February 16th, 2021 Mortgage Industry Update

The Bank of Canada announced on January 20th that its overnight lending rate will remain at 0.25%. The prime rate remains 2.45%. The Bank of Canada suggests that they will more than likely keep rates at this “effective lower bound” until 2023, as they observe the full effects of the pandemic. 

Additionally this week:

– Statistics Canada: Employment in Canada fell more than expected in January, with a loss of 212,800 positions that reversed five months of gains. But the entirety of the drop was in part-time work. Unemployment rate worsened by 0.6%, rising to 9.4%.

– National Bank of Canada has reported that a Canadian household occupying the average income bracket would need around 60 months to save the minimum down payment for a residential property purchase. This was the longest saving period calculated in around four decades.

– Urbanation: New condominium apartment sales in GTA declined 28% last year to 18,247 units, lowest annual total since 2013 and 15% below the 10-year average (21,421). New condo sales remained in line with new launches of 18,004 units last year, down from 25,296 launches in 2019.

– Finder analysis: Canadians saved approximately five times more of their disposable income in 2020 compared to 2019. According to Finder’s study of data from the OECD, Canadian households saved an average of $5,816 last year, far outstripping the $1,144 seen in 2019.

– According to Statistics Canada, the total value of all building permits fell 4.1% month-over-month to $9.1 billion in December, with gains in seven provinces largely offset by a 13.2% decrease in Ontario.

– CMHC: More rental properties sat empty in 2020, especially in the Greater Toronto Area where the vacancy rate hit a 14-year high. Rental market vacancy rate in the country’s big cities edged up to 3.2 per cent in 2020 from two per cent in 2019.

– TRREB: Number of condos put up for rent in Toronto more than doubled (up 132%) in Q4 compared with a year earlier. Average rent for a one-bedroom condo fell almost 17 per cent from a year earlier to $1,845, while costs for a two-bedroom unit dropped about 15 per cent to $2,453.

– Statistics Canada: GDP expanded 0.7 per cent in November from a month earlier, easily beating the 0.4 per cent forecast of economists in a Bloomberg survey. A preliminary estimate from the agency shows GDP grew 0.3 per cent in December, defying expectations for a contraction.

– Canadian Bankers Association: Active deferrals (37,582) in Canadian banks represent a mere 0.8% of their residential mortgage portfolios as of December. For perspective, deferrals throughout 2020 accounted for nearly 17% of banks’ residential loan books, totalling around 800,000.

 
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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