May 30th, 2023 Mortgage Industry Update
The Bank of Canada announced on April 12th that its overnight lending rate will remain at 4.50%. This was the second hold-still since they started increasing rates a year ago. Inflation has started to lower. Latest data remains in line with the expectation that inflation will come down to around 3% in the middle of this year. Prime remains at 6.70%.
Additionally this week:
– TRREB: Prices in Toronto’s rental market are soaring, with latest figures revealing a 15.1% yearly surge in the average rent for 1 bed condo in GTA. Brings average rental price for a 1 bed apartment to $2,474, with 2 bed apartments on average rising in price by 9.2% to $3,162.
– CMHC: Canadian households are more in debt than those in any other G7 country, and the amount they owe is now more than the value of the country’s entire economy. Household debt now sits at 107% of Canada’s GDP. Three quarters of Canadian household debt is tied to mortgages.
– Statistics Canada: A profile of Ontario residential real estate investors shows that in 2020 (pre-pandemic) only 0.5% lived outside the province and that most investors were over 55, had an income of $110,000 or less – with an outsized portion of them being immigrants.
– BILD: Sales of new construction single-family homes rose 81% annually in April to 1,064. Up from March’s 384. 1,327 condos and stacked townhouses that sold was a 57% annual drop. Benchmark price for new single-family homes declined 1% to $1.77M. Condo prices down 7.3% to $1.10M.
– Bank of Canada: Mortgage holders are facing payment increases of up to 40% at renewal. One third of mortgages have already seen increases in payments compared to February 2022. By the end of 2026 all mortgage holders will have experienced a payment increase.
– CMHC is against the idea of extending amortization periods for new mortgages. CEO made the comments in an interview, saying that while such measures would help reduce monthly mortgage payments, they would also stoke housing demand and put upwards pressure on prices.
– Statistics Canada: The new housing price index dropped 0.2% annually in April, the first year-over-year decline in the national index since November 2019. This is significantly lower than the 9.4% annual increase recorded in April 2022.
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.
