Mortgage rules help fuel rent hikes – Canadian Mortgage Trends
Last July, the federal government enacted regulations that reduced the maximum allowable amortization period and gross debt service ratio on insured mortgages. These changes had an immediate effect on potential first-time homebuyers, as 80 per cent of first-timers need mortgage default insurance. Thousands of Canadians who wanted to purchase homes in 2012 were forced to rent instead, leading to a rise in rental demand and prices. This effect is especially noticeable in the Toronto condo market, where vacancies have dropped to just 1 per cent. Additionally, as a result of the increased demand for rental units, Toronto’s average monthly rent price has gone up $170 since 2011. Overall, rules designed to decrease home buying are now causing pain to renters, as rental prices continue to rise with the increased rental demand.
Canadian home building to plunge 30% by 2015, costing the economy 150,000 jobs, mortgage industry warns – Financial Post
According to the Canadian Association of Accredited Mortgage Professionals (CAAMP), new home construction will decline significantly in the next two years. The housing industry is slowing and continues to trend downwards, partially as a result of the tighter mortgage lending regulations that were put in place last July. As the industry slows, housing starts are declining in most Canadian cities. Calgary and Edmonton are two exceptions where, unlike the rest of Canada, they will see home construction increase. However, on a national level, CAAMP predicts the annual level of housing starts to drop to 150,000 by late next year. If housing starts reach this level, it would represent a 25 per cent decline from the 2011-2012 average of 205,000. CAAMP predicts that the worst slowdown would occur in Toronto, with the number of housing starts falling by around 50 per cent, to 22,000 a year. By mid-2015, the declines in new housing construction could lead to the loss of 150,000 construction-related jobs; this decline would lead to the loss of around 35,000 jobs in Toronto.
Canada bank regulator says watching housing risk, pleased so far – Reuters
Office of the Superintendent of Financial Institutions’ (OSFI) Julie Dickson said recently that she feels comfortable with the direction the Canadian housing market is heading. OSFI has been focusing on the risks Canadian banks face with low interest rates and increased lending. The regulator was most worried about the size of the major banks’ mortgage lending portfolios and Canadian homebuyers who were taking on more debt than they could handle. “The real estate lending market has been a significant area of focus for OSFI, because of the significant incentives for consumers to borrow and for banks to maintain revenues, the size of mortgage lending portfolios, the concerns about some markets being over-valued, and the possibility that customers’ debt serviceability could be masked by low interest rates,” Dickson reported. The regulator is pleased with the current trends in the housing market, as they will help curb bank lending.
CANADIAN MORTGAGE RATES TODAY
A look at current mortgage rates and 5-year mortgage rate history.
The average discounted mortgage rates in Canada in 2013:
A history of weekly 5-year fixed mortgage rates and 5-year variable mortgage rates.