February 20th, 2024 Mortgage Industry Update
The Bank of Canada announced on January 24th that its overnight lending rate will remain at 5.00%. Bank of Canada maintains overnight rate at 5.00%! The Canadian economy has stalled since middle of 2023 and growth will likely remain close to zero through first quarter of 2024. Economy now looks to be operating in modest excess supply. The prime rate remains at 7.20%.
Additionally this week:
– TRREB’s latest forecast: GTA home sales expected to reach 77,000, up from about 65,000 in 2023 but still out of line with the 10-year average of 92,000. Average selling price will tick up to $1.17 million, the second-highest mark on record but below 2022’s peak of $1.19 million.
– The Canadian Home Builders’ Association wants the government to offer a 30-year amortization period for insured mortgages on newly built homes. The association says extending the period an additional five years would help with affordability and spur more construction.
– RBC currently forecasts national home sales to rebound by 9.2% year-over-year to 484,000 units in 2024 followed by another 16% gain in 2024. That would partially reverse sharp declines of 25% in 2022 and 11.1% in 2023.
– During a recent RBC Capital Markets conference, bank leaders suggested that an average increase of about $5,000 per year in mortgage payments is manageable for most, thanks to Canadians’ savings, higher earnings, and readiness to cut non-essential spending to keep their homes.
– Bank of Canada’s latest quarterly Market Participants Survey (to 30 influential financial market participants): Based on median results, participants expect Bank of Canada to cut its policy rate by 25 basis points starting in April, followed by another 75 bps by December.
– TRREB: Total sales last month in GTA were 4,223, an increase from 3,083 in January 2023, while the average price fell by 1% to just over $1.026M. The market was also boosted by a jump in active listings, which increased by 8.5% compared with the same time last year to 10,093.
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.
