September 24th, 2024 Mortgage Industry Update
The Bank of Canada announced on September 4th that its overnight lending rate will be cut to 4.25% from 4.50%! This marks the third back to back rate cut! Excess supply in the economy continues to put downward pressure on inflation, while price increases in shelter and other services are holding inflation up. The prime rate now decreases to 6.45%.
Additionally this week:
– Wahi’s 2024 Great Canadian Dream Home Survey: 64% of respondents want a single-family home. Potential homebuyers also prefer larger, renovated homes (64%), 3 bedrooms (43%), and properties located in suburban (38%) or urban (34%) neighbourhoods rather than rural (28%) communities.
– Statistics Canada: Total value of building permits jumped 22% to $12.4B in August, reversing two months of decline. Residential sector saw 16.7% increase, with multi-unit component leading charge (up by 29.3%, reaching $5B). Single-family housing permits dipped slightly by 1.9%.
– The federal government is raising the cap on insured mortgages to $1.5 million from $1.0 M. Also allowing homebuyers to take out a 30-year loan if they’re buying for the first time or purchasing a newly built home. Both changes are scheduled to come into effect on December 15.
– Statistics Canada: Canadians now spending more of their income on interest payments than at any time in last 30 years. Households spent 9.59% of their disposable income just on interest, marking highest level since 1992. Canadians paid $43.8B in interest in Q2, up 14% annually.
– JLL: Canada has been recognized as one of the most transparent real estate markets in the world. Country ranked fifth in the Global Real Estate Transparency Index 2024, which assesses openness, integrity, and credibility in real estate markets. United Kingdom took the top spot.
– CIBC says BoC Governor will reduce policy rate by 50 basis points at each meeting in December and January. The lender expects the central bank to end the easing cycle next June with a policy rate of 2.25%. The pace of cuts is faster and deeper than what most economists expect.
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.
