Statistics

Canadian mortgage rates on the rise

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croissanceSome of Canada’s major banks are starting to raise mortgage rates. RBC, Scotia Bank and TD have all increased some of their mortgage rates in the last month and RBC announced a second hike last week.

Everyone breathe.

For RBC, the four-year closed-rate mortgage is moving up 10 basis points to 3.39 per cent, five-year increase by 20 basis points to 3.6 per cernt, the seven-year by 20 basis points to 3.99 per cent, the 10-year is moving up by 30 basis points to 4.29 per cent.

When mortgage rates increase, homeowners, or those ready to buy, are often fearful, with reason.

However, it’s not all bad. Hopefully, we can get a little bit of perspective on the recent rise in Canadian mortgage rates.

These are still really good rates

In November 2008, the monthly average mortgage rate for a conventional five-year mortgage in Canada was 7 per cent. Since the 2008 crash, we’ve been a bit spoiled with artificially low mortgage rates. A five-year closed rate of 3.69 per cent is still low, historically speaking.

Rising mortgage rates are a double-edged sword

Rising mortgage rates are a signal of a stabilizing economy in North America, which we’ve all been rooting for since 2008. A stabilizing economy means increases in employment, incomes and hopefully stock markets. These are good things that should help families offset the effect of mortgage hikes.

These are very small hikes

The largest increase announced is 30 basis points on the RBC 10-year closed mortgage. That’s three tenths of a percent. We aren’t talking full percentage swings over night. Small rises in mortgage rates can be a signal of upward trends, but at least they give home owners time to speak with their mortgage specialist and lock down a rate that allows them to sleep at night.

Most mortgage rates are set by banks

Mortgage rates are set by each individual bank, based on supply and demand. Banks who have not yet raised rates may hold off on a rate increase to see how their competitor’s decisions plays out.

How to survive a mortgage rate hike

  1. Purchase a home you can afford, even when rates rise. The bigger your mortgage, the more effected you are.
  2. Aim to have a 20 per cent down payment to ensure that you’re not over leveraged.
  3. Start paying down consumer debt to free up additional cash flow for your household.
  4. Sit down with a mortgage specialist and ask for a rate hold, which you can always cancel if you need to or lock in a historically low rate.

SOURCE : http://globalnews.ca/

May 2013 Real Estate Market: North Shore Fared Well Despite Ongoing Slowdown

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Île-des-Sœurs, June 7, 2013 – According to the real estate brokers’ Centris® provincial database, there were 4,288 residential sales transactions concluded in the Montréal Census Metropolitan Area (CMA) in May 2013, said the Greater Montréal Real Estate Board (GMREB). This represents an 8 per cent decrease compared to May 2012 and the smallest drop in sales in the past seven months. The North Shore performed well with a 5 per cent decrease in sales.

“The North Shore registered the smallest decrease in sales for the fourth consecutive month,” said Diane Ménard, Vice-President of the GMREB Board of Directors. “In a context where some buyers had to revise their budget due to the new mortgage rules, the North Shore continues to benefit from the fact that it is the most affordable area in the Montréal region,” she added.

All three property categories registered a drop in sales in May 2013 as compared to May 2012. Sales of single-family homes and plexes fell by 7 per cent, while condominium sales decreased by 12 per cent.

All five main areas of the Montréal CMA registered a decrease in sales in May 2013. While the North Shore posted the smallest drop at 5 per cent, sales in Vaudreuil-Soulanges, the South Shore and Montréal decreased by 7, 8 and 9 per cent, respectively. Laval registered a 14 per cent drop in sales.

The median price of single-family homes grew by 4 per cent across the CMA in May, the largest increase since December 2012. By area, the South Shore led the way with a 6 per cent increase ($279,900) followed by Laval with a 5 per cent increase ($290,000), Vaudreuil-Soulanges with a 3 per cent increase ($268,000) and the North Shore with a 2 per cent increase ($240,000). On the Island of Montréal ($380,000), the median price of single-family homes remained unchanged compared to May of last year.

The median price of condominiums remained unchanged (0 per cent) in May in the Montréal CMA. A slight decrease of 1 per cent was registered on the Island of Montréal ($274,000) and in Laval ($208,000), but this was compensated by increases of 3 per cent on the North Shore ($175,000) and 4 per cent on the South Shore ($189,500).

“Condominium prices have stabilized since the start of the year in the Montréal Metropolitan Area,” noted Paul Cardinal, Manager, Market Analysis, at the Québec Federation of Real Estate Boards. “Despite a slight excess in supply, construction of new condominiums has slowed considerably in recent months, which could lead to a rebalancing of this market segment in the near future,” he added.

As at May 31, 2013, there were 32,603 active listings in the Centris® system, up 16 per cent compared to the same period last year. Once again, the increase in active listings was most noticeable for condominiums (28 per cent). The increase in supply was more moderate for plexes (12 per cent) and single-family homes (10 per cent).

Geographically, the increase in the number of active listings was largest on the Island of Montréal (+25 per cent) and in Laval (+23 per cent), while Vaudreuil-Soulanges, the South Shore and the North shore registered respective increases of 16, 11 and 6 per cent.

MLS® Home Price Index for May 2013 

Smallest Decrease in Residential Sales in the Past Six Months

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Île-des-Sœurs, May 8, 2013 – According to the real estate brokers’ Centris® provincial database, there were 4,605 residential sales transactions concluded in the Montréal Census Metropolitan Area (CMA) in April 2013, said the Greater Montréal Real Estate Board (GMREB). Although this represents an 11 per cent decrease compared to April 2012, it was the smallest drop in sales in the past six months.

“Sales have decreased every month since the entry into force of the new mortgage rules last July,” said Diane Ménard, Vice-President of the GMREB Board of Directors. “Despite the drop in sales, April 2013 was a better month than that of April 2011, when 4,474 transactions were concluded,” she added.

All three property categories registered a similar decrease in sales in April 2013. Sales of single-family homes fell by 11 per cent, condominium sales dropped by 10 per cent and plex sales slipped by 13 per cent compared to April of last year.

All five main areas of the Montréal CMA registered a decrease in sales in April 2013 compared to April 2012. The largest decreases, for a second consecutive month, were in Laval (-20 per cent) and Vaudreuil-Soulanges (-13 per cent), while the North Shore (-7 per cent) and South Shore (-6 per cent) posted the smallest decreases. Sales on the Island of Montréal fell by 12 per cent.
As for the median price of single-family homes, Laval ($285,000), the South Shore ($270,000) and the North Shore all registered an increase of 2 per cent, while the Island of Montréal ($380,000) registered a 1 per cent increase. The median price of single-family homes remained stable in Vaudreuil-Soulanges ($270,000) compared to April 2012. As at April 30, 2013, there were 33,099 active listings in the Centris® system, up 16 per cent compared to the same period last year. Once again, the increase in active listings was most noticeable for condominiums (29 per cent). The increase in supply was more moderate for single-family homes (8 per cent) and plexes (12 per cent). Geographically, the increase in the number of active listings was largest on the Island of Montréal (+26 per cent) and in Laval (+21 per cent). Vaudreuil-Soulanges, the South Shore and the North shore registered respective increases of 14, 9 and 4 per cent.

Source : http://www.cigm.qc.ca

Mortgage rates – how low they can go?

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Four times in the past four years, Flaherty has tightened mortgage insurance rules, each time making it a little more difficult to get home financing. And although household debt continues to hit new record highs—reaching 165% of disposable income by the end of last year—Flaherty has succeeded in slowing housing activity in Canada. But that comes at the expense of the mortgage market, which is the largest of the banks’ lending businesses. Mortgages in the banking sector are currently growing at about 6% a year—half of the pre-recession rate of growth. “The competition between institutions is so fierce that they really have no choice but to compete by offering as low a rate as they possibly can,”  says John Andrew, a real estate professor at Queen’s University.

Lenders still make money on low-rate mortgages. Their profit margins are roughly measured by the difference between mortgage rates and the banks’ own costs of borrowing, which is approximated by the Bank of Canada’s five-year benchmark bond rate—about 1.2%. Most of the money the banking sector lends out is provided by retail deposits, supplemented by borrowing on the “wholesale” market. The minimum spread at which a bank would be willing to offer five-year mortgages is about 140 basis points, says Ohad Lederer, a financial services analyst at Veritas Investment Research. That would put a floor on five-year mortgage rates of about 2.6%—assuming the five-year bond rate doesn’t fall any further. Variable or shorter-term mortgages are already available for even less.

 Source : http://www.canadianbusiness.com

Real Estate Market. March 2013.

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Montréal Real Estate Market has Something for Both Buyers and Sellers

Île-des-Sœurs, April 8, 2013 – According to the real estate brokers’ Centris® provincial database, the market for single-family homes continued to favour sellers, while that of condominiums gave buyers the upper hand, said the Greater Montréal Real Estate Board (GMREB).

“Market conditions for condominiums have been relaxing quickly in recent months,” said Diane Ménard, Vice-President of the GMREB Board of Directors. “In early 2012, the condominium market still advantaged sellers slightly, but after a short period in balanced territory the condominium market is now a buyer’s market, both on the Island of Montréal and in the suburbs,” she added.

The number of sales concluded in the Montréal Census Metropolitan Area (CMA) decreased by 17 per cent in March 2013 compared to March 2012, with a total of 4,435 transactions. The drop in sales in Greater Montréal began with the entry into force, last July, of the most recent tightening of mortgage rules.

Sales fell for all property categories in March 2013 compared to March of last year. Single-family home sales decreased by 15 per cent, condominium sales fell by 18 per cent and that of plexes by 24 per cent.

The drop in sales in March 2013 was felt in all five main areas of the Montréal CMA. Sales decreased by 36 per cent in Vaudreuil-Soulanges, by 23 per cent in Laval and by 20 per cent on the Island of Montréal. The North Shore and South Shore registered smaller drops at 9 and 10 per cent, respectively.

As for the median price of single-family homes, Vaudreuil-Soulanges ($285,450) led the way with a 7 per cent increase compared to March 2012, followed by the South Shore ($274,500) with a 5 per cent increase, the Island of Montréal ($370,000) with a 3 per cent increase and the North Shore ($235,000) with a 1 per cent increase. The median price of single-family homes in Laval ($290,000) remained stable compared to March of last year.

In the Montréal CMA as a whole, single-family homes ($275,000) and plexes ($417,000) both registered a 1 per cent increase in median price compared to March 2012. The median price of condominiums ($222,000) fell by 1 per cent.

As at March 31, 2013, there were 32,934 active listings in the Centris® system, up 12 per cent compared to the same period last year. The largest increase was for condominiums, as the number of active listings for this property category grew by 25 per cent. Geographically, the Island of Montréal (+22 per cent) registered the largest increase, while it was barely noticeable on the North Shore (+1 per cent).

SOURCE : http://www.cigm.qc.ca