Analysts: Growing number of mortgage payments going solely towards interest
According to Victor Tran, a mortgage and real estate analyst at Ratesdotca, a significant number of Canadian homeowners are finding that their payments are only going towards paying the interest on their mortgages, rather than the principal amount. Tran stated that this situation became particularly apparent when Canadian banks implemented unprecedented interest rate hikes in March 2022, as many consumers chose to significantly extend their loan amortization periods. While longer amortization periods can make monthly payments more affordable, consumers are also required to pay more interest, according to data from the Canadian Financial Consumer Agency. “I’ve had many clients with …
Annual pace of housing starts plummets
A big decrease took place between April and May; The annual pace of Canadian housing starts fell 23% in May from the previous month, with sharp declines in Toronto, Vancouver and Montreal. Canada Mortgage and Housing Corporation (CMHC) said the seasonally adjusted annual rate of housing starts came in at 202,494 units in May compared with 261,357 units in April as apartment, condo, and multi-unit housing starts fell dramatically in those three cities. Vancouver housing starts plummeted by 45%, with Toronto posting a 28% decrease and Montreal seeing its pace slow by 35%. In each of those cities, multi-unit starts …
As interest rates rise again, what does it reflect?
The Canadian mortgage market has already seen a significant shift from floating rates to fixed rates among borrowers, and last week’s rate hike decision by the Bank of Canada will only further accelerate this trend. The 25-basis-point increase in the central bank’s policy rate means that borrowers across the country are also adjusting their mortgage rates upward. While fixed rates are also rising, many economists believe that the central bank may have further rate hikes in store for the remainder of the year. However, the recent increase in the five-year Canadian government bond yield, which has a significant impact on …
Analysts say another rate hike could be on the way
The central bank’s next policy rate announcement is scheduled for July. According to various market analysts, the existing circumstances indicate a high likelihood of another interest rate hike after June 7th. Sherry Cooper, Chief Economist at Dominion Lending Centres, stated that the Bank of Canada’s next move will be influenced by the inflation reports and two upcoming labor market reports, which will be released between now and the central bank’s policy decision next month. Currently, the Bank of Canada’s policy rate has reached its highest level in 22 years at 4.75%. Cooper mentioned, “There is a good chance of another …
Bank of Canada announces new rate hike
The Bank of Canada has announced a 25-basis-point rise in its benchmark interest rate, resuming its rate-hiking strategy after pausing in the previous two announcements. This increase brings the trendsetting rate to 4.75% and comes in response to recent data suggesting that the economy is still performing above the Bank’s desired level. According to the Bank’s statement, the current monetary policy is considered “insufficiently restrictive” to restore the balance between supply and demand and bring inflation back to the targeted 2%. The Bank acknowledges concerns about the possibility of inflation persistently exceeding the target level while maintaining its expectation that …
Canada’s economy outperforms in first quarter, raising pressure on Bank of Canada ahead of next week’s rate decision
The first quarter saw the Canadian economy expand by 3.1 percent on an annualized basis, surpassing predictions and increasing the pressure on the Bank of Canada to consider another interest rate hike, potentially as early as next week. Following a stagnant fourth quarter in 2022, the economy experienced a revival in the initial months of this year, thanks to strong exports and resilient consumer spending. This positive momentum appears to have carried over into April, as per a preliminary estimate by Statistics Canada, which indicates robust growth in that month, despite the adverse effects of the federal government workers’ strike. …
Demand for variable mortgage rates down 21% compared to 2022
The popularity of variable-rate mortgages has significantly declined in the past year due to consecutive interest rate hikes by the Bank of Canada. Borrowers are now favoring fixed-rate mortgages for slightly lower costs and overall stability. Recent data from RateHub reveals that inquiries for five-year variable rates on their website accounted for only 5% of all user submissions in 2023, compared to 26% in 2022. In contrast, demand for five-year fixed mortgages has been steadily increasing, With inquiries now representing 79% of all submissions, up from 66% in 2022. In Canada, fixed-rate mortgages have traditionally been the most popular option, …
Housing Market is Still Hot: Local Experts Highlight the Significance of Reliable Advice
In the realm of personal finances, few decisions carry as much weight as buying a house. It’s a colossal investment that demands not only finding the perfect value for your money but also ensuring long-term financial stability beyond the closing date. Recent data from the Canadian Real Estate Association (CREA) reveals a significant 30% drop in home sales in April 2022 compared to the previous year. Thunder Bay, in particular, witnessed a 5.7% decrease in average home prices, with single detached homes averaging around $345,000. Wes Case, President of the Thunder Bay Real Estate Board, emphasizes that the current market …
Toronto’s New Multiplex Allowances Signify A Very Big Milestone, Here’s Why
Toronto recently made a seismic move by approving new planning rules that allow multiplexes of up to four units in every neighborhood. This decision is a significant step toward breaking the stranglehold that exclusionary zoning has had on residential growth in the city. Prior to the amalgamation of Toronto and its former satellite cities in 1998, apartment buildings, single-family homes, basement flats, and laneway housing coexisted, albeit not always harmoniously, side by side, however, the suburbanization of the city, which was already well underway, accelerated after amalgamation. The notion of a car in every garage and a highway in every …
Home Sales Bounce Back in April As National Average Home Price Rises
Despite affordability challenges, rising housing demand has pushed Canada’s national average home price up to $716,000, in April — a 6% month-over-month rise, which was driven by increases in Nova Scotia (+7%), Ontario (+6%) and B.C. and Alberta (+4%), according to monthly resale data from the Canadian Real Estate Association. In seasonally adjusted terms, the MLS home price index was up 1.6% month-over-month. While the average sale price remains down 3.9% from April 2022, it has now surged by $103,500 since January 2023. “With interest rates at a top, and home prices at a bottom, it wasn’t all that surprising …
