist Hélène Bégin say Canadian home prices could plausibly fall 15 per cent from their February 2022 peak by the end of next year, but would remain above pre-pandemic levels.
– The total value of building permits in Canada declined by 0.6% in April to end up at $11.7 billion, with decreases in residential permits (down by 3.3%) mostly offset by gains in the non-residential segment (up by 5%).
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.
