Interested in learning more about property mortgages in Canada? Look no further!
Latest in mortgage news: consumer insolvencies at highest level since 2019 May 25th
Consumer insolvencies in Canada have risen to their highest level in three years..... More »
Home prices won’t revert to pre-pandemic levels, should start rising again in 2024: CMHC + MORE May 4th
The Canada Mortgage and Housing Corporation (CMHC) expects home prices to reach a bottom this year, but aren't expected to fall below pre-pandemic levels..... More »
RBC and NBC are the latest big banks to hike fixed mortgage rates + MORE Jun 3rd
RBC and National Bank became the latest Big 6 banks to increase their posted fixed rates this week, following previous increases by BMO and CIBC..... More »
CMHC consumer survey reveals the importance of follow-up contact by mortgage brokers + MORE May 13th
There was a simple but important lesson for mortgage brokers in CMHC's 2023 Consumer Survey released Wednesday: follow-up contact leads to more satisfied clients..... More »
Mortgage borrowers to see payments increase by 20-40% at renewal: Bank of Canada May 19th
The Bank of Canada says it it concerned about the ability of households to service their debt, particularly as mortgage holders are facing payment increases of up to 40% at renewal..... More »
Home Prices Heat Up Despite High Interest Rates
Some weird stuff is happening in the world of real estate. As you likely know, the Bank of Canada has steadily raised interest rates over the past year in hopes of cooling inflation. This was also supposed to cool the housing market. Conventional wisdom dictates that higher rates would result in more mortgage defaults, more housing supply, and lower home prices. Oddly enough, none of that is happening.
What’s Going On?
Despite the astronomical spike in interest rates, there are far fewer real estate transactions compared to this time last year. The number of new mortgages being registered has dropped significantly. The rental market has ramped up (a basement apartment in Toronto now goes for $2k – $3k/month, which is ludicrous). And most importantly, real estate prices have skyrocketed. Bidding wars are back in full swing, which is almost the exact opposite of what we expected to see from a rate environment like the one we’re in.
Why Is This Happening?
There are a few factors at play here…
While some Canadian lenders do offer fixed-rate terms for as long as 25 years, a five-year term is far more common in Canada.
Health-care workers Annie and Ben, 33, can afford a bigger house. But is now the time as they look to grow their family?
The couple has a combined annual income of $260,000, a modest mortgage, and is wondering how best to invest their savings.