September 12th, 2023 Mortgage Industry Update
The Bank of Canada announced on September 6th that its overnight lending rate will remain at 5.00%. The Canadian economy has now entered a period of weaker growth. CPI inflation is forecast to hover around 3% for the next year before gradually declining to 2% in the middle of 2025. Prime remains at 7.20%.
Additionally this week:
– TRREB: Volume of home resales in Toronto region fell 1% from July to August. However decline was not as steep as the previous two months. Home Price Index fell 0.1% to $1,163,700 from July to August. But was up 2.4% annually across the Toronto region.
– Statistics Canada: Real GDP dipped 0.2% in the second quarter, against estimates for a 1.2% rise. That’s also well below the Bank of Canada’s official GDP forecast for 1.5% growth in both Q2 and Q3. Monthly growth in June also came in lower than expected, similarly falling 0.2%.
– Bank of Canada maintains overnight rate at 5.00%! Canadian economy has now entered a period of weaker growth. CPI inflation is forecast to hover around 3% for the next year before gradually declining to 2% in the middle of 2025. Prime remains at 7.20%.
– Big 5 banks’ residential loan growth slowed to 4% in their fiscal Q3, compared with annual growth of 9.8% a year earlier. The amount of impaired loans (stage 3) ballooned to nearly $1.3B from $717M. However, figures account for a small fraction of the lenders’ overall portfolios.
– Royal LePage survey: 6% of Canadian homeowners currently co-own their property with another party (not including their spouse or significant other). Of this cohort, 89% said that they co-own with family members, while 7% do so with friends. 56% live with their parents or in-laws.
– Former Bank of Canada governor David Dodge: The Canadian financial system is not likely to return to interest rate levels between 1% and 2%. Dodge is anticipating a stable endpoint of around 3.5%, significantly higher than the levels registered over the last few decades.
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.