September 20th, 2022 Mortgage Industry Update
The Bank of Canada announced on September 7th that its overnight lending rate will increase to 3.25% from 2.50%. The prime rate has increased to 5.45% from 4.70%. Inflation globally and in Canada continues to rise. Central banks around the world continue to tighten as well. The Bank of Canada suggests that they will more than likely continue to raise interest rates as necessary to tackle higher than anticipated inflation rates.
Additionally this week:
– Statistics Canada: Credit market debt to disposable income ratio climbed to 181.66 in Q2, up from 179.71 in Q1. Average Canadian owed almost $1.82 for every dollar of disposable income. Canadians added near record $56.3 B of debt and mortgages were the largest at $48.7 B.
– Statistics Canada: Employment levels unexpectedly fell for third straight month in August and jobless rate jumped. Economy shed 39,700 jobs last month; surprise negative reading compared to 15,000 gain anticipated by economists in a Bloomberg survey. Jobless rate rose to 5.4%.
– The Office of the Superintendent of Financial Institutions has maintained that it will not yield to pressure from various sectors that have called for the easing of its strict mortgage qualification standards. Inclusive of the “stress test”.
– Equifax Canada: During Q2, consumer insolvency rose to its highest level since the start of the pandemic. Consumer proposals went up by 20.7% annually, accounting for approximately 76% of all insolvencies in Canada. Delinquency rates in 90 day+ accounts also had a 4% increase.
– TRREB has called on the federal government to re-evaluate the stress test in light of a resurgence in housing market activity. OFSI should deliberate on whether the current stress test remains applicable, considering prevailing environment of economic and fiscal volatility.
– Equifax: Average non-mortgage debt per consumer was $21,128 in Q2; up 2.4% annually. Credit card balances rose to highest level since Q4 2019, average credit limit on new cards is over $5,800; highest in last seven years. Overall total non-mortgage debt rose to $591.4 B, up 5.2%.
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.
