April 30th, 2024 Mortgage Industry Update
The Bank of Canada announced on April 10th that its overnight lending rate will remain at 5.00%. The Bank expects CPI inflation to be close to 3% during the first half of this year, move below 2½% in the second half, and reach the 2% inflation target in 2025. The prime rate remains at 7.20%.
Additionally this week:
– Finance Minister Chrystia Freeland said the government will tax Canadian companies on two-thirds of their capital gains on investments, up from half currently. That change will also apply to individual taxpayers when they have gains over $250,000 in a year.
– Statistics Canada: National inflation rate went up slightly in March compared to February to 2.9%. In February, the measure was at 2.8%. Gasoline prices are partly behind increase. Monthly the CPI increased 0.6%, which was slightly below the expected 0.7%, according to Bloomberg.
– Zolo report – based on a survey of 800 people who bought homes in 2023 – revealed a growing trend of co-ownership: 35% of home buyers in 2023 purchased a property with a family member or friends, compared to 38% who bought a home as part of a romantic couple.
– Urbanation: Purpose-built rental units experienced a 12.7% year-over-year price increase in March, averaging $2,117. In contrast, condominium rentals grew at a more modest rate of 3.9% reaching an average of $2,321. Overall rents increased by 8.8% to $2,181 in March.
– OSFI has introduced new restrictions on how much debt federally regulated banks can extend. Banks will be restricted in # of new mortgages they can issue that exceeds 4.5x a borrower’s income. Will set tailored limits for each bank on the % of new loans that can surpass threshold.
– CREA has revised its housing market outlook for 2024, now expecting national average home price to climb 4.9% annually to $710,468 – more than double previous forecast. Also increased its prediction for home sales, 10.5% increase to 492,083 transactions, up from 10.4% forecast.
– The federal government confirmed plans to consult with the mortgage industry on developing income verification tools through the Canada Revenue Agency. The announcement was part the government’s new housing strategy entitled ‘Solving the housing crisis: Canada’s Housing Plan.’
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.
