August 21st, 2018 Mortgage Industry Update

The Bank of Canada announced on July 11th that it’s overnight lending rate will increase to 1.50% from 1.25%. The prime rate thus increases to 3.70% from 3.45% with most lenders. The common prediction remains that there will be no further rate increases for the remainder of the year.  

Additionally this week:
– Better Dwelling: Average monthly housing mortgage payments much higher in Q1 2018 compared to Q4 2017. In Toronto: reached $1,662 in Q1, 6.4% increase from the last quarter. In Vancouver, this figure was $1,794 per month at the end of the first quarter, up 6.53% from Q4 2017.

– There was a slight decline in the volume of new mortgage loans in 2017 according to an analysis of consumer credit data from CMHC. The analysis shows that in 2017 there were 959,074 new mortgages, down 6.5% decline from 2016.

– Moody’s: Canada’s largest lenders have boosted their capital enough in the past two years to withstand a 35% decline in housing prices in Ontario, BC, and 25% in the rest of the country. Residential credit quality remains “strong”.

– Nanos Research survey: Higher interest rates don’t appear to be worsening the pain for consumers. 53% say rising borrowing costs haven’t had a negative impact on their personal spending. 43% of respondents say they are feeling at least somewhat of a pinch, with the rest unsure.

– Toronto is seeing mortgage delinquencies flatline with large mortgages. Toronto mortgage delinquencies with a balance of over $400k sit almost at all-time low, at near 0.08%, for the past six quarters consecutively. Less than $400k mortgages have continued to fall below 0.11%.

– Royal LePage survey: 80% of Canadian baby boomers plan to stay put in their homes in the next 5 years. 60% opting to renovate their current house rather than buy a new home. 56% consider the neighbourhoods they currently live in unaffordable nationally, 63% in Ontario.

 
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.

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