CanEquity Mortgage Canada - Current Canadian Mortgage News

Making the News

House prices to hit record
Feb 08, 2010 — Canadian house prices will hit a record $337,500, on average, this year and sales activity should also burst through an all-time high, a real-estate report predicted Monday. National average home prices are expected to rise 5.4 per cent, with gains in all provinces, the Canadian Real Estate Association said. A rebound in activity in Canada's priciest markets, particularly British Columbia and Ontario, will juice gains.
Ottawa says housing bubble not a concern
Feb 08, 2010 — Finance Minister Jim Flaherty appears to have no immediate plans to tighten Canadian mortgage rules despite the advice of senior bankers concerned about surging home prices. Mr. Flaherty said he sees no evidence of a housing bubble in Canada. Easy access to risky mortgages was at the heart of the global financial collapse. Some are calling on Canada to err on the side of caution in ensuring the economy is protected from an American-style wave of mortgage defaults by homeowners.
Banks urge Ottawa to tighten mortgage rules
Feb 06, 2010 — Canada's top bankers are pushing the government to clamp down on the mortgage market to cool off the rise in home prices. The heads of the country's six largest banks have privately told policy makers that they fear the wide-ranging economic fallout of a U.S. style binge-and-collapse in housing. To head off any chance of that happening, they are willing to accept tighter rules on mortgages that would slow the real estate market, even though it would mean forgoing some short-term profits from giving out ever bigger mortgages as home prices jump.
The little house that went to market
Feb 05, 2010 — The micro-house, or cube, is the brainchild of James Stuart, a securities salesman who retired from the army in 1992. He wanted to build the smallest comfortable living space possible, thanks to a uniquely moveable floor that doubles as a ceiling. Mr. Stuart, an avid fan of CBC-TV's venture capital reality show Dragons' Den , is an ideas kind of guy.

Canada Mortgage & Housing Related Press Releases

Resale housing forecast extended to 2011

OTTAWA – February 8, 2010 – The Canadian Real Estate Association has revised its forecast for home sales via the MLS® Systems of Canadian real estate boards in 2010, and extended the forecast to 2011.

With Canadian economic growth rebounding from the recession, the unusually severe decline in sales activity in early 2009 is not expected to recur in 2010. Annual activity in 2010 is forecast to be well above the previous year’s level as a result.

CREA forecasts national activity will reach 527,300 units in 2010, up 13.3 per cent from 2009. This would represent a new annual record, standing 1.2 per cent above the previous peak in 2007. Low interest rates are expected to boost housing demand in the first half of the year, resulting in strong annual sales growth in nearly all provinces in 2010, led by British Columbia and Ontario.

National home sales activity is expected to remain strong in the first half of 2010, fuelled by low interest rates and homebuyers motivated to avoid the HST before it comes into effect in Ontario and British Columbia. Over the second half of the year, national activity is expected to trend downward as the last of pent-up demand is exhausted, interest rates begin rising, and the HST comes into effect in Ontario and British Columbia.

Interest rate increases will contribute to weaker national sales activity in 2011. National home sales activity is forecast to decline 7.1 per cent to 490,100 units in 2011, putting it on par with annual levels reported in 2005 and 2006.

“Although interest rates are expected to rise, they will still be low enough to keep affordability within reach for many homebuyers requiring mortgage financing, and support overall housing demand,” said CREA President Dale Ripplinger.

The national average home price is forecast to climb 5.4 per cent in 2010, reaching a record $337,500, with average price gains forecast in all provinces. The national average price increase will continue to reflect upward skewing from the rebound in activity among Canada’s priciest markets, particularly in British Columbia and Ontario.

The national average price is forecast to ease by 1.5 per cent in 2011. Modest average price gains are forecast for all provinces except British Columbia and Ontario, whose share of national activity is expected to ease. The shift in the contribution made by provinces toward national activity will continue skewing the annual comparison in the national average price in 2011.

The price trend is similar but less dramatic for the weighted national average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national average price is forecast to climb 4.8 per cent in 2010, and remain stable in 2011.

“Improved financial market stability and recovering global economic growth mean that home sales activity in 2010 is unlikely to repeat the dive it experienced in late 2008 and early 2009,” said Chief Economist Gregory Klump.

“Fiscal restraint, a strong Canadian dollar and a subdued inflation outlook point to marginal interest rate increases over the next couple of years, especially if the U.S. economic recovery proves to be weak and protracted,” said Klump.

“The Bank of Canada will need time to gauge the effect of interest rate increases on Canadian economic growth,” Klump said. “It recognizes that consumer debt burdens are running high, so it will want to gauge the impact of interest rate hikes on domestic demand and overall economic growth. Changes in interest rates impact the economy with a lag, so the timing and magnitude of interest rate hikes will be tricky, given that the Bank expects the private sector to lead economic growth once temporary government stimulus spending expires,” he added.

“The decline and subsequent rebound in sales activity for homes in the upper price spectrum in some of Canada’s priciest markets skewed average prices upward in the second half of 2009 and into 2010. This segment of housing activity in Ontario and British Columbia is expected to ease beginning in the second half of 2010, causing average prices to moderate in those provinces,” said Klump.

“A downward trend in national sales activity combined with an increase in listings will result in a more balanced market. Although builders are understandably more upbeat than they were during the depth of the recession, speculative building will likely continue to be held in check. As a result, while the real estate market will become more balanced, Canada will continue to avoid the massive realignment in housing supply and demand experienced in the U.S.”

NOTE: All statistics contained in this release are obtained through analysis of the MLS® Systems of real estate Boards across Canada.

MLS® Systems are co-operative marketing systems used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.

January Housing Starts

OTTAWA, Ontario, February 08, 2010 — The seasonally adjusted annual rate¹ of housing starts reached 186,300 units in January 2010. This is an increase from an annual rate of 176,100 units in December 2009, according to Canada Mortgage and Housing Corporation (CMHC). According to final figures, actual housing starts for 2009 totalled 149,081 units, with activity improving as the year progressed.

“Housing starts improved in both the singles and multiples segments in January,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “These increases are similar to the ones that occurred in December.”

The seasonally adjusted annual rate of urban starts increased by 4.4 per cent to 165,200 units in January. Urban multiple starts increased by 5.7 per cent to 76,300 units while single urban starts increased by 3.3 per cent to 88,900 units.

January’s seasonally adjusted annual rate of urban starts increased by 19.8 per cent in British Columbia, by 7.3 per cent in Quebec, by 2.3 per cent in Atlantic Canada, and by 1.5 per cent in the Ontario. In the Prairie region, the seasonally adjusted annual rate of urban starts decreased by 4.8 per cent.

Rural starts were estimated at a seasonally adjusted annual rate of 21,100 units in January².

As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.

¹ All starts figures in this release, other than actual starts, are seasonally adjusted annual rates (SAAR) — that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels.

² CMHC estimates the level of rural starts for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, CMHC conducts the survey in rural areas and revises the estimate.

Signs of Thaw in Corporate Attitudes Emerging, Says Governor Carney

WINNIPEG, Manitoba, February 04, 2010 — With improvements in financial conditions, economic activity, commodity prices, and confidence, the Bank of Canada anticipates that there will be a relatively modest recovery this year in business fixed investment in Canada, and an acceleration of investment spending in 2011. "The first signs of a thaw in corporate attitudes have begun to emerge," Bank of Canada Governor Mark Carney said in a speech today.

The actions of the corporate sector will be critical for the economic recovery, growth in employment, and competitiveness in Canada. As policy stimulus begins to fade, a key determinant of the pace and sustainability of Canada's recovery will be how investment and hiring intentions of businesses in all sectors evolve.

The recent global recession was the worst economic downturn since World War II, and both its speed and virulence took business by surprise, the Governor noted. In the future, global economic growth may not only be lower, but it could also be more volatile. "Canada is entering this period of adjustment with many strengths, but the efforts required of us will be historic," the Governor told the Winnipeg Chamber of Commerce.

Governor Carney acknowledged that businesses in Canada are understandably waiting for confirmation of the recovery before acting. He cautioned, however, that action will be needed. "Companies are emerging from the recession to an altered world – one that may require deeper restructuring and bolder strategic initiatives than currently contemplated," he stated.

Canada's corporate sector has advantages, the Governor observed. Domestic demand is expected to be relatively strong, providing a base of support for some sectors. Corporate balance sheets are in outstanding shape, and margins have held up very well. In addition, Canada's overall financial conditions are now contributing to, rather than retarding, the recovery.

In concluding, the Governor reaffirmed the Bank of Canada's commitment to price stability and to keeping inflation low, stable, and predictable. "Price stability lowers uncertainty, minimizes the costs of inflation, reduces the cost of capital, and creates an environment in which households and firms can invest and plan for the future," he said.

Fixed or Variable Mortgage Rate? BMO Experts Offer Their Verdict

TORONTO, Ontario, February 01, 2010 — With interest rates at a record low, a growing number of people are looking to purchase a home. Every homebuyer faces the age-old question of whether to choose a fixed or variable rate mortgage.

“The question of whether to lock in to a longer-term fixed mortgage rate or stay in a variable rate has become an increasingly complex and important debate,” said Doug Porter, Deputy Chief Economist, BMO Capital Markets. “Short-term rates are at historic lows and pressure is likely to build for higher rates in the year ahead.”

Research shows that over the past 30 years it has been more cost-effective for borrowers to have a variable rate mortgage 82 per cent of the time. However, under the current environment, Porter points out there are a number of factors to consider before assuming the variable rate is the hands-down winner:

A conventional fixed rate mortgage can mitigate a number of risks. Although inflation has not been a problem since 1991, there is a risk of an inflation flare-up as global central banks keep the pedal to the policy metal, and amid record government deficits. The Bank of Canada could be forced to raise interest rates aggressively, driving variable mortgage rates higher, but leaving Canadians with fixed rates relatively unscathed. Plus, fixed rates are currently very attractive given that short-term rates are already as low as they can go.

The advantage to a variable rate mortgage is that it has been consistently less costly over time. As well, the current outlook for inflation remains benign, which will likely keep price pressures at bay well into 2011. The soaring Canadian dollar is putting additional downward pressure on prices, reducing the near-term need for the Bank of Canada to raise rates. There is also some risk to locking in as fixed rates could fall if the economy performs worse than anticipated. Even as rates start to rise, Canadians can always lock into a fixed rate at a later date.

The decision depends on the individual. For those who do not have a lot of financial flexibility – such as first-time home buyers and those who would run into difficulty from an upswing in interest rates – the moderate extra cost of peace of mind you can get from a fixed rate may be a price worth paying. There is also a reasonable scenario where fixed rates may actually prove to be a cheaper alternative at this point. That’s particularly the case given some recent cuts in long-term fixed rates, such as BMO’s current special rate of 4.09 per cent for a five-year fixed mortgage. BMO Economics’ view is that variable rates will climb only moderately, but by enough to tilt the balance in favour of current fixed rates.

“The most important thing a current or first-time homeowner can do is talk to a knowledgeable mortgage expert about their situation and make decisions based on their particular circumstances,” said Jane Yuen, Senior Manager, Mortgages, BMO Bank of Montreal. “So come in to a branch or contact a mortgage expert to decide on the type of mortgage that is best for you at this point in your life.”

Current Press Releases and Mortgage News

Lowest Mortgage Rates