August 30th, 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:
– Royal LePage: 74% of millennial respondents in Toronto said owning a home is important to them, only 22% said they think they’ll ever purchase a property in the city. 37% of Toronto millennials surveyed said they believe they will need to relocate to ever become homeowners.
– RBC says interest-rate hikes may trigger higher monthly payments for about 80,000 customers with variable-rate mortgages. Increases will average about $200, a level the lender expects most borrowers can afford, and most customers won’t hit those trigger rates.
– New home prices for Canada ticked up by just 0.1% in July compared to June – the smallest monthly increase since June 2020, and markedly lower than the average increases witnessed during the first two quarters of 2022, according to Statistics Canada.
– Angus Reid Institute: In a survey of 2,279 adult Canadians, 56% said they can’t keep up with cost of living. Many individuals say they wouldn’t be able to handle any unexpected expenses in this environment, with 52% saying they couldn’t manage a surprise cost of more than $1,000.
– Rentals.ca: Average rent in Canada for all properties rose more than 10% yearly in July. Was $1,934, only $20 below the pre-pandemic peak of $1,954 in September 2019. Month-over-month, average rent rose 2.6% in July compared to June.
– Avison Young: Total value of commercial real estate sales in GTA in Q2 rose 43% annually. Totalled $7 billion, up from $4.9 billion. Brought total investment to $14 billion for the first half of 2022. Industrial sector saw the highest investment dollar volume.
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.