January 7th, 2025 Mortgage Industry Update
The Bank of Canada announced on December 11th that its overnight lending rate will be cut to 3.25% from 3.75%! The second consecutive cut of 50 bps. Marks the fifth back to back rate cut! Inflation has dropped below the 2% target now. We can expect further decreases. The prime rate now decreases to 5.45%.
Additionally this week:
– Statistics Canada: National annual inflation rate dropped to 1.9% in November, a lower reading than economists had expected as mortgage interest costs continued to fall. Dipped from 2% October reading with the mortgage interest cost index slowing for the 15th month in a row.
– Teranet: 65% of urban buyers, 62% of rural buyers went with one of the Big Five banks in 2011. By 2023 rural buyers dropped to 48%, before rebounding to 55% in first half of 2024. Urban buyers continue to favour Canada’s largest banks, with 60-65% consistently opting for Big Five
– CREA: Home sales across Canada spiked by 26% annually in November. 37,855 homes were sold last month, up from 30,042 in November 2023. This marked the second consecutive month of big year-over-year gains. The national average sale price was also up, rising by 7.4% to $694,411.
– Urbanation: National rent average in November fell to 15 month low to $2,139. Annual decrease of 1.6%, monthly of 0.6%. Up 6.7% over the past two years and 18.8% compared to three years. Toronto saw annual decline of 9.4%, with rents hitting a 28 month low of $2,640 on average.
– Bank of Canada cuts overnight rate to 3.25% from 3.75%! The second consecutive cut of 50 bps. Marks fifth back to back rate cut! Inflation has dropped below the 2% target now. We can expect further decreases. Prime rate decreases to 5.45%.
– Statistics Canada: National unemployment rate spiked to its highest level in three years last month, jumping to 6.8%. Jobless rate had increased by 0.3% in November, with unemployment higher than economists surveyed by Bloomberg before the announcement had expected (6.6%).
– Royal LePage: Aggregate price of a Toronto home in Q4 2025 will increase 5% to $1,225,770. Median price of a single-family detached property is expected to rise 7.0% to $1,523,466. GTA condos expected to see a 1% decline in price.
– Royal LePage: Aggregate home price in Canada is projected to rise by 6% year over year to $856,692 in Q4 2025. Detached homes expected to see 7% price increase, reaching a median value of $900,833, while condo prices are forecasted to grow by 3.5%, reaching $605,993.
– RBC will see $353 B worth of mortgages renew from 2025 to 2027. Borrowers renewing in 2025, with average current rate of 3.60%, are expected to experience steepest payment shock. Of 60% clients expected to face higher rates, average monthly payment increase will be $513, or 22%.
– TRREB: GTA home sales in November were 5,875, up 40.1% annually. Monthly sales gain was 1.9%. The average selling price rose 2.6% compared with a year earlier to $1,106,050. There were 11,592 new listings throughout the GTA last month, up 6.6% from a year earlier.
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.
