December 13th, 2022 Mortgage Industry Update
The Bank of Canada announced on December 7th that its overnight lending rate will increase to 4.25% from 3.75%. Inflation globally and in Canada continues to rise. Central banks around the world continue to tighten as well. The prime rate has increased to 6.45% from 5.95%. The Bank of Canada suggests that they are now considering whether or not more increases are needed.
Additionally this week:
– Bank of Canada increases overnight lending rate to 4.25% from 3.75%. The prime rate has increased to 6.45% from 5.95%.
– TRREB: November benchmark home price slipped 0.8% to $1.09M, the smallest monthly drop since prices began falling in April. Just 4,544 homes were sold, down 49% from a year ago. Fewer than 8,900 homes were brought to market in November, down from October and from the year before.
– Statistics Canada: Unemployment rate remained almost static at 5.1% in November. The rate was essentially unchanged from 5.2% reading in October, as the economy saw only 10,000 new jobs last month. For perspective, the pre-pandemic level was 5.9% in November 2019.
– CMHC: In January, roughly 73% of all fixed-rate mortgages initiated or refinanced in Canada went with terms of four or five years, while only 11% had terms shorter than that. July data shows 28% of fixed mortgages had terms of 1-3 years, while 45% opted for four to five years.
– Royal LePage: 75% of U.S. citizens living in border towns and owning recreational properties in Canada made purchase after government announced forthcoming foreign buyer ban. Two-year ban will apply to non-Canadian citizens and non-permanent residents. Comes into effect on Jan. 1
– CMHC: As of August, 44.2% of new mortgage borrowers chose a variable rate, down from a peak of 56.9% in January. For new mortgages originated as of September by Canada’s chartered banks, just 16% had a 5-year fixed-rate versus 40% that had terms of one to four years.
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.