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Canada Housing Market Update - September 8, 2019

By Tom Albrecht | Sep 11, 2019 | Buyers

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Real Estate Market Update - Still a Roller Coaster Ride for the Mortgage Sector

The Canadian mortgage market is one of the most changeable and challenging industries in the real estate realm today. The latest update on the mortgage sector showed more evidence that the market has turned upside down and back again in its previous position. However,for two Canadian bank key players, the most recent news in this sector could prove advantageous to mortgage borrowers:

According to an excerpt from Livabl.com, Deputy Chief Economist for Scotiabank, Brett House and Raffi Ghazarian, senior research analyst, it is quite a very unusual and uncommon advantage:

“With long-term rates lower than short-term rates, home buyers have had a rare opportunity to lock in longer maturity fixed-rate mortgages at lower rates than if they had opted for variable rate mortgages.” - livabl.com
Zoocasa.com in a similar report reiterated the statement from the Bank of Canada, as part of the BoC’s September announcement:
For variable-rate mortgage holders or applicants, there won’t be any immediate change for rate prices; existing borrowers won’t see any fluctuation in their mortgage payments, and lenders are under no obligation to discount their variable rates at the moment for new borrowers. However, those considering signing up for a variable rate will already benefit from some of the lowest mortgage pricing available in today’s low-interest environment, and may see discounting in the months to come.- zoocasa.com
Nevertheless, there is a different way of looking into this scenario and making an analysis. For instance, the report from Betterdwelling.com showed that there may be a growth in the Canadian mortgage credit sector but other types of debt are also surfacing and they are not looking good:
Canadian households are pushing mortgage growth higher, but not other types of debt. Bank of Canada (BoC) data shows the rate of growth for mortgage debt hit a high for the year in July. Meanwhile consumer credit continued to the lowest rate of growth seen in years. An unusual match, since both segments don’t typically diverge for long. Compared to last year, both segments are showing continued signs of decelerating growth. - betterdwelling.com
Experts are saying that the mortgage growth indicates acceleration compared to the previous year but credit growth also varies with longer-term trend. Moreover, there is consistency in terms of the longer-term picture:
Compared to last July, the rate is also 8.82% lower, meaning we’re seeing a faster slowdown than we are with mortgages. Odd, since consumer credit usually rises when the economy is improving, as it is now. - betterdwelling.com

Final Thoughts

The trend in the mortgage sector for the Canadian real estate market is a fluid and ever-changing one. However, certain indications are showing that it is quite a good period for now especially with the latest five-year fixed-rate mortgages. Canadian home buyers, especially those who wanted to have a great deal from the market would no longer have to worry about higher interest rates. Thus, key players expect more growth in the Canadian housing market in the coming months.

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Tom Albrecht leads The A-Team with his wife, Breanna, and is a Buyer’s Agent. He holds a Masters in Economics for Developing Countries from The University of Oxford.

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