Notable News of the Week: July 12, 2013
Toronto home prices up but rising mortgage rates could spell trouble – Yahoo! Finance Canada
Housing sales in the Greater Toronto Area were down by less than 1 per cent in June, compared with the same month a year ago. However, in the same month, the average selling price rose by 4.7 per cent to $531,374. This increase was driven by the detached and semi-detached housing segments. On the opposite side of the country, home sales were up 11.9 per cent in Vancouver in June compared to a year ago. Robert Hogue, a senior economist at Royal Bank of Canada, believes these figures indicate that the Vancouver housing market is beginning to rebound. However, mortgage rates have been rising and, if they continue to do so, it could result in more pressure on the housing market. One of the biggest challenges for the Toronto market will be absorbing all the new condominiums that will be finished in 2014 and 2015. “There’s definitely a risk that condo prices, which have essentially levelled off, could be under downward pressure over the next couple of years,” explained Adrienne Warren, an economist at Scotiabank.
British Columbians most likely to delay first home purchase – Vancouver Sun
The government’s decision to tighten the mortgage rules last year has cooled down the housing market and forced some first-time homebuyers out of the market. A study commissioned by the Bank of Montreal (BMO) indicates that the mortgage rules introduced last summer had the biggest affect on first-time homebuyers in British Columbia. According to the study, one-third of first-time homebuyers in British Columbia put off their plans to purchase, as a result of the tougher mortgage regulations. This figure is high compared with the national average of one in five buyers who felt they were pushed out of the market. BMO’s Chief Economist, Doug Porter, noted that, “It did take a bit of steam out of the market because it essentially forced quite a number of potential buyers, especially first-time buyers, to wait awhile longer.” On a positive note it appears that these changes have helped Canada’s overheated real estate market achieve the soft landing the Conservative government desired.
Canadian housing market defies skeptics as starts top expectations – Financial Post
Canadian housing starts were stronger than anticipated, these last two months, indicating that the housing market is rebounding from last year’s slowdown. The seasonally-adjusted annualized rate of housing starts reached 199,586 units in June, surpassing analysts’ expectations. The Canadian Mortgage and Housing Corporation (CMHC) also revised May starts up to 204,616 from the 200,178 figure that was originally reported. A year ago, the Conservative government introduced new mortgage rules to cool the market, which has proven to be successful. However, after almost a year of the housing market cooling, demand has started to increase again, partially due to low borrowing costs. “With sales finding a floor in recent months, prices well behaved and homebuilding close to demographic demand, the soft landing story looks firmly in place,” said BMO Capital Markets Economist Robert Kavcic.
INTEREST RATES IN CANADA
A look at current mortgage interest 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.
