June 26th, 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 Canadian dollar slid to its lowest level since last June with a host of factors weighing it down. The loonie was trading at 75.17 US cents as of 12:42 p.m. ET Wednesday, its lowest level since June 22, 2017.
– TD Economics: There is reason to believe that the worst of the home price adjustment is behind us. Monthly moves have become less dramatic, with some markets beginning to see modest increases. Most likely be the Q3 2018 before the housing market reaches a “convincing bottom”.
– CREA is lowering its national home sales forecast for this year due to weaker sales in B.C. and Ontario. Now expects home sales this year to fall 11% compared with a year ago to 459,900 units this year. Forecast was for 7.1% decline; released in March. Pointed at a 1.6% month-over-month increase in May in Toronto residential transactions – a development that analysts said was the “first sign of stability” in the long overheated market.
– Statistics Canada: Mortgage activity has dropped to the lowest level since Q2 2014 following the introduction of new lending rules + rise in interest rates. Fell by $2 billion to $13.7 billion in Q1 2018. Mirrored the 17% decrease in the value of residential resale activity in Q1.
– The Teranet-National Bank Composite National Price Index rose 1% in May, following a 0.2% rise in April. Confirms stabilization of home prices that took place since the end of last year, following a correction in Q2 2017. 10/11 markets covered by the index saw price increases.
– CMHC report: Recent drop in Ontario home prices isn’t expected to persist. Moderate economic growth in GTA + Ontario generally will provide support for real estate prices in 2018, 2019. Expecting inflation-adjusted prices will remain stable and close to the levels of Q4 2017.
Stay tuned for the next update!
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