Last year was an interesting one for the Canadian new and resale housing markets. The introduction of the mandated mortgage stress test set out by the Office of the Superintendent of Financial Institutions (OSFI) had a significant effect, in that both new and resale home sales were down. First-time buyers were especially affected, as most either avoided entering the market or rescinded their offers because they could not pass the test. The stress test requires all people (new and renewal) borrowing from federally regulated lenders such as banks to prove that they can afford future mortgage payments even if interest rates rise substantially. This applies even for mortgages requiring more than a 20 per cent down payment.[Read Me…]

It’s getting (a little) cheaper for banks to finance mortgages.

TORONTO — Royal Bank of Canada has lowered its posted five-year fixed rate by 15 basis points from 3.89 per cent to 3.74 per cent.

Mortgage rate comparison website founder Robert McLister says RBC is the first of the Big Six banks to cut its advertised five-year fixed rate after a fall in five-year bond yields.[Read Me…]

Canada’s population growth ‘exceeds expectations,’ but newcomers are struggling and some rental markets are ‘in crisis.’

Population growth in Canada has accelerated in the past few years, thanks to higher federal immigration targets meant to help Canada cope with an aging population and a labour shortage.

And while experts generally agree that this will be a boost to Canada’s economy in the long run, in the short run the population boom is causing a rental crisis in Greater Toronto, and it appears the country continues to waste the talents of many of its skilled immigrants.

Population growth is “exceeding even the most optimistic demographic projections,” Benoit P. Durocher, the senior economist at Quebec’s Caisse Desjardins, wrote in a report issued Monday.

Some 413,000 people arrived in Canada in the 12 months to July, a growth rate of 1.4 per cent, the fastest among G7 countries. The population passed the 37-million mark earlier this year, according to Statistics Canada.

“Canada has close to double the growth of the second-ranked country, the United States,” Durocher wrote.[Read Me…]

Canadian real estate markets are still cooling around the country. Canadian Real Estate Association(CREA) numbers show only two markets saw SNLR improvements in October. The indicator, used as a gauge of demand, fell fastest in some of Canada’s largest real estate markets.

Sales To New Listings Ratio

The sales to new listings ratio (SNLR) is a quick way to gauge real estate market demand, and is used by CREA. It sounds fancy, but it’s just the ratio of sales to the number of new listings. The concept is, by measuring same month absorption, you can tell how hot or not a market is.

Reading it is straightforward. If the ratio rises above 60%, it’s a “seller’s market” – when a seller can ask for more. When the ratio falls below 40%, it’s a “buyer’s market” – when a buyer can ask for more. Anything between, and it’s considered “balanced.” One should exercise caution when the ratio is moving fast. Sometimes a fast moving ratio only makes a “pit stop” in balanced, before flipping higher or lower.[Read Me…]