10 Apr

Bank of Canada update and expected rate drop

General

Posted by: Donna White

https://www.bankofcanada.ca/2024/04/fad-press-release-2024-04-10/?utm_campaign=BoC%20Announcements&utm_medium=email&_hsenc=p2ANqtz–Kk1TQgSodakGBT9jTRc7r8Y6nnR54M2DAYPwmugVWgY_OnZjIZZIDshzo8uhitQQvCEw8bfTQChxv0RFk37lse-o47Q&_hsmi=302041120&utm_content=302041120&utm_source=hs_email

15 Mar

How Bond Yields effect Fixed Mortgage Rates

General

Posted by: Donna White

The Bank of Canada (BoC) left its overnight rate unchanged last week. The US and Canadian yield curves have risen slightly for most maturities.

**The above chart reflects rates as of 9:30AM Eastern, 2024-03-13.**

 

THE IMPACT ON MORTGAGE RATES:

Shorter term mortgage rates will be remain higher than long term rates as a result of the inverted yield curve. That’s why variable-rate and short-term fixed rates are higher than 5-year fixed rates.

 

As a Mortgage Professional, I keep a watch on bond yields. They predict the movement of mortgage rates. For example, if the 5-year bond yield rises, you can expect the 5-year fixed-rate to increase.
27 Feb

Report on Housing in Canada – First National Financial LP Feb 26/24

General

Posted by: Donna White

“A dollar don’t buy what it used to.”  And even a million of them is still not enough according to some Canadian house hunters.

Royal LePage is out with its latest Million Dollar Properties Report.  It suggests more than 20% of Canadians feel that $1 million is not enough to buy a home that meets their needs in the area where they currently live.  On the flip side of that, more than 60% of Canadians are convinced that $1 million is a reasonable budget for a home with 41% saying it is “more than enough” and 22% calling it “adequate”.

Not surprisingly that level of optimism changes by region.  Just 18% of respondents in B.C., and 30% in Ontario agree that $1 million is more than enough.  In Manitoba/Saskatchewan it is 60% and in Quebec it is 59%.

What do you get for $1 million?  Well, it comes down to the old adage, “Location Location Location”.  In Calgary, $1 million is seen as the “move up” price point.  In Toronto and Vancouver, it is the entry level.

On average a $1 million home in Canada is 1,760 square feet with 3.2 bedrooms and 2.1 bathrooms.  In Edmonton your million will get you 2,675 square feet of floor space, 3.3 bedrooms and 2.9 bathrooms.  In Vancouver that shrinks to 900 square feet, 1.8 bedrooms and 1.6 bathrooms.

The stats for 2023 are virtually the same as 2022.  The big change, according to Royal LePage, has come in affordability as carrying costs have climbed substantially due to higher mortgage rates.

9 Jan

Residential Mortgage Commentary – Post-holiday update

General

Posted by: Donna White

Residential Mortgage Commentary – Post-holiday update

  • Jan 8, 2024
  • First National Financial LP

We are back from a brief holiday hiatus and there are a few things to update.

Home sales and prices both continued downward according to the Canadian Real Estate Association.  Sales dipped 0.9% compared to October and year-over-year figures showed the same decline.  Prices came down 1.6% month-over-month, but the national average price is 2.0% higher than a year earlier, at just under $657,000.  CREA’s preferred measure of pricing, the MLS Home Price Index, showed a 1.1% decline from October, with a 0.6% increase compared to November of ’22.  The sales-to-new listings ratio continued to tighten as well.  The number of newly listed homes fell 1.8% month-over-month in November.  The pace of new housing starts dropped 22% according to Canada Mortgage and Housing Corporation.

The economy as a whole is also sluggish.  Gross Domestic Product numbers for the third quarter showed a 1.1% contraction, year-over-year.  But StatsCan made an upward revision to the Q2 numbers and a technical recession was avoided.  Q2 showed a 1.4% increase.  All in all it was enough to keep the Bank of Canada on the sidelines.  The central bank held its Policy Rate at 5.0% for a third straight setting.  Now market watchers have their sights set on the horizon, looking for signs of interest rate cuts.

Competition in the mortgage market may have diminished.  The federal finance minister Chrystia Freeland has approved RBC’s takeover of HSBC.  The $13.5 billion dollar deal is expected to close sometime in the first quarter of this year.  Well known mortgage commentator Rob McLister calls it a sad day for mortgage customers.  He calls HSBC an “everyday, low-cost lender” that gave borrowers some “leverage” against the big banks.