January 2nd, 2024 Mortgage Industry Update
The Bank of Canada announced on December 6th that its overnight lending rate will remain at 5.00%. The Canadian economy has now entered a period of weaker growth and is continuing to slow. Recent data suggesting economy is no longer in excess demand. The prime rate remains at 7.20%.
Additionally this week:
– Statistics Canada: The national inflation rate stood at an annualized pace of 3.1% in November, essentially flat with the 3.1% rate in October.
– Deloitte: The Bank of Canada will likely start cutting interest rates in the second quarter of 2024. Forecasting three 25-basis-point cuts from the central bank, which would reduce its overnight policy rate from five per cent to 4.25 by the end of 2024.
– CREA: Benchmark price of homes in Canada fell by 1.1% monthly in November. This marked biggest decline seen since September 2022 and was the third consecutive decrease as the benchmark price now stands at $735,000. Home sales dropped by 0.9%. New listings also fell by 1.8%.
– Statistics Canada: Mortgage interest payments have now soared nearly 90% since the Bank of Canada started hiking interest rates in early 2022. As of Q3, mortgage interest payments are up 89.6% since March 2022. Over same period, amount of mortgage principal paid has fallen 16.8%.
– TransUnion: Average outstanding mortgage balance rose to $356,848. Up 3.9% compared to a year earlier. The agency also reported a dramatic slowdown in mortgage originations in the first half of the year, which were down 27% compared to the active mortgage market in early 2022.
– Canadian Bankers Association: After seven straight months of no change, the national mortgage arrears rate rose to 0.16% from 0.15% in September. That works out to 8,140 mortgages out of a total of 5.07 million. Arrears rate tracks mortgages that are behind payments by 3+ months.
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.
