Canadian Mortgage Industry (A quick sneak peek)

Canadian Mortgage Industry (A quick sneak peek)

Source- Illustration by getimg.ai

A Market in Motion: Trends to Watch

This January, the Canadian mortgage scene is buzzing with potential and challenges. While fixed rates are edging downward, giving hope to buyers, the national housing market continues its delicate dance between affordability and demand. In Toronto, a historical low in condo sales tells a tale of cautious buyers and shifting priorities. But what does this mean for you?

• Royal LePage’s Bold Predictions: A staggering 9% rise in home prices is expected in Q4, thanks to anticipated Bank of Canada rate cuts. Will this spark a buying frenzy or further strain affordability? Time will tell!​ Read More

• Toronto's Dilemma: New condo sales have plummeted by 57% this financial year, the lowest in 27 years, leaving developers with a mountain of unsold inventory. For buyers, this could mean more negotiating power in the short term. Read More(1) (2)

The Canadian mortgage industry is experiencing significant shifts as interest rate policies evolve. Notably, the Bank of Canada (BoC) is expected to maintain its key rate at 3.75% in its upcoming announcement. With inflation showing signs of moderation, gradual rate cuts might begin in 2025-26, paving the way for affordability improvements in the housing market.

• Interest Rates: A potential decrease of 50 basis points in 2024 is predicted, contingent on inflationary pressures staying controlled​. Read More

• Housing Affordability: The average home price in Canada hovers around $670K. High mortgage rates, currently between 4.5% and 6.5%, make up nearly half of average Canadian families' monthly expenses.

Watch what CMHC’s Deputy Chief Economist has to say

 

Spotlight: Toronto’s Unique Mortgage Landscape

Toronto stands at the crossroads of opportunity and challenge:

• Changing Dynamics: A growing number of solo buyers are entering the market, challenging the traditional notion of shared mortgage applications. Nearly 42% of potential homeowners now prefer flying solo​. Read More.

• Policy Updates: The federal government’s new insured mortgage cap of $1.5M could be a game-changer for mid-range buyers. However, without addressing the city’s chronic housing shortage, will this be enough?​ Read More(1) (2)

• The Toronto Real Estate Board (TREB) reports fewer listings as homeowners hesitate amid rate uncertainties. Read More

• Increasing rental costs add further complexity, pushing many potential buyers to stay renters longer​.

Nationwide Buzz: What Canadians Are Talking About.

• Interest Rates in Flux: Fixed mortgage rates are dipping ahead of potential Bank of Canada cuts, a beacon of hope for prospective buyers. Will you seize the moment or wait for the market to stabilize?​ Read More(1) (2) (3)

• Geopolitical Impact: Rising geopolitical tensions could slow inflation decline, influencing future rate decisions.

• Household Debt: Canadian household debt, driven by mortgages, has grown significantly since 1990, reflecting increased reliance on credit​. Read More

• Canada vs. USA: While Canadian rates align closely with Federal Reserve policies, potential divergence in 2025 might affect exchange rates and cross-border investments. Read More

Weekly Summary:

• BoC Policy: The BoC is anticipated to keep rates stable in January. Markets are preparing for potential rate cuts in Q2 2025​

• Housing Market: Nationwide sales volumes remain subdued. Toronto sees an uptick in rental demand as buyers adopt a wait-and-see approach.

Pro Insights: Navigating the December Market

As the financial year winds down:

• Consider the dip in fixed rates to lock in favorable terms for mortgages.

• Keep an eye on the spring market if you’re waiting to buy; sidelined buyers are poised to re-enter when rates stabilize.

• Leverage Toronto’s high inventory to negotiate better deals, particularly for condos.

Source- Illustration by getimg.ai

Disclaimer: These are insights and not financial advice.