May 6th, 2025 Mortgage Industry Update
The Bank of Canada announced on April 16th that its overnight rate will hold at 2.75%. Marks the first pause after seven consecutive rate cuts. The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty and diminished prospects for economic growth. The prime rate remains 4.95%.
Additionally this week:
– GDP contracted 0.2% in February, missing expectations for zero growth and wiping away part of January’s 0.4% expansion. Advance data for March showed output rising 0.1%, with declines in manufacturing and wholesale trade offsetting gains in mining, oil and gas, retail.
– Markets are widely expecting two additional quarter-point cuts from the Bank of Canada this year, according to the Bank’s first-quarter Market Participants Survey. Respondents see the BoC’s policy rate falling from 2.75% currently to 2.25% by the end of 2025.
– CBRE and Avison Young: Toronto office market showed signs of resilience in the Q1 2025, buoyed by strong leasing activity early in the year. Overall vacancy rate dropped by 0.5% quarter-over-quarter to 18.0% in Q1 2025, a notable improvement amid broader economic uncertainty.
– Teranet: Typical first-time homebuyer in Ontario is now close to five years older than they were just a decade ago due to affordability concerns and people delaying home ownership. In 2014 the median age was 36. In 2019 it was 38. By 2024 the median age rose again to 40.
– BILD: 385 new homes were sold in March in the GTA, down 68% from March 2024 and 87% below the 10-year average. Marks sixth consecutive month of record all-time lows. Benchmark prices decreased for both single-family homes and condominiums in the GTA compared to the previous year.
– Statistics Canada: Non-bank mortgage lenders held $405.3B in residential mortgages at the end of Q4 2024, up 3.5% from a year earlier. Marks roughly 20% increase from Q4 2020. Total number of outstanding mortgages also up to 1.85 million. Average mortgage size up to ~$220k.
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.
