August 23rd, 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:
– Statistics Canada: Year-over-year inflation recorded its first deceleration since June 2021 last month; annual inflation rate was 7.6% in July. Represented smallest monthly increase since December 2021. In June, the inflation rate hit 8.1% – highest level for nearly 40 years.
– CREA: National average home prices fell for 5th consecutive month in July, and now down 23% since reaching peak in February. Average price stands at $629,971, down 1.7% from June and 5% compared to a year ago. National home sales were also down 5.3% monthly and 29.3% yearly.
– Total investment in building construction across Canada ticked up by 0.3% to reach $20.8 billion in June, seeing end of a robust nine-month streak of growth in the residential segment. Residential construction investment fell by 0.4% to settle at $15.5 billion in June.
– TRREB: Average sale price for Toronto detached homes in July was $1,515,763. February market price peaked at $2,073,989 — 27% decline in just five months. Average price has fallen by nearly $400,000 since May and over $550,000 since hitting a record high in February.
– Bank of Canada: Housing affordability deteriorated to its worst level in over 30 years. Data shows a household must now devote 42.8% of its disposable income to housing-related expenses. That’s up from 39.7% in Q4 2021 and 34.7% a year earlier.
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.