Notable News of the Week: July 13, 2012

Alyssa Furtado
by Alyssa Furtado July 13, 2012 / No Comments

Each week, Ratehub brings you the Notable News of the week which is a compilation of the latest headlines from the mortgage and housing industry. The new mortgage rules kicked in at the start of the week, yet some Canadians were still unaware of the changes; And to no one’s surprise, the high-paced construction of homes was deemed “unsustainable by TD.” Oh, and in case you missed it, a large number of media outlets reported that the Canadian housing market has reached the “tipping point.”

Almost half of Canadians unaware of new mortgage rules – The Globe and Mail

Despite Ottawa announcing three weeks ago that new mortgage rules would take effect on Monday, some Canadians are still left in the dark on the details. A recent survey by Bank of Montreal found that:

  • 49% of Canadians aren’t familiar with the new mortgage rules
  • 26% still believe the maximum amortization is 30 years instead of 25
  • 41% of people purchasing a house within 5 years say they’ll likely spend less
  • 45% say they’ll opt for a smaller mortgage

The new rules will change the affordability options for Canadians. Ratehub provides an up-to-date mortgage affordability calculator that already takes into account the new mortgage rules.

British Columbians unhappy with new mortgage rules – The Province

British Columbia’s housing market is already cooling down, so some are arguing that introducing the new mortgage rule changes are overkill. Take Greater Vancouver whose housing sales just reached a 10-year low in May. Many BC residents are unhappy with the mortgage rules tightening which make it more difficult for first-time home buyers to purchase a home. The rules reduce potential homebuyers’ purchasing power by 13% and add to heavier monthly payments.

A Bank of Canada Rate Cut? Don’t Count it out – The Wall Street Journal

A potential rate cut by the Bank of Canada in the future is still in the cards. The result of which, would likely lower mortgage interest rates across Canada. Investment house Brockhouse Cooper isn’t ruling out a cut in interest rates, saying, “if commodity prices remain low and consumer spending and job growth slow down significantly, housing will become a secondary consideration in the BOC’s thinking – and rate cuts will not be out of the question.”

Home-building pace ‘unsustainable,’ TD economist says – CBC News

Housing starts recently reported rebounds in June according to the CMHC. This was driven by starts on condo construction. An economist with TD Bank, Francis Fong, said housing construction in Canada remains at an elevated level that is unsustainable, predicting that this pace of construction is on its last legs. He goes on to say that high levels of household debt, coupled with an overvaluation in the housing market do not support these high construction levels.

Going online makes buying the new home easy – The Toronto Sun

The internet is an abundance of free online resources which make the home-buying process much easier for today’s shopper. Some of the recommended websites this article directs readers to visit include: BuzzBuzzHome.com, the most complete listings of new construction in Canada; Walkscore.com, a site that rates a neighbourhood’s proximity to transit, grocery stores, entertainment and other attractions; oh, and this humble mortgage website, Ratehub.ca which always supplies the most up-to-date mortgage rate information in an easy-to-read format.

The most expensive cities to rent in Canada – Huffington Post

The top ten most expensive cities to rent in Canada is limited to three provinces, with half of the top ten coming from Ontario. Alberta and British Columbia had three cities and two cities, respectively. So which city required the highest average rent cheque? Fort McMurray in Alberta which sees a constant influx of high-paying jobs, fuelled by the oil sands industry.

Canada’s housing market at ‘tipping point’ – The Globe and Mail

According to Royal LePage, with some cities showing growth and other cooling down, Canada’s housing market is currently at a ‘tipping point.’ The brokerage’s CEO said, “confidence in Canada’s real estate market is sound, but home prices cannot grow faster than salaries and the underlying economy indefinitely.” However, some markets such as Toronto and Winnipeg are expected to continue to gain. A senior economist for National Bank believes a moderation in residential construction will occur in the second half of 2012. TD economists believe, “The expected housing pause will reflect stricter regulations on mortgages and lending and what we expect to be a gradual rise in interest rates.”