May 15th, 2018 Mortgage Industry Update
The Bank of Canada announced on April 18th 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 Bank of Canada raised the conventional five-year mortgage rate from 5.14% to 5.34% after all Big Six banks raised their posted five-year fixed mortgage rates in recent weeks. The rate is the one used for stress tests.
– A new report from mortgage insurer Genworth Canada reveals that 59% of millennials are already homeowners, with 30% having bought a home in the past two years (including first-time buyers and repeat buyers). Among non-homeowners 30% say they intend to buy in the next two years.
– CMHC: Annual pace of housing starts in April slowed compared with March. The seasonally adjusted annual rate of new home construction, which is seen as a measure of the health of the housing market, fell to 214,379 units in April compared with 225,459 in March.
– CMHC says that its mortgage loan insurance and securitization business generated net income of $1.8 billion in 2017. It provided mortgage loan insurance for more than 250,000, 65% of which supported first-time buyers, and 14% were for buyers in rural areas.
– BMO report: Rising interest rates do not appear to be discouraging Canadians sufficiently from buying homes. 23% are still planning to purchase their primary residences in the next year, for an average expected price of $474k (national), $580k (Toronto), $603k (Vancouver).
– Zoocasa’s 2018 Housing Trends Report found that 84 per cent of Millennials surveyed felt that owning a home was an important life milestone. However, OREA: 68.5% of young Ontarians agree or somewhat agree that home ownership remains unaffordable in their neighborhood.
Stay tuned for the next update!
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