One of the WORLD’s largest downtown redevelopment projects was announced last week for our hometown, Toronto. The Star reports:
A bigger deal than a rail deck park, or a new subway extension, or any of the other things that typically occupy front pages. The kind of thing that, when Torontonians look back in 50 years, they will realize defined the Toronto they know, shaped it, allowed it to be built.
By doing some heavy lifting with flood protection and cleaning up the river and surrounding areas, the Port Lands could – in a decade or more – be home to 25,000 new residences and 30,000 jobs.
Big news in our space: the first overnight rate increase in seven years could be announced by the Bank of Canada next week on Wednesday, July 12.
Bond yields have already risen in anticipation of the announcement, resulting this week in RBC increasing its posted rates for 2, 3 and 4-year fixed rates by 0.2% (to 2.54%, 2.64% and 2.84%, respectively) for mortgages with amortization periods of 25 years or less.
Next week’s announcement, if realized, would likely mean a quarter percentage point increase to the overnight rate, which is currently sitting at 0.5%.
This would have an immediate impact on those with a variable rate mortgage. Here’s a quick overview of how the banks reacted to the last couple of rate cuts, and how next week’s announcement might impact other products like savings.
New numbers show slowdown in Toronto real estate
The Toronto Real Estate Board released their monthly market figures this week. Key highlights from the report: home sales dropped 37.3%—the biggest decline since January 2009, and there were only 7,974 sales in June, down from 12,794 in the same month last year. Detached house and condo sales dropped by 45.0% and 23.4%, respectively. However, detached house and condo prices still saw gains of 7.8% and 23.2% compared to June 2016.
Here’s more info from CBC on that – still hot – condo market.
Ban on bundled mortgages
OFSI (The Office of the Superintendent of Financial Institutions) is proposing a ban on bundled mortgages (or “co-lending arrangements”) that “expressly prohibiting co-lending arrangements that are designed, or appear to be designed to circumvent regulatory requirements.”
They are taking comments from interested parties until August 17, 2017 to implement new rules by the end of the year.
In summary from CBC’s report: Bundling mortgages with an unregulated entity can allow lenders to offer mortgages worth up to 90% of a property’s value, despite Canada restricting regulated lenders to lend more than 65% of the value of a home to borrowers with poor credit, and not more than 80% of a property’s value to borrowers with good credit without government backed insurance.