July 12th, 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 provincial Ford government has approved the highest rent increases in almost a decade. Rents in 2023 will be capped at a maximum 2.5 per cent, more than double the 2022 increase but the province says its lower than it could have been given current inflation rates.
– Ipsos poll conducted on behalf of TD: Three quarters (76%) of Canadians who are likely to buy a home in the next year agree (35% strongly/41% somewhat) that they’re worried about rising rates impacting what home they can afford.
– The Office of the Superintendent of Financial Institutions has changed readvanceable mortgages. Starting in late 2023, the principal portion of payments over 65% LTV will go towards paying down the overall debt and reducing the total readvanceable mortgage borrowing limit.
– Office of the Superintendent of Financial Institutions: HELOC debt is rising at fastest rate in 10 years. Outstanding HELOC balance reached $168.8B in April, representing increases of 0.9% monthly and 1.8% annually. The year-over-year growth was the highest since April 2013.
– An assessment of housing price valuations in Canada during Q4 2021, carried out by Moody’s Analytics, found that Peterborough homes were overvalued by a jaw-dropping 107.8%. It just beat out St Catharines-Niagara for the title, with homes there said to be overvalued by 106.9%.
– TorontoRentals.com report: Average monthly rent rates across all property types in the GTA grew by 16.5% annually in May, rising from $1,998 last year to reach $2,327 last month. On a monthly basis, GTA average rent increased by 5.7%, its largest monthly jump in 3 years.
– Altus: Canadian commercial segment saw nearly $23.8B (up by 52%) across 3,250 transactions (up 25%) during Q1 2022. Most active asset classes were industrial ($5.8B) and office properties (just above $3B), followed by ICI and residential land (approximately $8.9B combined).
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.