March 18th, 2025 Mortgage Industry Update
The Bank of Canada announced on March 12th that its overnight rate will be cut from 2.75% to 3.00%! Marks the seventh consecutive rate cut from the bank. Heightened trade tensions will likely slow pace of economic activity and increase inflationary pressures in Canada. The prime rate decreases to 4.95%.
Additionally this week:
– OSFI Annual Risk Outlook: 36% of Canada’s mortgages are set to renew by end of 2026. Despite recent interest rate reductions of 200 basis points since June 2024, many borrowers will still face significantly higher payments upon renewal compared to their original rates.
– Statistics Canada: Total value of building permits issued in Canada fell 3.2% in January, reaching $12.8B. Residential building permits were down 3.4% from December, totalling $8.8B. Multi-unit housing saw a $424.2M decline, while single-family homes rose $111.4M.
– OSFI is considering a new approach to mortgage risk management that could replace the current stress test. Evaluating whether to shift responsibility from borrowers to lenders, rather than individuals. Would face tighter restrictions on issuing high-risk mortgages.
– Urbanation: Average asking rent for residential properties across Canada dropped 4.8% yearly to $2,088 in February. Lowest level since July 2023. This marks the fifth consecutive month of year-over-year rent declines. However rents remain 16.9% higher than pre-pandemic levels.
– Statistics Canada: Employment remained nearly unchanged in February, adding only 1,100 jobs, a far cry from the significant increases seen in the previous two months. The unemployment rate held steady at 6.6%. Economists had predicted a moderate increase of 15,000 net new jobs.
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.
