November 7th, 2023 Mortgage Industry Update
The Bank of Canada announced on October 25th that its overnight lending rate will remain at 5.00%. There is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures. Supply and demand in the economy are now approaching balance. Prime remains at 7.20%.
Additionally this week:
– Equifax Canada poll: 52% of respondents in 18-34 age range reported anxiety about their personal debt levels, a markedly higher share than the overall average of 39% of other respondents. 36% of young adults said that they missed a bill payment this year, versus 23% of all others.
– CMHC: Share of Canadians missing payments on their mortgages is down compared to last year despite the impact of higher interest rates. Proportion of insured mortgages in arrears or with missed payments is down to 0.25%, compared to roughly 0.5% in December 2022.
– RBC: Consumers could see an increase in monthly mortgage payments by as much as 48% on a weighted average basis by 2026, when about $400B of mortgages are scheduled for renewal. Potential increases of 32% on $186B in 2024. Possible increase of 33% on $315B in 2025.
– Latest data from Financial Services Regulatory Authority of Ontario shows private mortgages represented 11.7% of all brokered mortgages in province last year, compared with 8.4% in 2014. Dollar value of private mortgages last year was $25.9B, more than doubling from $9.1B in 2014.
– Equifax Canada: 36 per cent of younger adults reported having missed a bill payment this year, compared with 23 per cent overall. Meanwhile, 52 per cent of those surveyed between the ages of 18 and 34 are anxious about their personal debt, compared with 39 per cent overall.
– TD Economics predicts Canadian home sales and average prices will fall over the coming months but pick up by Q2 next year. Higher rates will likely push sales and prices lower by 10% and 5%, respectively, by the end of Q1 next year, compared with 2023 Q3 levels.
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.