Bank of Canada says most mortgage payments will increase
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Market Highlights
The Bank of Canada recently put out a report on how most mortgages have not seen an increase in payments, and based on the rate path established by bond yields and financial markets, assumes that most borrowers will see increased rates moving through the next few years:
Stat Central
💸 $1.82
Canadians owed $1.82 in credit market debt for every dollar of household disposable income in the third quarter of 2023.
🏠 $150,622
That is the average price of a home in Edmundston, New Brunswick. Edmundston is listed as first place for the best place to live in Canada by company MovingWaldo. They based the ranking on 3 criteria: safety, affordability and access to recreational facilities and parks.
📉 1.8%
The number of newly listed properties declined 1.8% month-over-month according to CREA, (the Canadian Real Estate Association).
The MLS® Home Price Index (HPI) decreased 1.1% month-over-month but was still up 0.6% year-over-year.
The actual (not seasonally adjusted) national average sale price posted a 2% year-over-year increase in November.
Headlines
Is 'war-time' housing a solution to Canada's crisis? The federal government is reviving a war-time plan for pre-approved home designs to accelerate building across the country. There is a great 10 minute video clip with some cool visuals.
Bank of Canada’s confidence grows that rates are now high enough, but says inflation risks remain The Bank of Canada’s six-member Governing Council believes the odds have increased that interest rates are now high enough to bring inflation back to target. The Bank’s 475 basis points of rate hikes since March 2022 are continuing to work their way through the economy and are now slowing spending and easing price pressures.
Underbidding now taking place in many real estate markets across Ontario: realty company 10 cities outside the GTA, including Hamilton, Ottawa, London, Barrie and the three cities in Waterloo Region, with Kitchener being the only one that had not been affected on average by underbidding.
St. Catharines, London, Barrie and Guelph had the most underbidding occurring, although it still remains under three per cent of asking prices….while there is underbidding going on, it does not mean that all sellers are willing to take a cut if they are not in a hurry to sell.
Tweets & Charts
What we’re reading
Financial feasibility of purpose-built rental in Canada Once a highly popular and incentivized form of housing in Canada for decades from the 1940s-1970s until they were replaced by the condo. PBR’s are going to be a big part of the future of housing in Canada, this CMHC report provides great insights into all thing PBR’s, This is from the introduction;
The results point to financial feasibility challenges for new private rental apartment projects in the 6 selected markets. Land costs, government charges, and underground parking construction costs constitute some of the significant cost items hindering financial performance. Achievable market rents are also generally not high enough to support development costs in most markets.
The impact of higher interest rates on mortgage payments: Since March 2022, interest rates have risen considerably and rapidly following a period of historical low rates during the first two years of the COVID‑19 pandemic. As a result, many mortgage holders are currently facing significantly higher payments, and others will do so at renewal. The exact size of this increase in payments depends on the features of each mortgage and how interest rates continue to evolve.
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Catch ya next week!
-Padder