While mortgage rates have fallen substantially over the past year, they’re still not low enough to entice a majority of prospective homebuyers into the market, according to a new survey by EveryRate.
The survey found that nearly three-quarters (74%) of Canadians considering a home purchase or refinance would act only if the Bank of Canada’s policy rate, currently at 4.25%, were to drop below 3%.
Another 12% said they’d move when the rate drops below 4.00%, which could potentially happen as early as tomorrow, while only 3% are ready to act regardless of the current rates.
“We knew Canadians wanted lower rates, we knew Canadians wanted into the housing market, we just didn’t know how low they needed rates to go before they get off of the sidelines,” Andy Hill, mortgage broker and co-founder of EveryRate.ca, said in a statement.
“Most Canadians are clearly waiting for rates to drop further before moving,” he added. However, with current rate trends not expecting most fixed rates below 3.00% until at least mid-2025, Hill says that means many potential buyers and refinancers “will likely stay on the sidelines for the foreseeable future.”
A Bank of Canada policy rate at 3.00%, which impacts the prime lending rate used at most lenders, would imply variable rates about 125 basis points lower than today’s levels.
Currently, variable mortgage rates offered by national discount brokerages hover around 5.40% for uninsured mortgages and 5.20% for default-insured ones (those with down payments below 20%), according to mortgage analysis website MortgageLogic.news.
Fixed rates, influenced by Government of Canada bond yields, have also fallen over the past year.
In recent weeks, a handful of discount brokerages started offering 5-year fixed rates just below 4.00%. However, these were specifically for high-ratio default-insured mortgages, meaning those with a down payment of less than 20%.
However, sub-4.00% rates, briefly available earlier this year, have disappeared due to a recent spike in bond yields. The national average for high-ratio 5-year fixed mortgages now stands at around 4.50%, according to MortgageLogic.
Last week, Ron Butler of Butler Mortgage told Canadian Mortgage Trends that the recent spike in mortgage rates is likely to be temporary as bond yields stabilize and resume their downward trajectory.
Canadian household debt growth stalled in August
Canadian household debt grew by $7.7 billion, or 0.3%, in August, bringing total credit liabilities to $2.98 trillion, according to data released last week by Statistics Canada. This matches the growth rate seen in July.
The rise was largely driven by real estate-secured debt, which includes both mortgages and home equity lines of credit (HELOCs). Mortgage debt specifically saw a $6.9-billion increase in August, marking a 3.8% year-over-year growth, slightly up from July’s 3.3% increase.
Active real estate listing cancellations up: National Bank
Last week, the Canadian Real Estate Association released September market data showing that new listings were up 4.9% month-over-month, the eighth increase in nine months and the largest increase since July 2023. As a result, they are now at their highest level since February 2022.
However, a report from National Bank noted that this didn’t translate to an increase in housing inventory due to a rise in active listing cancellations.
“…a higher proportion of sellers cancelled their listings during the month, probably because they (like buyers) are looking forward to future rate cuts and more momentum in the market,” the report noted.
Overall, active listings dipped by 0.5% in September, marking the second decrease in three months. The months of inventory, which measures the ratio of active listings to sales, also dropped slightly from 4.2 to 4.1, returning to levels seen before the pandemic.
Realtors® unveils advocacy priorities to address housing crisis
REALTORS®, which represents more than 160,000 members across the country, are currently meeting with local Members of Parliament in Ottawa to advocate for “critical housing policies that encourage access to housing for all Canadians.”
The advocacy initiative is part of the Canadian Real Estate Association’s (CREA) 39th Political Action Committee (PAC) Days, from October 20-22.
“It’s essential we strive together to advance effective policies that foster increased housing supply while ensuring affordability and accessibility for Canadians across the entire housing continuum,” said Janice Myers, CREA CEO.
This year, REALTORS® are advocating to:
- Stimulate supply across the housing continuum by embracing innovation through offsite construction technologies.
- Establish a permanent mechanism to collaborate and coordinate housing policy and development, such as a national housing secretariat.
- Extend HST/GST relief for non-profit-built affordable ownership housing.
Mortgage snippets
- Bank of Canada to begin publishing web-based Monetary Policy Report: The Bank of Canada will launch its Monetary Policy Report (MPR) as an interactive, web-based publication starting at its October 23 policy meeting.
“The shift to an online MPR is aimed at improving transparency and enhancing the user experience,” the Bank said in a statement. It added that the new format will offer interactive charts, tables, and downloadable data through the Valet API, allowing users to easily compare current and past reports.
A sample version, based on the July 2024 MPR, is available to help users get familiar with the new design.
- Quebec City ranks as best place for renters to save for a down payment: This is according to a study by Money.ca, which found renters in Quebec City can save 10% for a down payment in just under 3.5 years.
In larger metro areas, Montreal also ranked highly, where it takes just under six years for renters to save for a 10% down payment. This is in stark contrast to Toronto and Vancouver, where renters need over 13 years to save, with Vancouver requiring 13.5 years.
The study compared rent affordability and the time required to save for a down payment across major Canadian cities. It analyzed factors like average income and rental costs, revealing that cities with lower rents and higher incomes allow renters to save for a home more quickly, while those in high-rent markets face significantly longer timelines.
- FINTRAC charges real estate broker: FINTRAC has imposed an administrative monetary penalty of $57,750 on North-York, ON-based Right At Home Realty Inc. and Right at home Realty.
The penalty was issued for three violations: failing to implement an adequate compliance program, neglecting to conduct proper risk assessments, and not fulfilling client identification requirements as per Canada’s anti-money laundering and anti-terrorist financing laws.
- 117 Ontario homebuyers left in limbo after builder’s illegal sales: Sunrise Homes is facing legal action after allegedly selling the same homes to multiple buyers, leaving 117 homebuyers in financial uncertainty.
According to a CBC report, these homebuyers are accusing the company of fraud and breach of contract. Many have been left without homes they paid deposits on, with some properties being sold to other buyers. The case has prompted calls for greater regulatory oversight in the real estate sector to protect consumers from similar situations.
Next Steps: Mortgage industry career moves
“Next Steps” is a feature in our weekly news roundups that highlights notable job changes and career advancements within the mortgage industry. If you have a job update to share, we welcome your submissions to keep the community in the loop.
Veronica Love promoted to Chief Revenue Officer at TMG The Mortgage Group
TMG The Mortgage Group has announced the promotion of Veronica Love from Senior Vice President of Corporate Development to Chief Revenue Officer (CRO), effective immediately.
In her new role, Love will be responsible for driving growth in revenue-generating activities across the broker network, while further strengthening the company’s market presence.
“With a proud 35-year legacy, TMG The Mortgage Group has recently gained significant momentum as more mortgage agents seek brokerages that truly support their success,” Love told CMT. “As Chief Revenue Officer, I’m excited to lead our efforts in driving growth and ensuring TMG remains the top choice in Canada for mortgage professionals. My focus will be on enhancing the support and value we provide, helping our agents thrive in an ever-evolving market.”
Mark Kerzner, President and CEO of TMG, adds that Love’s promotion aligns with the company’s commitment to innovation and building meaningful industry relationships.
“Veronica is a demonstrated leader, has been a strong member of the senior leadership team at TMG and consistently demonstrates strategic vision. She has been a staunch and vocal advocate for brokers and the broker channel,” he said. “Her approach to finding win-win solutions helps create meaningful and valuable partnerships. Veronica will be instrumental in shaping our future.”
Love has also previously served as Chair of the Mortgage Professionals Canada Board of Directors.
Axiom Innovations appoints Gord Dahlen as Strategic Advisor
Axiom Innovations has appointed industry veteran Gord Dahlen as Strategic Advisor, which the company says “underscores Axiomʼs commitment to innovation and strategic growth.”
Axiom added that Dahlen’s wealth of experience and proven track record will support the company’s growth, particularly in advancing the Scarlett Network, the company’s point-of-sale mortgage software.
“As I approach my first year as CEO of Axiom Innovations, I recognize the critical importance of strategic leadership in guiding our companyʼs next phase of growth,” said Dong Lee, CEO of Axiom Innovations. “I am thrilled to welcome Gord to the team, as his proven track record and wealth of experience will provide invaluable guidance and thought leadership. His expertise will be instrumental as we continue to accelerate the growth of the Scarlett Network.”
Dahlen expressed his excitement about joining Axiom, saying, “I am excited to work
alongside Joe, Dong, and the talented team at Scarlett Network. Theyʼve developed remarkable technology, and I look forward to contributing my experience and strategic insights to drive further growth.”
Scarlett’s platform is already integrated across major brokerages in Canada and supports a range of industries beyond mortgages, including lending, insurance, and government sectors.
EconoScope:
Upcoming key economic releases to watch
The latest headlines
Visited 5,894 times, 300 visit(s) today
active listings cancellations Andy Hill Axiom Innovations Bank of Canada Canadian real estate association crea EconoScope Editor’s pick EveryRate.ca FINTRAC Gord Dahlen household debt Janice Myers monetary policy report Money.ca mortgage career moves mortgage debt Mortgage digest National Bank next steps real estate market Realtors renters Right At Home Realty Inc. Sunrise Homes TMG The Mortgage Group veronica love
Last modified: October 22, 2024
