February 9th, 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:
– BILD: 37,669 new homes sold in the GTA in 2020, up 5% annually, up 2% from 10 yr avg. New single-family homes accounted for 16,973 sales in 2020, up 81% annually. Benchmark price was $1,321,186, up 21.4%. New condos were at 20,696 sales, down 22%. Price was $1,025,645, up 11.9%.
– TRREB: Q4 2020 condo and apartment sales reached 6,469, up 20.7% annually. New listings climbed by almost 92% to hit 12,298, up from 6,407 in 2019. Active listings doubled to reach 4,294. The average selling price fell 1.1% to reach $610,044, down from $616,771 a year earlier.
– Statistics Canada: Canada’s non-bank lending sector has seen its mortgages in arrears (over 90 days) spike by 20.13% annually. They reported 4,392 mortgages in arrears in this category as of Q2 2020, with a total balance of $1.08 billion (up 31.81% year over year).
– Conference Board of Canada: Consumer confidence has risen to its highest point since the start of the pandemic in March of last year. The non-profit’s consumer confidence index rose 4.9 points to 90.7 in January, exceeding last March’s level for the first time in 10 months.
– Point2Homes: Topping the list of Canada’s most unaffordable city is Burnaby, British Columbia, where, on average, households spend 44.7% of their income to service a mortgage. Followed by Richmond, BC (44.0%); Oakville, ON (43.8%); Vancouver, BC (41.6%); and Kelowna, BC (40.8%).
– BMO,: The average home price in Canada is about 46% higher than the average cost of a home south of the border. What’s more, housing’s share of Canadian nominal GDP increased above 9% in the third quarter of last year – more than double the current US ratio of 4.3%.
– Statistics Canada: The national inflation rate cooled to an annual rate of 0.7% in December, pushing down the average monthly inflation rate for 2020 to similarly slight levels. Made 2020 the weakest year for inflation since 2009, when the average rate set a record low of 0.3%.
– Engel & Völkers Americas: On national level, real estate firm projects homes in Canada priced over $1 million will grow in value by 7.5% in 2021, which will be driven by low-interest rates, along with a growing number of expatriates returning to Canada amidst global uncertainty.
– Statistics Canada: Spurred by record-low rates, Canadians borrowed at an unprecedented pace in 2020, with national mortgage debt growing 7.4% annually in November to $1.66 trillion. Surge was accompanied by sharp spike in mortgage loans, which reached new high of $28.7B during Q3.
Stay tuned for the next update!
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