Forecasts are right: Rates will rise + MORE Nov 26th

They are arriving with big down payments, and reducing their risk with five-year mortgages.

(Getty Images/Juan Monino)
Quick Chicken Little, the sky is falling!
That’s my synopsis of the latest Organization for Economic Co-Operation and Development forecast regarding when mortgage rates will begin to climb in Canada.
Much like the fable, the OECD keeps pointing to signs of how Canada’s housing market is in for steep correction, or even a collapse. Much like the fable, the OECD is beginning to sound like an anxious chicken whipping up fears to cause mass hysteria.
I don’t think there’s an economist out there that wouldn’t agree with the assertion that mortgage rates are going to rise next year in Canada. Economists I’ve spoken to (including David Madani at Capital Economics and Robert Hogue of RBC Bank) predict a small increase by mid-year with an overall increase of just over 1% by year-end (2015).
Now, I may be naïve, but I don’t really think there will be much difference in the market if residential mortgage rates rise in May versus June. It’s certainly not a “sky is falling!” situation…

(Getty Images/Image Source)
Over the last few years critics have complained that fewer and fewer Canadians rely on personal savings for their down payment, preferring to get help from friends and other sources. But a new survey shows that this just isn’t the case.
Released in mid-November by the Canadian Association of Accredited Mortgage Professionals, the annual survey shows that the average down payment made by first-time homebuyers hasn’t changed much in the last three decades—bouncing between 20% and 22% since 1980. However, the source of that down payment has shifted over the years.
Before 1980, first-time homebuyers relied primarily on:
personal savings for the bulk of their down payment (54%)
gifts from family members (5%)
family loans (9%)
loans from financial institutions (26%)
loans from employers (1%)
other sources (4%)
withdrawals from an RRSP (2%)
Between 2010 and 2014, the source of down payment shifted:
personal savings for the bulk of their down payment (40%)
gifts from family members (11%)
family loans (6%)
loans from financial institutions (27%)
loans from employers (1%)
other sources (2%)
withdrawals from an RRSP (12%)
However, if you were to include withdrawals from RRSPs as part of savings, then there’s only been a 2% drop in the amount of personal savings used by first-time homebuyers to make a down payment—from 54% in pre-1980, to 52% in the 2010 to 2014 period…

(Getty Images)
OTTAWA – The Canada Mortgage and Housing Corp. says there is a modest amount of overvaluation in the country’s housing markets, however other risk factors such was overheating, price acceleration, and overbuilding are not present.
In its house price analysis and assessment, CMHC says, overall, housing markets in Canada are broadly consistent with underlying demographic and economic factors such as employment and interest rates.
CMHC chief economist Bob Dugan says the risk of overvaluation is most evident in Montreal and Quebec, but added that the trend is improving.
He said a modest risk of overvaluation is also present in Toronto, Calgary and Halifax.
However, CMHC did not point to Vancouver, one of the country’s hottest real estate markets as being at a risk of overvaluation.
CMHC says home prices in Vancouver are supported by local growth in personal disposable income and long-term population growth.
The post Canadian housing markets overvalued: CMHC appeared first on MoneySense.

A perennial highlight of CAAMP’s Mortgage Forum is the EXPO. It’s where brokers network with lenders and mortgage industry suppliers, and where the latter show off their wares. It’s become our tradition to roam the show floor every year, gathering tidbits about each exhibitor’s recent developments and new products. Here’s some of what we dug […]