Notable News of the Week: December 14, 2012
Bank of Canada’s warnings drove homeowners to lock in rates – Financial Post
Canada’s red-hot housing market is beginning to cool, in response to the federal government’s new mortgage rules. While the heated housing market poses a severe risk to the economy as a whole, Canadian consumers have been taking another issue seriously: the debt-to-income level warnings from the Bank of Canada.
Fixed rate mortgages have almost doubled this year, a sign that Canadians are aware that mortgage rates could increase. For any homeowners with both variable rate mortgages and a high debt-to-income level, an increase in Prime could be detrimental to their budget and personal finances. By locking into fixed rates, homeowners can feel some sense of stability in knowing an increase would not affect their monthly mortgage payments.
It is too early to tell what will ultimately happen to the market, however Scotiabank Senior Economist Adrienne Warren, along with Bank of Canada Governor Mark Carney, have voiced that a more sustainable housing situation is expected.
Land transfer tax is questioned as the housing market slows – CTV News
Toronto realtors are strengthening their call to eliminate the municipal land transfer tax put in place in 2008. With the tightening of mortgage rules, along with the tax, the Toronto Real Estate Board has made it clear that it is hurting the local economy. The cooling housing market also affects the industries that rely on a strong housing market, such as the financial services industry and the demand for things like furniture and appliances.
Unfortunately, city councilors have made it clear that the tax provides a source of revenue to the city that they cannot afford to lose. Currently, the tax brings in 3 per cent of the city’s operating budget for the year; if the tax is removed, that money will have to come from Toronto residents in another way, especially if the Toronto market cools even more.
Carney won’t cram any last-minute decisions into his final months – Yahoo! Finance Canada
With Bank of Canada Governor Mark Carney’s June departure date fast approaching, there is a growing concern among Canadians that he will leave the problem of soaring household debt to his successor. On Tuesday, however, he made it clear that he will not rush through any policy decisions and will make the bank’s goals very transparent.
One of his goals is to eventually increase rates, to specifically target excess household debt and the heated housing market; this could mean potentially increasing rates even more than necessary, to bring inflation back within a desirable range.
CANADIAN MORTGAGE RATES
Where are they this week?
A history of weekly 5-year fixed mortgage rates and 5-year variable mortgage rates.
Canadian Mortgage Rates in 2012
The average discounted mortgage rate in Canada for 2012:
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