27 Mar

Fairness for every generation

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Posted by: Dean Kimoto

Posted on: https://www.pm.gc.ca/en/news/news-releases/2024/03/27/fairness-every-generation

 

Everyone deserves to succeed. But today, for too many younger Canadians, doing as well as your parents or better – doesn’t seem possible. The middle-class dream feels out of reach. Your hard work isn’t paying off like it did for previous generations. Your paycheque doesn’t go as far as costs go up, and saving enough to go after your dreams seems harder and harder. It doesn’t have to be this way. Everyone deserves a fair shot at success.

One of the biggest pressures on young people right now is housing. This is particularly true for renters – where it feels like the deck is stacked against them. They are facing skyrocketing rents, renovictions, unfair competition, and a lack of housing options. While we’ve taken bold action to build more homes, faster, improve access to housing, and make homes more affordable, we know there is more to be done.

The Prime Minister, Justin Trudeau, today announced measures from the upcoming Budget 2024 to make the playing field fairer for renters and make it easier for them to become homeowners.

These measures include:

  • Launching a new $15 million Tenant Protection Fund. This would provide funding to legal aid and tenants’ rights advocacy organizations to better protect tenants against unfairly rising rent payments, renovictions, or bad landlords.
  • Creating a new Canadian Renters’ Bill of Rights, developed and implemented in partnership with provinces and territories. This would require landlords to disclose a clear history of apartment pricing so renters can bargain fairly. We will also crack down on renovictions, create a nationwide standard lease agreement, and give renters more agency.
  • Making sure renters get credit for on-time rent payments. Renters deserve credit for the money they put toward rent over the years, especially when it comes time to apply for a mortgage for their first home. We’re going to amend the Canadian Mortgage Charter and call on landlords, banks, credit bureaus, and fintech companies to make sure that rental history is taken into account in your credit score.

This is about protecting renters. But this is also about generational fairness – making sure Millennials and Gen Z, who are most likely to rent, get a level playing field in the rental market. This is just one of the things that we are going to be doing in this budget to build an economy that is fair for every generation. Alongside these measures, we’re building more homes faster, making life more affordable, and creating good jobs, to make sure every generation can get ahead. We will relentlessly fight for Canadians – taking concrete action to strengthen the middle class and make life better for everyone.

Quotes

“It’s too hard to find an affordable place to rent, especially for younger Canadians. That’s why in Budget 2024, we’re taking action to protect renters, make the rental market fairer, and open new pathways for renters to become homeowners. Let’s make sure renters count.”

The Rt. Hon. Justin Trudeau, Prime Minister of Canada

“Renters are facing rising rents across the country, and they need support today. Budget 2024 will take action to deliver generational fairness, help renters – who are increasingly younger Canadians – become homeowners, and ensure they aren’t alone when they have to defend their right to a place to call home. Renters deserve credit for the money they put toward rent over the years. We’re helping them get credit for rental payments so they can qualify for a mortgage, or even a lower rate, sooner and unlock the door to their first home.”

The Hon. Chrystia Freeland, Deputy Prime Minister and Minister of Finance

Quick Facts

  • The Government of Canada’s Budget 2024 will be tabled in the House of Commons by the Deputy Prime Minister and Minister of Finance on Tuesday, April 16, 2024.
  • The measures outlined above build on the progress we have already made to help renters become homeowners, address the unique challenges they face, and build more rental housing across Canada, including:
    • Launching the Tax-Free First Home Savings Account, which is already helping over 500,000 Canadians save faster for their first downpayment.
    • Removing the Goods and Services Tax (GST) from new rental housing to incentivize the construction of more apartment buildings, student housing, and seniors’ residences built for long-term rental accommodation.
    • Unlocking $20 billion in new financing to support up to 30,000 more rental apartments per year by increasing the annual limit for Canada Mortgage Bonds from $40 billion to up to $60 billion.
    • Helping low-income Canadians with the cost of housing by delivering direct rent support through the Canada Housing Benefit, an initiative jointly funded and co-developed with provinces and territories. The federal government recently announced a $99 million top-up to this benefit to make rent more affordable for Canadians. By 2027-28, the Canada Housing Benefit is expected to have helped over 300,000 low-income households with the cost of rent.
  • Canada’s economic plan is to build more homes faster and to make housing more affordable. This plan also includes:
    • The Apartment Construction Loan Program, a $40+ billion initiative that boosts the construction of new rental homes by providing low-cost financing to homebuilders. Since 2017, the Apartment Construction Loan Program has committed over $17 billion in loans to support the creation of more than 48,000 new rental homes. It is on track to build 101,000 new rental homes across Canada by 2031-32.
    • The Affordable Housing Fund, a $14+ billion initiative that supports the creation of new market and below-market rental housing and the repair and renewal of existing housing. It is designed to attract partnerships and investments to develop projects that meet a broad spectrum of housing needs, from shelters to affordable homeownership. As of December 31, 2023, the Fund has committed $8+ billion to repair or renew over 150,000 homes and support the construction of more than 32,000 new homes.
    • The Housing Accelerator Fund, a $4 billion initiative that encourages municipalities to incentivize building by making transformative changes, such as removing prohibitive zoning barriers. To date, the federal government has signed 179 Housing Accelerator Fund agreements which, combined, will fast-track an estimated total of over 750,000 housing units across the country over the next decade.
    • The Rapid Housing Initiative, a $4 billion fund that is fast-tracking the construction of 15,500 new affordable homes for people experiencing homelessness or in severe housing need by 2026. The Rapid Housing Initiative also supports the acquisition of existing buildings for the purpose of rehabilitation or conversion to permanent affordable housing units, focusing on the housing needs of the most vulnerable, including people experiencing or at risk of homelessness, women fleeing domestic violence, seniors, Indigenous Peoples, and persons with disabilities.
  • Progress on these and other programs and initiatives under Canada’s National Housing Strategy are updated quarterly at www.placetocallhome.ca. The Housing Funding Initiatives Map shows affordable housing projects that have been developed.
  • Since 2015, the federal government has helped almost two million Canadians find a place to call home.
22 Mar

What You Need to Know About Smart Homes!

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Posted by: Dean Kimoto

Technology is constantly evolving and adapting to our needs as a society and individuals. One of these exciting developments has been the creation and evolution of smart homes.

WHAT IS A SMART HOME?

A smart home is any home where the homeowners are able to control thermostats, lighting, appliances and other devices remotely over the internet through a smartphone or tablet. These can be set up through wired or wireless systems, allowing you full control wherever you are.

BENEFITS OF SMART HOMES

  • Easy Home Management: One of the biggest and most appealing aspects of a smart home is the easy home management it provides. The integrated systems not only give you full control over every smart aspect of your home, but also allows you to view insights and data, which can help you analyze daily habits and energy use.
  • Energy Savings: Smart homes provide opportunity for extensive energy efficiency and cost savings, depending on how you use the technology. Precise control over heating and cooling systems allows the system to learn your schedule and set preferences for the highest energy efficiency outcome. In addition, you can manage lighting to turn on and off at specified times to prevent energy waste. In addition, these homes are often stocked with top of the line appliances and electronics, with improved energy efficiency leading to further cost savings.
  • Increase Appliance Functionality: Using smart appliances and electronics allows you to get even more out of these household tools. For instance, a smart oven can help you cook your chicken to perfection and a built-in audio system can provide the perfect atmosphere to any party. Plus, connecting your appliances and other systems will improve automation and give you even more to love about your home.
  • Flexibility: With the ever-changing smart home technology, this affords you greater flexibility when it comes to your home and your changing needs.Smart homes are typically highly flexible, allowing you to easily swap out old models for updated versions, or to install new technology seamlessly.
  • Improved Home Security: Incorporating security and surveilliance features, such as cameras, into your smart home network will help you maximize your home security. There are various options for home automation systems containing motion detectors, automated locks and surveillance cameras so that you always know what is going on. You can even set it to receive security alerts in real time!
  • Growing Industry: Another advantage to smart homes is that this is a growing industry with technology that is constantly being worked on and improved. This means bigger and smarter tech will be available in the coming years, allowing for even greater cost savings, automation and control.

CONSIDERATIONS FOR SMART HOMES

I bet you are probably pretty excited now that you know what smart homes can do! However, before you jump in there are a couple considerations to keep in mind.

  1. How much automation do you want/need?
  2. What systems are most important to you (lighting, audio, climate, security, etc)?
  3. What is your budget?
  4. What are your future plans?

With the right preparation, a smart home can be a dream come true. It is important to understand how much technology you are comfortable with, and what systems are most important to you, so that you can create a plan and a budget to upgrade your current home – or so you know what to look for when you begin shopping.

Smart technology has come a long way! Smart homes are already incredibly intuitive and automated, with more technology and advancements to come. While some of us will always remain the “labor of love” type, many of us have less time and energy than we used to. Smart homes not only help save you money, but time and energy too so you can focus on more important things.

21 Mar

Bank of Canada’s Governing Council divided over timing of future rate cuts

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Posted by: Dean Kimoto

While conditions for rate cuts are expected to materialize over the course of the year, the Bank of Canada itself appears divided over when exactly these conditions will be met.

That’s according to the latest summary of deliberations from the Bank of Canada’s March 6 monetary policy meeting, where its six-member Governing Council unanimously voted to leave the benchmark rate unchanged at 5.00%.

They agreed that if the economy performs in line with expectations, “the conditions for rate cuts should materialize over the course of this year.”

However, the summary of deliberations revealed a “diversity of views” among members as to “when there would likely be enough evidence that these conditions were in place, and how to weight the risks to the outlook.”

As the Bank has communicated repeatedly, members agreed that they need to see a “further and sustained” easing in underlying inflation towards its neutral 2% target. On top of that, they said they would also be considering the balance of supply and demand in the economy, corporate pricing behaviour, wage growth and inflation expectations.

The Bank’s latest data show early signs that wage growth is moderating, and that corporate pricing bahaviour is “gradually normalizing.”

Inflation is easing, but upside risks remain

The members said a key risk to their outlook is that inflation remains “more persistent than expected,” adding that the Bank’s preferred measures of core inflation had “yet to show much downward momentum.”

However, these discussions were prior to February inflation data that was released Tuesday, in which both headline and core inflation measures slowed more than expected.

The data from Statistics Canada showed headline inflation eased to 2.8% from 2.9% in January. The Bank’s preferred measures of core inflation, which strip out food and energy prices, also came in lower than expected, with CPI-median easing to 3.1% (from 3.3% in January) and CPI-trim falling to 3.2% from 3.4%.

Given slowdown in inflation and data pointing to a quickly slowing economy, markets and economists largely expect the Bank of Canada can begin cutting interest rates by its June meeting.

While the Bank’s Governing Council said the current level of monetary policy is “doing its work” to slow economic growth and ease price pressures, they warned that future progress on inflation is likely to be “gradual and uneven.”

 

This article was written for Canadian Mortgage Trends by:

18 Mar

Homeowners, realtors should take steps to protect against title fraud: experts

Latest News

Posted by: Dean Kimoto

It’s been years since you finished paying off your mortgage, so the letter in the mail from a bank saying you’re in default and now owe money comes as a shock.

Not only did you not take out another mortgage on your property, you’ve never even dealt with that bank before. Yet the documents you’re presented with say otherwise.

At this point, you realize you may have been the victim of fraud.

The chances of that scenario playing out may seem far-fetched, but experts say title and mortgage fraud are fast growing in Canada and homeowners should take steps to protect their properties — and their identities.

Title fraud refers to when the ownership or title of a property is fraudulently changed or documents are forged to allow a fraudster to illegally sell or refinance the property.

The issue gained prominence last year amid two Toronto police investigations in which homes were allegedly listed for sale without the owners’ knowledge, including one where the home was sold.

While those were “extreme” cases, more common is mortgage fraud, where fraudsters obtain a mortgage from a lender under false pretenses, said Daniel La Gamba, a real estate lawyer and partner at LD Law LLP.

La Gamba said a typical case of such fraud involves the perpetrator stealing the identity of a legitimate homeowner — using a fake ID, job letter, credit report or references — to obtain a mortgage through a bank.

If the bank is convinced of the person’s identity, it will advance them the funds for the mortgage, only to find the false owner hasn’t made any payments on it months later.

“Even with all the safeguards in place … fraudsters are getting quite sophisticated in their ability to replicate ID, steal identity,” said La Gamba.

“Sometimes, we’re really left with only our gut feeling. If something doesn’t smell right, then we start digging and asking a few more questions.”

When the true owner receives the bank’s letter demanding that payment, setting off alarms they’ve been defrauded, it can be a “stressful and very costly burden” of proving they’ve been the victim of fraud and shouldn’t be required to pay that mortgage, La Gamba said.

He said the most cost-effective defence for the homeowner is if they already have title insurance — the premium for which typically costs around $900 for a $1 million property, and which covers the entire period of ownership.

“If you have title insurance, they basically step into your shoes and take whatever steps are required to rectify the matter,” he said.

“If you don’t have title insurance, that’s when you’re on your own … and it will be a very costly and time-intensive endeavour.”

Newcomers, seniors most vulnerable

Title insurance companyFCT estimates at least one attempted title or mortgage fraud takes place every four business days. In the past two to three years, the company has refused to insure $539 million worth of mortgages and transfers “on the basis that they were too suspicious for us,” said John Tracy, senior legal counsel at FCT Canada.

He said the reason the real estate sector is such a growing area of focus for fraudsters is simple: “The payoff is huge.”

“Compared to getting a credit card in my name — you might get $10,000 worth of stereo stuff or gift cards. But if you can steal my ID and mortgage my house, the payoff is a magnitude of times bigger.”

Experts say the most common targets of title or mortgage fraud attempts include newcomers to Canada, who are particularly vulnerable if they face language barriers, as well as seniors.

“Generally speaking, fraudsters really like to target homes that are mortgage-free,” said La Gamba.

“The elderly tend to be targeted quite frequently in this scenario. They’ve had the home for 20, 30-plus years, their mortgages are paid off in full.”

Daniela DeTommaso, president at FCT Canada, said the company began tracking attempts at title fraud in 2010, seeing a 70 per cent increase in the first 10 years. She said that rate likely accelerated during the pandemic as reliance on remote technology and digital verifications increased.

“Technology is a fabulous thing, but it’s also created the ability for fraudsters to duplicate identity in a way that, to even a trained eye, is almost impossible to catch,” she said.

“For $5,000, you can buy a printer that can pretty much replicate a piece of identification.”

DeTommaso said FCT monitors “a moving target” of potential red flags. The organization employs a certified fraud examiner and teams of underwriters “whose sole job it is to really look for some of these red flags,” she said.

“As good as our underwriters are, there are schemes that are always one step ahead, so we are now partnering with a company where we’re leveraging digital identity verification that actually goes beyond a physical review of a document,” she said.

Ontario brokers required to monitor for red flags

Last fall, the Financial Services Regulatory Authority of Ontario released guidance aimed at combating mortgage fraud, which set out requirements for brokers “to conduct business in a manner that does not facilitate dishonesty, fraud or any other illegal conduct.”

The guidance included obligations such as monitoring for increased warning signs of potential fraud. It also recommended the use of multi-factor authentication as the best practice for identity verification.

“From our perspective, what a broker needs to be able to demonstrate is that they have taken reasonable steps to identify fraud and that would include … to verify the identity of a client, verify the client actually has the authority to mortgage a property,” said Antoinette Leung, FSRA’s head of financial institutions and mortgage brokerage conduct.

“Anyone who notices these red flags should be following up and looking into them.”

She said red flags could include a person’s name linked to the title of a property looking slightly different from what’s listed on their ID or utility bill. The guidance also highlighted employment letters, which should be cross-referenced to ensure the mortgage applicant’s employer does actually exist and that they work there.

FSRA, which has authority to regulate and sanction licensed mortgage brokerages, brokers, agents and administrators, warns it may take enforcement action if it receives credible information about potential fraud or failure to comply with the law and its regulations.

“If you’re facilitating fraud, and there is no way for you to see evidence that suggests otherwise, then (brokers) will have to step away from that transaction,” Leung said.

 

This article was written for Canadian Mortgage Trends by Sammy Hudes

12 Mar

Home sales up in major metro areas as buyers bet on rate cuts later this year

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Posted by: Dean Kimoto

Homebuyer sentiment appears to be improving across the country with major real estate boards reporting an increase in sales activity in February.

On an annual basis, February home sales were up by double digits in Toronto (+18%), Vancouver (+14%), Montreal (+30%), Calgary (+22%) and Ottawa (+17%).

While Toronto activity was down by 12% on a seasonally adjusted monthly basis, the Toronto Regional Real Estate Board (TRREB) noted that monthly data can be volatile, “especially when the market is approaching a transition point.”

While activity remains low compared to historical norms—in Vancouver, for example, sales are 23.3% below its 10-year average—real estate boards say sentiment is improving among both buyers and sellers, leading to overall higher sales and more listings hitting the market.

“We have recently seen a resurgence in sales activity compared to last year,” noted TRREB President Jennifer Pearce. “The market assumption is that the Bank of Canada has finished hiking rates [and] consumers are now anticipating rate cuts in the near future.”

In Calgary, continued strong activity led to a 15% decline in active listings. “Purchasers are acting quickly when new supply comes onto the market, preventing inventory growth in the market,” said Ann-Marie Lurie, chief economist at the Calgary Real Estate Board.

Home sales expected to pick up throughout the year

In addition to potential interest rate cuts on the horizon later this year, continued strong population growth and the ongoing supply-demand imbalance are expected to lead to stronger housing activity over the course of the year, experts say.

“I continue to believe that we’ll see a pretty good spring market due to improving sentiment,” analyst Ben Rabidoux of Edge Realty Analytics wrote in his newsletter to clients.

He pointed to not only a rise in overall consumer confidence as measured in weekly surveys by Bloomberg and Nanos, but specifically improved sentiment towards real estate.

“We think a pivot towards rate cuts mid-year will get the wheels turning faster over the second half—perhaps even sooner,” Robert Hogue of RBC Economics wrote recently.

“There will be a lot of pent-up demand to satisfy once confidence returns, which could heat things up in a hurry,” he added. “However, poor affordability conditions will restrain the recovery and make it a gradual liftoff.”

Regional housing market roundup

Here’s a look at the February statistics from some of the country’s largest regional real estate boards:

QUICK LINKS:

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Greater Toronto Area

Toronto real estate market
February 2024 YoY % Change
Sales 5,607 +17.9%
Benchmark price (all housing types) $1,108,720 +1.1%
New listings 11,396 +33.5%
Active listings 11,102 +15.1%
Source: Toronto Regional Real Estate Board (TRREB)

“As we move through 2024, an increasing number of buyers will re-enter the market with adjusted housing preferences to account for higher borrowing costs,” said TRREB Chief Market Analyst Jason Mercer.

“In the second half of the year, lower interest rates will further boost demand for ownership housing,” he added. “First-time buying activity will also be a contributing factor, as many renters look to trade high monthly rents for a long-term investment in which they can live and build equity.”


Greater Vancouver Area

Vancouver housing market
February 2024 YoY % Change
Sales 2,070 +13.5%
Benchmark price (all housing types) $1,183,300 +4.5%
New listings 4,560 +31.1%
Active listings 9,634 +16.3%
Source: Greater Vancouver Realtors (GVR)

“While the pace of home sales started the year off briskly, the pace of newly listed properties in January was slower by comparison,” said Andrew Lis, Director of Economics and Data Analytics at Greater Vancouver Realtors, formerly the Real Estate Board of Greater Vancouver.

“A continuation of this pattern in February would have been concerning, as it could quickly tilt the market towards overheated conditions,” he added.


Montreal Census Metropolitan Area

Montreal housing market
February 2024 YoY % Change
Sales 3,843 +30%
Median Price (single-family detached) $550,000 +7%
Median Price (condo) $395,000 +4%
New listings 6,769 +32%
Active listings 18,110 +18%
Source: Quebec Professional Association of Real Estate Brokers (QPAREB)

“This is the first time since 2004 that we have seen a surge in new listings of over 36 per cent in a month of February,” said Charles Brant, QPAREB Market Analysis Director.

“More homeowners are counting on the imminent drop in interest rates to put their property up for sale,” he added. “Moreover, increasing numbers have no choice but to put their property up for sale, as they are squeezed by monthly mortgage payments which are at unsustainable levels in a much less favourable economic context.”

Calgary

Calgary housing market
February 2024 YoY % Change
Sales 2,135 +22.8%
Benchmark price (all housing types) $585,000 +10.3%
New listings 2,711 +13.6%
Active listings 2,355 -14.2%
Source: Calgary Real Estate Board (CREB)

“Purchasers are acting quickly when new supply comes onto the market, preventing inventory growth in the market,” said CREB Chief Economist Ann-Marie Lurie. “It is this strong demand and low supply that continues to drive price gains in Calgary. The biggest supply challenge is for homes priced under $500,000, which saw inventories fall by 31% compared to last February.”


Ottawa

Ottawa housing statistics
February 2024 YoY % Change
Sales 629 +16.5%
Benchmark price (all housing types) $628,500 +2.8%
New listings 1,539 +29.5%
Active listings 2,158 +16.3%
Source: Ottawa Real Estate Board (OREB)

“Even with higher prices and the interest rate holding steady, Ottawa is a strong, active market,” said OREB President Curtis Fillier. “With metrics across the board up from last year, it’s clear both buyers and sellers are making moves. The metrics, however, don’t tell us about all the people relegated to the sidelines because affordability remains out of reach for many.”

 

This article was written for Canadian Mortgage Trends by:

6 Mar

No Recession In Canada, As Q4 GDP Growth Rose 1%

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Posted by: Dean Kimoto

Still no recession in Canada thanks to huge influx of immigrants

Real gross domestic product (GDP) rose a moderate 1.0% (seasonally adjusted annual rate), a tad better than expected and the Q3 contraction of -1.2% was revised to -0.5%. This leaves growth for 2023 at a moderate 1.1%. Monthly data, also released today by Statistics Canada, showed that December came in flat, well below the robust flash estimate, while the January preliminary estate was a strong +0.4% (subject, of course, to revision). The January uptick was driven by the return of Quebec public servants and a mild winter.

The fourth quarter growth was fuelled by higher oil exports and was moderated by a significant decline in business investment. Housing investment declined again in Q4–a sixth decline in the last seven quarters. Despite increased activity in Q4 new residential construction and renovations, it was more than offset by a large drop in home ownership transfer costs, reflecting the weakening resale market across Canada. Single-family units and apartments led the rise in new construction, as all provinces and territories, except Prince Edward Island, post a rise in housing starts.

Investment in non-residential structures fell sharply, as did spending on machinery and equipment, especially on aircraft and other transportation equipment. Even government spending declined.

Bottom Line
This is the last major economic release before the Bank of Canada meets again on March 6. The central bank will hold interest rates steady at next week’s meeting, and while some are suggesting the first rate cut this cycle will be as soon as the April confab, the consensus remains at June. With the uptick in growth in Q4, there is no urgency for the Bank to ease.

Policymakers will wait for their favourite core inflation measures to fall within the 1%-to-3% target band. They know that GDP per capita is falling and that mortgage renewals at higher interest rates will dampen household discretionary income. That’s why a June rate cut is widely expected.

Please Note: The source of this article is from SherryCooper.com/category/articles/
27 Feb

The latest in mortgage news: BC government unveils details of its proposed home-flipping tax

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Posted by: Dean Kimoto

The British Columbia government today unveiled additional details of its proposed house flipping tax that was first introduced in last week’s budget.

The government said it plans to introduce the legislation in the spring. If passed, the new tax will take effect starting January 1, 2025.

The legislation would impose a tax on any home sold within two years from its purchase date, but includes exemptions for people facing “unavoidable life changes,” including death, divorce and job relocation or loss.

According to government figures, 7% of homes bought between 2020 and 2022 were resold within two years.

Homes sold within the first year that don’t fall under any of the exemptions would face a tax of 20% on the profits, with that rate falling progressively to zero over the second year.

“We know that people are struggling to find homes to rent or buy in areas that are close to work and their families,” Minister of Finance Katrine Conroy said in a statement. “That’s why Budget 2024 takes further steps to deliver more housing for people faster and make sure homes are lived in.”

The proposed new tax accompanies other measures introduced in last week’s budget, including:

  • Expansion of the First Time Homebuyers’ Program: First-time buyers of homes valued up to $835,000 will benefit from a property transfer tax exemption on the first $500,000 of their purchase price, with potential savings reaching $8,000. The government said this new exemption will benefit approximately 14,500 people, or about twice as many under previous exemptions.
  • Newly built home exemption: To encourage the purchase of new constructions, buyers of homes valued up to $1.1 million will benefit from the newly-built home exemption. This is an increase from the current $750,000 limit.
  • Rental home construction exemption: To lower the cost and encourage the construction of more rental units, eligible purpose-built rental buildings of four or more units will also receive a property transfer tax exemption that will run from January 1, 2025, until 2030.

Desjardins no longer offering mortgages for homes in certain flood zones

Desjardins Group has made changes to its underwriting guidelines and will no longer offer mortgages for properties that fall within certain flood zones.

According to media reports, parts of Île-Bizard and Île-Mercier in Quebec, which saw severe flooding in 2017 and 2019, will be impacted by the credit union’s decision.

“The impacts of climate change, including water damage, are growing in importance and causing substantial damage,” Desjardins said in a statement.

Buyers of properties where the seller already has a Desjardins mortgage will still be able to obtain financing for up to 65% of the loan if proper flood-protection measures are in place, according to media reports.

Quebec homebuying intentions remain strong despite economic challenges: survey

Homebuying intentions remain high in Quebec despite high interest rates and a challenging economy, according to the results of a new survey by Léger for the Société d’habitation du Québec (SHQ) and the Québec Professional Association of Real Estate Brokers (QPAREB).

The survey found that 22% of Quebecers are planning to purchase a property within the next five years, up slightly from the previous year. For younger households between the ages of 18 and 34, 49% say they expect to purchase in the next five years, up from 47% in 2022 a year earlier.

The expected average purchase price is $440,000, up 34% since 2020. “Households are therefore very aware of rising property prices in Quebec, but are nevertheless resigned to dealing with these prices and are hoping for a drop in interest rates before they consider taking action,” Charles Brant, QPAREB’s Market Analysis Director, said in a release.

However, the sharp rise in interest rates has made it more challenging to remain a homeowner, the survey found, with just 72% of Quebecers feeling they could meet their financial obligations in 2023, down from 86% in 2021.

Single-family homes are the preferred property choice, representing 81% of buying intentions. Intentions to purchase condos remain stable at 14%, despite a rise in purchase prices and a sharp 20% increase in condo fees over the past two years.

The survey of 4,162 people found that only 14% of homeowners are looking to sell in the next five years, pointing to a continued tightening of the already limited supply of housing.

This supply-demand imbalance has also trickled into the rental market, pushing average rent prices to $963 in 2023 from $862 in 2021, according to the survey.

Mortgage arrears held steady in November

Canada’s national arrears rate held steady in November, according to data from the Canadian Bankers Association.

The arrears rate, which tracks mortgages that are behind payments by three months or more, was unchanged at 0.17%. That works out to just over 8,560 mortgages in arrears out of a total of over 5.05 million.

This is well below the highs seen during the pandemic, when the arrears rate reached a peak of 0.27% in June 2020. The rate is highest in Saskatchewan (0.57%) and Alberta (0.33%), and lowest in British Columbia (0.13%) and Ontario (0.11%).

Real estate professionals saw revenues plunge in 2022: StatCan

Revenue from real estate agents and brokers fell by over 20% in 2022 in the wake of higher borrowing costs brought on by the Bank of Canada’s rate hikes, which took the key overnight target rate from 0.25% in January to 4.25% in December.

Recent figures from Statistics Canada show operating revenues from real estate agents and brokers fell to $20.9 billion in 2022, down 22.8% from $26.7 billion in 2021.

The declines in revenue were seen in almost all provinces, led by British Columbia and Ontario, which saws declines of 25.9% and 27.3%, respectively. Alberta was the only province to see revenues rise, which were up 5% from 2021 to 2022.

“Operating revenue in the real estate agents and brokers industry is expected to continue to decline in 2023, as most real estate associations reported continuing weakness in both residential home resale transactions and home prices across Canada,” the StatCan report noted. “The industry also faced affordability challenges because the cost of borrowing continued to increase in 2023.”

 

This article was written for Canadian Mortgage Trends by:

20 Feb

Great News On The Inflation Front Cause Big Bond Rally

General

Posted by: Dean Kimoto

Canadian inflation falls to 2.9% in january, boosting rate cut prospects

The Consumer Price Index (CPI) rose 2.9% year-over-year in January, down sharply from December’s 3.4% reading. The most significant contributor to the deceleration was a 4% decline in y/y gasoline prices, compared to a 1.4% rise the month before (see chart below). Excluding gasoline, headline CPI slowed to 3.2% y/y, down from 3.5% in December.

Headline inflation of 2.9% marks the first time since June that inflation has moved into the Bank of Canada 1%-to-3% target band and only the second time to breach that band since March 2021.

Grocery price inflation also decelerated broadly in January to 3.4% y/y, down from 4.7% in December. Lower prices for airfares and travel tours also contributed to the headline deceleration. Prices for clothing and footwear were 1.3% lower than levels from a year ago, potentially reflecting the discounting of winter clothing after a milder-than-usual winter in much of the country.

The shelter component of inflation remains by far the largest contributor to annual inflation. The effect of past central bank rate hikes feeds into the CPI with a lag. The y/y growth in mortgage interest costs edged lower in January but still posted a 27.4% rise and accounted for about a quarter of the total annual inflation. Inflation, excluding mortgage costs, is now at 2.0%. Home rent prices continue to rise, but another component under shelter – homeowners’ replacement costs inched lower on slower house price growth.

On a monthly basis, the CPI was unchanged in January, following a 0.3% decline in December. On a seasonally adjusted monthly basis, the CPI fell 0.1% in January, the first decline since May 2020.

The Bank of Canada’s preferred core inflation measures, the trim and median core rates, exclude the more volatile price movements to assess the level of underlying inflation. The CPI trim slowed three ticks to 3.4%, and the median declined two ticks to 3.3% from year-ago levels, as shown in the chart below.

Notably, the share of the CPI basket of goods and services growing at more than 5% has declined from the peak of 68% in May 2022 to 28% in January 2024.

Bottom Line

The next meeting of the Bank of Canada Governing Council is on March 6. While January’s inflation report was better than expected and shows that the breadth of inflation is narrowing, it is still well above the level consistent with the 2% inflation target.

Shelter inflation will remain sticky as higher mortgage rates over the course of last year filter into the index and the acute housing shortage boosts rents.

The Bank of Canada will remain cautious in the face of still-high wage gains and core inflation measures above 3%. I hold to my view that the Bank will begin cutting rates in June.

Please Note: The source of this article is from SherryCooper.com/category/articles/
12 Feb

Latest in mortgage news: 50% of Canadians say high interest rates are negatively impacting their love life

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Posted by: Dean Kimoto

As Cupid readies his arrows for Valentine’s Day, a new survey has uncovered that high interest rates are taking their toll on Canadians’ romantic life.

Nearly half of respondents said higher mortgage or rent payments have (35.2%) or may have (14%) negatively impacted their love life in the past 12 months, according to the survey commissioned by 360Lending.

And it’s not just romance that higher shelter costs are impacting. Asked how they’re able to afford their mortgage, a quarter of respondents (24%) said they aren’t travelling and 17% said they aren’t going out. Another 11% said they have cancelled their streaming services, such as Netflix.

“We’re seeing that higher mortgage rates are seriously costing Canadians love, relationships and generally joy,” said Ringo So, mortgage agent and managing partner of 360Lending.

However, the survey also found many are willing to spend less on romance if it meant being able to afford a down payment on a house or condo, with almost half of Canadians (45%) prioritizing homeownership over ‘being in love.’

Mortgage arrears rate held steady in November

Canada’s national arrears rate was unchanged in November, according to data from the Canadian Bankers Association.

The arrears rate, which tracks mortgages that are behind payments by three months or more, was 0.17%, unchanged from October. That works out to just 8,560 mortgages in arrears out of a total of over 5.05 million.

This is well below the highs seen during the pandemic, when the arrears rate reached a peak of 0.27% in June 2020, but also up from the all-time low of 0.14% reached in 2022.

 

With interest rates still at record-high levels and an estimated $600 billion worth of mortgage rates coming up for renewal this year and next, expectations are for arrears to continue rising to more historical levels.

Improving consumer outlook suggests GDP rise in 2024: Nanos

Consumer confidence moved upward this week along with forward-looking expectations, according to a weekly survey by Bloomberg and Nanos.

The Expectations Sub-indice, which projects into the future, reached 51.46—its highest level since May 2022. Four weeks ago it was at 49.25.

“Based on the past track record of the index as a leading indicator, this suggests a likely GDP lift in the latter part of 2024,” noted Nik Nanos, Chief Data Scientist.

Looking at specific measures of consumer confidence, sentiment on the Canadian economy deteriorated compared to last week, while sentiment towards personal finances, job security and real estate all improved.

 

This article was written for Canadian Mortgage Trends by:

24 Jan

Bank of Canada maintains policy rate, continues quantitative tightening

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Posted by: Dean Kimoto

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5¼% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening.

Global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the United States has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment. In the euro area, the economy looks to be in a mild contraction. In China, low consumer confidence and policy uncertainty will likely restrain activity. Meanwhile, oil prices are about $10 per barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have eased, largely reversing the tightening that occurred last autumn.

The Bank now forecasts global GDP growth of 2½% in 2024 and 2¾% in 2025, following 2023’s 3% pace. With softer growth this year, inflation rates in most advanced economies are expected to come down slowly, reaching central bank targets in 2025.

In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. Consumers have pulled back their spending in response to higher prices and interest rates, and business investment has contracted. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around 4% to 5%.

Economic growth is expected to strengthen gradually around the middle of 2024. In the second half of 2024, household spending will likely pick up and exports and business investment should get a boost from recovering foreign demand. Spending by governments contributes materially to growth through the year. Overall, the Bank forecasts GDP growth of 0.8% in 2024 and 2.4% in 2025, roughly unchanged from its October projection.

CPI inflation ended the year at 3.4%. Shelter costs remain the biggest contributor to above-target inflation. The Bank expects inflation to remain close to 3% during the first half of this year before gradually easing, returning to the 2% target in 2025. While the slowdown in demand is reducing price pressures in a broader number of CPI components and corporate pricing behaviour continues to normalize, core measures of inflation are not showing sustained declines.

Given the outlook, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Bank’s balance sheet. The Council is still concerned about risks to the outlook for inflation, particularly the persistence in underlying inflation. Governing Council wants to see further and sustained easing in core inflation and continues to focus on the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.

Information note

The next scheduled date for announcing the overnight rate target is March 6, 2024. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on April 10, 2024.

 

This press release was published on the Bank of Canada website, CLICK HERE for the original article.