October 8th, 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:
– Royal LePage survey: 54% of Canadians born from 1986 to 2006 believe homeownership is an achievable goal. 45% said they’re saving diligently and feel they’ll have enough put aside in the near future to afford a home. One in five said they don’t think it’s in the cards for them.
– Bloomberg survey of 28 economists: Bank of Canada will keep gradually lowering borrowing costs at 25 point increments over the next five decisions. See benchmark overnight rate falling from the current 4.25% down to 3% by April 2025, lower than forecast in the previous survey.
– Statistics Canada: National economy grew slightly in July but its overall performance during the third quarter likely remained muted. GDP had inched upwards by 0.2% in July, slightly bettering expectations, but that growth probably stalled in August.
– Statistics Canada: In June number of active Canadian businesses saw its largest decline since COVID-19 pandemic. Around 5% of firms closed that month – the highest closure rate since June 2020. New businesses representing only 4.2% of total firms, lowest rate since March 2023.
– Statistics Canada: 250,000 people immigrated in Q2, giving 0.6% quarterly growth. Marks first time since 2020 that quarterly growth was slower than same period year earlier. Added 118,000 temp residents, smallest net increase since Q1 2023 and third straight quarterly decline.
– OSFI says it’s ending requirement for borrowers on uninsured mortgages to complete stress test when switching lenders at renewal. Mortgage providers will no longer have to apply minimum qualifying rate when a borrower moves from another lender. Date for implementation is TBD.
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.