Mortgage Battle Cools Down.
Just a couple weeks after the major banks lowered mortgage interest rates to an historic low of 2.99%, RBC blinked first and rose again their rates by 40 points. The others quickly followed suit. Fixed rate mortgages are strongly tied to bold yields. It appears that the economic recovery is finally taking hold in the United States putting upward pressure on rates.
If you spoke with you bank or other lender in the past two weeks, they usually guarantee their rate for 90 days.
More About Mortgages.
Last week I reported that the CMHC was almost maxed out to the limit of how much mortgage they can insure $600 Billion. Mortgage insurance is required on all mortgages with down payments between 5-20% (a 5% downpayment is required on real estate purchases). Mortgage insurance is also required on the mortgages of ‘untraditional’ borrowers such as the self-employed and immigrants to Canada.
There is more and more noise in the system as the CMHC tops out about tightening up rules around “stated income” of self employed individuals, “immigrant” mortgages and mortgages on condos. Although the CMHC has not yet announced any changes, the major banks are
becoming more demanding.
Canadian Home Prices Up.
Canadian home prices are up 5.2% from a year ago and up 0.27% from a month earlier in five key markets Montreal, Toronto and Vancouver Calgary and B.C.'s Fraser Valley region.
These markets make up 44% of the entire Canadian real estate market. The strongest gains were for two-storey homes (up 6.7%)
Housing Starts Beat Forecast for Canada and KW.
Housing starts are a key indicator of an area’s economic health. Last week the CMHC announced that the number of starts in January were ahead of expectations. There were about 5000 more units started than anticipated. We’re doing better than we thought.
In the Kitchener-Cambridge-Waterloo census metropolitan area last month, builders started 467 housing units. That is more than double the 177 units started in January a year ago.
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