Notable News of the Week: January 18, 2013

Alyssa Furtado
by Alyssa Furtado January 18, 2013 / 3 Comments

Are stubborn sellers killing the real estate crash? – Financial Post

It seems to be the new trend for first-time buyers: saving more while waiting for home prices to drop. And while Flaherty’s new rule that decreased the maximum amortization to 25 years is one reason buyers need to save more, waiting for prices to drop is a result of predictions that have been circulating for months. “I’m waiting for that bubble to pop that everybody is talking about,” explained Megan Vickell, a first-time buyer in Toronto.

Unfortunately, it doesn’t look like that will be happening anytime soon. “Crashes don’t just happen…you need a trigger,” says Benjamin Tal, deputy chief economist with CIBC World Markets. A spike in interest rates or major job losses could be that trigger but, so far this year, the economy looks stable. And with home prices expected to drop by 5-10 per cent this year, many sellers are pulling their homes off the market, refusing to sell at a lower price.

Finance Minister Flaherty ‘pleased’ as Canada’s housing market softens – The Globe and Mail

On Tuesday, the Canadian Real Estate Association revealed new data to prove that the rapid increase in home prices is now over. Canada’s housing market is beginning to soften and Finance Minister Jim Flaherty says he is happy with the news. “I don’t mind prices coming down a bit, too,” he added, after the data showed that home sales fell sharply in December.

Sparked by his concern that low interest rates were encouraging consumers to take on large amounts of debt, as well as bid too much on already hot real estate, Flaherty changed the rules to make it more difficult for consumers to qualify for new mortgages. While prices nationally are still slowly rising, there has been a major decline in sales. According to the same data, 20,538 homes sold over MLS in December, down 17.4 per cent from the year before. In total, 1.1 per cent fewer homes were sold in 2012 than in 2011.

ING DIRECT’s Broker Business Announcement –

In an email sent out Wednesday morning, ING DIRECT Canada announced to mortgage brokers and agents that the financial institution would be discontinuing its broker channel and transitioning the business over to Scotiabank. This decision is a direct result of Scotiabank’s acquisition of ING DIRECT in August 2012.

Predictions of Scotiabank taking over ING’s broker channel have circulated for months. In Q3 2012, Scotiabank had 23.6% of the broker lender market share – the highest percentage of any financial institution – while ING had only 4.6%. Because of this, ING is confident that the result of Scotiabank taking over its broken business will be successful.


Where are they this week?

2013.01.17 - Current Rates2013.01.17 - Rate History

A history of weekly 5-year fixed mortgage rates and 5-year variable mortgage rates.

2013.01.17 - History of Rates

Canadian Mortgage Rates Since 2012

2013.01.17 - Rates 2012-13

The average discounted mortgage rates in Canada in 2013:

The average discounted mortgage rates in Canada in 2013:

  • I would just take the time comment with my personal idea of whats going on, which I am basing on important factors I’m aware of being a Real-Estate agent in the Greater Toronto Area.

    The major drop in sales is there due to two main reasons: first being the seasonal decline which occurs every year around the same time, and the second reason being the change in the mortgage regulation, which currently adds an additional expense to a home buyer.

    If you jump back in time to the time the HST was introduced to the market; we have seen a cooling in the Real-Estate market, but as the buyers adjusted to the new expense so did the Toronto Housing Market in general, which very quickly heated up to proportions way beyond the everyday talk about a bursting bubble, which by the way we have been hearing about for years.

    If you’re a buyer in the Greater Toronto Area, please do take advantage of the slow sales as it would save you thousands of dollars while negotiating(The people who really need to sell – will sell, and would entertain lower offers), and would most likely save you from fierce competition in a multiple offer situation.

  • Pingback: CIBC Mortgage Penalty Class Action: Update()

  • Pingback: Scotiabank cuts off mortgage brokers at ING Direct()