June 19th, 2018 Mortgage Industry Update

The Bank of Canada announced on May 30th that it’s overnight lending rate will remain at 1.25%. The prime rate thus remains at 3.45% with most lenders. The 5 year posted rate has officially increased with the Bank of Canada from 5.14% to 5.34%. Fixed rates are stabilizing from recent changes in the bond market.  

Additionally this week:
– The Federal Conservative Party of Canada’s Deputy Shadow Minister for Finance has proposed creating a subcommittee to study the new mortgage stress test’s impact in a bid to have it overturned.

– A Better Dwelling report revealed that private lenders originated over $2B last year and currently have about 7.87% of the national mortgage market. In fact, the private channel has enjoyed six straight quarters of market share growth.

– In 1976, the average home price (adjusted for inflation) was $213,030, with the median full-time earnings for those aged 25 to 34 at $54,700 (representing a ratio of around 4:1). In 2017, price stood at $510,179, income was $49,800 (ratio of nearly 10:1). Ontario = 12:1 ratio.

– Canadian housing starts declined in May as overall multi-family construction in urban areas weakened. CMHC’s 6-month moving average shows 216,362 starts in May compared to 225,481 in April.

– Knight Frank’s Q1 real estate price growth ranking: In Q4 2017 Canada held 10th spot on the real estate consultants global ranking — it’s now fallen to number 15, as its price growth slows. Toronto housing market dropped from 11th to 18th place on luxury housing market index.

– Bank of Canada: Financial system is resilient, but high household debt and imbalances in the housing market remain the biggest vulnerabilities. “Remain elevated,” even though policy measures have started to make an impact.

 
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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