December 6th, 2022 Mortgage Industry Update
The Bank of Canada announced on October 26th that its overnight lending rate will increase to 3.75% from 3.25%. Inflation globally and in Canada continues to rise. Central banks around the world continue to tighten as well. The prime rate has increased to 5.95% from 5.45%. 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: The national economy saw a 2.9% annualized increase in its gross domestic product during the third quarter, significantly higher than the Bank of Canada’s 1.5% forecast. That compares with 3.2 per cent growth in the second quarter.
– Re/Max: Canada’s housing market expected to show more balanced activity in 2023. 60% of housing market to return to balanced activity next year, with an average 3.3% drop in home prices. Prices in GTA could drop by 11.8% next year as possible overall economic slowdown takes hold.
– Rentals.ca: Rent for all property types across Canada up 15.4% yearly. Average monthly rent of all property types in Canada was $2,043 per month in September. This means there was a 4.3% increase monthly, and a 21.9% increase from the recent market low set in April 2021.
– In the Manulife Bank of Canada Debt Survey, it found the majority of respondents (87 per cent) think Canada will soon enter a recession, or that it’s already in one. It also found more than half (56%) of individuals believe a recession will last at least a year.
– Statistics Canada: New home prices nationwide fell by a monthly average of 0.2% in October following a 0.1% decline in September. Of 27 census metropolitan areas, 5 saw their home prices increase in October, while 7 had price declines and the remaining 15 were unchanged.
– Bank of Canada: Half of mortgage holders with static-payment variable-rate mortgages have already reached trigger rate. Comprises 13% of all outstanding mortgages in Canada. Variable-rate mortgages now account for 1/3 of total outstanding mortgage debt, up from 1/5 at end of 2019.
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.