August 6th, 2024 Mortgage Industry Update
The Bank of Canada announced on July 24th that its overnight lending rate will be cut to 4.50% from 4.75%! Marks the second back to back rate cut! Recent data has increased confidence that inflation will continue to move towards the 2% target. The prime rate decreases to 6.70% across lenders.
Additionally this week:
– Starting August 1, first-time homebuyers purchasing newly constructed homes will be eligible for 30-year mortgage amortizations, up from the current 25 years. Change is expected to lower monthly mortgage payments, making it easier for young Canadians to enter the housing market.
– Canadian Bankers Association: National mortgage arrears rate (3M+ delinquent) fell to 0.18% in April from 0.19% in March, where it held steady for three months. Translates to just 9,252 mortgages in arrears out of 5.02M+ . Low of 0.14% was in 2022. All-time high was 1.03% in 1983.
– TRREB: Q2 condo apartment rentals increased by 25.2% annually. Condo rental listings up by 51.3%. 1BR condo apartments saw 3.1% decline in average rent to $2,452, while 2BR’s experienced a 1.9% decrease to $3,178. Average condo apartment selling price was $729,005, down 1.2%.
– CIBC: 31% of first-time buyers received family help for their down payment, a significant increase from 20% in 2015. The average gift amount has risen to $115,000, up 73% since 2019. For those upgrading to larger homes, 12% received gifts, with an average amount of $167,000.
– CIBC and Urbanation: Rising costs have left 82% of investors in newly completed condos who have a mortgage as cash-flow negative in first half of 2024. Number is up from 77% last year, and up sharply from 40% in 2020. Monthly losses increased to average of $597 up from $220.
– Sotheby’s International Realty Canada: Luxury residential real estate sales over $4 million for condos, semi-detached and single-family homes in the GTA were up 8% yearly in first half of 2024 compared to 2023. In Toronto, sales for homes over $4 million were up a marginal 4%.
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.
