July 19th, 2022 Mortgage Industry Update
The Bank of Canada announced on July 13th that its overnight lending rate will increase to 2.50% from 1.50%. The prime rate has increased to 4.70% from 3.70%. Inflation in Canada is higher and more persistent than the Bank originally expected and will likely remain around 8% in the next few months. 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:
– Bank of Canada increases overnight rate to 2.50% from 1.50%. Inflation in Canada is higher and more persistent than the Bank originally expected and will likely remain around 8% in the next few months.
– CBRE: Nearly half a million square feet of office space has freed up in downtown Toronto, where the office-vacancy rate has peaked at a record 12% in Q2. National downtown office vacancy rate sat at almost 17%, while the national suburban office vacancy rate was 16% in Q2.
– CMHC: 90+ day delinquencies down across all lender types. Among chartered banks, arrears rate fell to 0.17% by end of 2021, down from high of 0.25% in Q3 2020. Credit unions average rate of 0.10% (down from 0.15% in 2020), other non-bank lenders 0.23%, down from 0.26% in 2020.
– CMHC: Residential mortgage debt in Canada climbed by 9% annually in 2021. Outstanding mortgages totalled $1.77 trillion in Q3. The majority of Canadians (53%) preferred variable-rate terms in the second half of 2021, up from 34% in the first two quarters.
– TRREB: Home prices dropped for 4th straight month and sales tumbled. Average price fell 3% in June to $1.14M, bringing total decline to more than 11% since February. Fewer than 6,500 homes sold during month, down 5% from the previous month — and 41% lower than a year ago.
– TD Economics report: Canadian home sales could fall by 23% on average this year before pulling back to 12% average decline in 2023. TD has “significantly” downgraded home sales and price forecasts compared to March “as monetary policy has tightened more acutely than anticipated.”
– Bloomberg poll: An estimated 27% of Canadian homeowners said they had a home equity line of credit, with 78% of these saying that they had used it,. Nearly three in five (58%) poll respondents also said that they currently hold outstanding balances on their HELOC.
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.