February 7th, 2023 Mortgage Industry Update
The Bank of Canada announced on January 25th that its overnight lending rate will increase to 4.50% from 4.25%. Inflation globally and in Canada continues to remain high. Central banks around the world continue to tighten as well. Our economy remains in excess demand, however there is indication we are nearing the end. The prime rate has increased to 6.70%.
Additionally this week:
– Bank of Canada data shows clear trend of borrowers shifting away from variable rates and towards short-term fixed rates. 31% of all new mortgage originations as of November had a fixed-rate term of under three years. 22% of new originations had a variable-rate mortgage.
– Statistics Canada: Economy geared down in Q4 2022, growing at 1.6% annually. This was about half the pace of Q3 growth which was 2.9%. Q2 was 2.8%, Q1 was 2.8%.
– Statistics Canada: Homeownership rate currently stands at 66.5%, as of 2021. That’s down from the peak of 69% in 2011. Number of renter households grew by 21.5% from 2011 to 2021, while owner households grew by 8.4%. Over 10 million households in Canada own their home (a record).
– CMHC: Average rent for two-bedroom purpose-built apartment grew 5.6% annually to $1,258 in 2022. New annual high in data going back to 1990. Average monthly rents for two-bedroom purpose-built condo apartments in Vancouver ($2,002) and Toronto ($1,779) remained highest in Canada.
– CMHC: National vacancy rate for purpose-built rental apartments dropped to 1.9% in 2022 from 3.1% – lowest level since 2001. Higher migration and rising home ownership costs drove up demand, while higher mortgage rates made it challenging for renters to consider home ownership.
– Zoocasa: Oakville and Milton are the most expensive municipalities in Canada if you want to buy a house. Analyzed prices in 47 major Canadian markets. Oakville-Milton “takes the prize” of the most expensive homes on average throughout 2022 with an average price of $1,393,608.
– Canadian Bankers Association: National arrears rate ticked up from its all-time low in October. Rate tracks mortgages that are behind payments by 3+ months. Rose to 0.15% from 0.14%, where it’s been since June. Just over 7,400 mortgages in arrears out of a total of over 5.1 M.
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.
