LATEST MORTGAGE NEWS
CANADIAN BORROWING AND ITS AFFECT ON THE MARKET
Canadian mortgage borrowing has dropped 41% in January; this is the sharpest observed in the past 10 years. Mr. Steve Bryan, Principal Broker at Canadian Tailored Mortgage Solutions reminds us that "when originations are this low, a reversal is on the horizon relatively soon." He noted that there has also been a sharp decline in purchase. According to report from the Building Industry and Land Development (BILD), just 922 new homes were sold in the GTA in February. House sales decreased 76% and is 69% below the 10 year average.
"but when there is an abrupt decline in purchase without an impact on the labor market trends, it means buyers are waiting for the best time to enter the market," Said Mr. Bryan. However, there has been a weak demand for new homes which is the contributor in the recent price pullback. Single-family benchmark price is down 5.4% from last year and condo apartments dropped 5.5% over the same period. Both are still higher than 2020.
Canadian interest in Real Estate
Reports from CMHC shows that Canadians continue to hold a positive view towards real estate, many see real estate as a solid long-term investment and is waiting for the rght time to jump in.
Is House Shortage a Thing Of The Past?
New home inventory has taken off; this is great news for the general population. Single-family inventory is up 191%, similarly, condo apartment is up 51% in comparison to last year. What's more, single-family homes are priced right for the market as long as this level is stable. Condo apartments on the other hand, are a buyer's market with the risk slanted lower for home prices. We need adequate housing for our population growth. Canadian population has risen 0.7% (Stat Can). The country has never seen such a rapid increase in population; that's largely due to immigration and is made up of temporary labor non-permanent residents represent 607,800 of 1.1million increase in 2022.
AMENDMENT OF FOREIGN BUYER BAN
The Government of Canada announced four amendments to the two years old Foreign Buyer Ban - officially known as Prohibition on the Purchase of Residential Property of Non-Canadian Act this was set in response to addressing growing concerns about housing affordability The four key amendments announced Monday by the Minister of Housing and Diversity and Inclusion include:
- Work Permit Holders
- Non-Canadian work permit holders were initially included in the ban, but critics argued that was contradictory to the government’s immigration goals. As a result, work permit holders are now exempt from the ban as long as they have 183 days or more of validity remaining on their work permit.
- Vacant land exemption
- The restriction preventing nonCanadians from purchasing vacant land zoned for residential or mixed has been lifted.
- Exception for development purchases
- Non-Canadians will also now be able to purchase residential property for the purpose of development. This exception was only applicable to publicly traded corporations in the original legislation.
- Increase to the foreign control threshold
- The ban initially prevented privately held corporations or entities from purchasing residential property if a non-Canadian owned 3% or more. That threshold has now been increased to 10% following concerns from developers that the 3% threshold was too restrictive and would hinder the development of new housing.