February 21st, 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:
– Hoyes, Michalos and Associates Inc study: Millennials accounted for 49% of all insolvencies in Canada last year. Millennials owed an average of $47,283 in unsecured debt in 2022, despite the demographic currently accounting for less than 27% of all Canadians aged 18 and over.
– TRREB: Home sales in GTA will decrease to 70,000 in 2023, down from 75,140 in 2022 and 121,712 in 2021. Lowest level since 2001. Average selling price will reach $1,140,000 for all home types combined, up from current levels, but 4% lower than average price of $1,189,912 in 2022.
– BILD: Number of renter households in the GTA will rise by 58% over the next decade to 312,000. Ontario is only track to add about 135,000 rental units during that time. Would be an improvement on previous 10-year period by 24,000 but won’t be enough to offset the rise in demand.
– Statistics Canada: Labour market surged again in January, adding over 150,000 jobs. Unemployment rate remained unchanged at 5.0%. January’s employment numbers were up over December, when the economy added 104,000 jobs. Total employment gains since September are now 326,000.
– Residential building construction costs increased by 1% in Q4 2022, in the wake of a 2.5% increase during the previous quarter, according to Statistics Canada. Non-residential construction costs grew by 1.6% in Q4, following a 2.1% increase during the previous quarter.
– According to the Office of the Superintendent of Bankruptcy, there were 100,184 consumer insolvencies in 2022, representing an 11.2 per cent increase from the previous year.
– BMO survey: Canadians now believe they need $1.7M in savings in order to retire, a 20% increase from 2020. This is the largest sum since BMO first started surveying Canadians about their retirement expectations 13 years ago. Increase from $1.4M expected just two years ago.
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.