What's happening in today's residential mortgage markets?

Amortizations are falling, rate discounts are increasing and consumers have flocked to fixed rates. Those are a few of the trends found in the Canadian Association for Accredited Mortgage Broker’s (CAAMP)  Annual State of the Residential Mortgage Market report. The following highlights were compiled by Canadian Mortgage Trends. Where do you fit in!

  • 16% of homes purchased in 2013 had amortizations over 25 years
  • 8% of respondents believe the housing bubble will burst within the next five years
  • 82% of new mortgages for homes purchased in 2013 were fixed rate mortgages
  • 2% of buyers with less than 20% down chose a variable rate mortgage
  • 40% of new mortgages in 2013 were obtained from a mortgage broker.
  • 70% of households with mortgages have 25% or more equity
  • 57% of 2013 homebuyers were first-time buyers
  • 84% of mortgages on homes purchased in 2013 had an original amortization of 25 years or less
  • 16% of borrowers  increased the amount of their payments in the past year – the average monthly increase was  $400
  • 17% of borrowers  made a lump sum payment – the average amount was $14,000

OTHER HIGHLIGHTS

  • 43% of current mortgage holders  consulted a mortgage broker about getting a new mortgage
  • 68% of respondents agreed their mortgages are “good debt”

INTEREST RATES

  • 3.23% is the average mortgage interest rate for mortgages on homes purchased in 2013
  • 3.20% is the average mortgage interest rate for mortgages renewed in 2013, which averaged 0.82 percentage point lower than prior to their renewal

EQUITY TAKE-OUT

  • 11%  of homeowners took equity out of their home in the past year with $57,000 the average amount
  • $59 billion is the estimated amount of total equity take-out in the past year
    • $16.6 billion was used for debt consolidation and repayment
    • $15.1 billion was used for investments
    • $12.3 billion was used for home renovations

REAL ESTATE/MORTGAGE MARKET

  • 9.52 million: The number of homeowners in Canada
  • 4.28 million: The number of renters in Canada
  • 5.58 million: The number of homeowners with mortgages (who may also have a home equity line of credit (HELOC))
  • 3.94 million: The number of homeowners who are mortgage-free
  • 2.3 million: Number of total homeowners who have HELOCs

MORTGAGING ACTIVITY

  • 450,000 of households bought homes over the past year
  • 400,000 of buyers took on mortgages

MORTGAGE MARKET OUTLOOK

The Canadian Real Estate Association (CREA) has revised its outlook to take into account a more buoyant market than expected. National sales have improved more quickly than anticipated. CREA’s forecast for national sales activity has been rebalanced with a modest upward revision this year to reflect stronger than expected sales for the year-to-date. Sales are forecast to reach 449,900 units in 2013. In 2014, national activity is forecast to reach to 465,600 units, a rebound of 3.5 per cent, and in line with its 10-year-average. The forecast increase reflects a gradual strengthening of sales activity alongside further economic, job, and income growth combined with only slightly higher mortgage interest rates.

I’m always happy to answer your mortgage and finance related questions. Feel free to call me any time at 306-260-9918 or drop me an email at riel@mortgagegrp.com.

Riel Syrenne
The Mortgage Group

Canadians can expect greater oversight of CMHC in the future

We were warned earlier in the year that the Canadian Mortgage and Housing Corporation (CMHC) would be backing fewer Canadian home loans moving forward, but little seems to have changed on the ground.

Now, the new federal budget is planning for greater oversight of the federal crown corporation, which was founded to provide insurance on Canadian mortgages where buyers are unable to produce a down payment of 20 percent or more.

“The government will propose legislative amendments to strengthen oversight of CMHC and to ensure its commercial activities are managed in a manner that promotes the stability of the financial system,” the budget said.

Banks are required to insure mortgages that don’t meet the minimum 20-percent down payment threshold. Apparently, in recent years, banks have been insuring mortgages that are eligible to be processed without the insurance. Given that purchasers bear the burden of the insurance cost, it’s no wonder that this approach seems attractive to lenders. No additional cost to them – substantial decrease in potential risk of loss.

Three years ago, CMHC reached the ceiling for mortgages that it was allowed to insure, by law, at $450 billion. That number was adjusted to $600 billion at that time. By the end of 2011, CMHC was insuring $541-billion in Canadian mortgage loans.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Our Saskatoon home search tool offers MLS® listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatoon housing sales remains strong in face a shrinking labour market

Canada Housing and Mortgage Corporation (CMHC) released their third quarter update on the Saskatoon housing market late last week. It takes a look at third quarter and year-to-date activity in new homes as well as resale activity.

Here are some highlights from the report.

  • Third quarter housing starts slipped lower to 735 units, down 4 percent from the same quarter in 2010.
  • Year-to-date starts (to September 30) sit at 2,231 units, up 27 percent from 1,755 starts in the same period of 2010.
  • Year-to-date gains are attributed to the production of multi-family dwellings.
  • In the multi-family category, 565 apartment units were started during the first three quarters of this year.
  • Low interest rates and a scarce supply of rental units helped support heightened demand in the resale market.
  • Resale transactions increased by 21.5 percent over the third quarter of last year.
  • Residential listings increased 2.9 percent over the previous year but the strong pace of sales negated increases to the supply.
  • Balanced market conditions prevailed through the quarter with average prices gaining just 2.7 percent compared to the same period last year.
  • The Saskatoon labour market softened during the third quarter with total employment declining 1.6 percent from the same time last year.
  • Saskatoon’s seasonally adjusted unemployment rate climbed to 5.7 percent, up from 5.5 percent at the same time last year.

Read the entire report here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Our Saskatoon home search tool offers MLS® listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Saskatoon Real Estate

Sharp declines ahead for Canadian housing: economist David Madani

Amidst a rising chorus of “soft landing” predictions for Canada’s housing markets, one Canadian economist, David Madani is singing a different tune that may or may not be music to your ears.

Madani, in a report released this week titled, “Canada Economics Focus, house prices likely to fall for several years” says rising interest rates and near stagnant wage growth resulting from low inflation will cause housing affordability to deteriorate substantially in the years ahead taking values down an estimated twenty-five percent.

The report is an interesting read addressing some of the typical, “Can’t happen here because” arguments while taking a look at how such significant declines might effect the economy and Canada Mortgage and Housing Corporation.

Read it here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Our Saskatoon home search tool offers MLS® listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Saskatoon Real Estate

Saskatoon housing starts & MLS sales to move in opposite directions: CMHC

According to Canada Mortgage and Housing Corporation (CMHC) Saskatoon housing starts and MLS® resale activity will move in opposite directions, this year and next.

In their fall Housing Market Outlook for the Saskatoon area, CMHC is forecasting that Saskatoon housing starts will finish 2010 at 2,125 units, up from 1,936 in 2009, before falling to just 1,700 in 2011. Conversely, resale MLS® activity is expected to fall to 3,500 units this year, down from 3,822 in 2009, and then increase to 3,600 units in 2011.

On the heels of a 7.9% decline in 2009, CMHC economists expect the New Housing Price Index to increase by 2.7% this year before it moves 2.9% higher in 2011. Resale prices, after moving to $291,000 this year from $278,895 in 2009 will moderate and advance less than two percent to $296,000 next year.

Nationally, CMHC forecasts housing starts to rise from 149,081 in 2009 to 186,200 by the close of 2010 when they will begin to drop and fall to 174,800 in 2011. MLS® resale activity is forecast to rise from 320,362 in 2009 to 336,800 this year before increasing further to 339,800 in 2011.

The CMHC Housing Market Outlook for Saskatoon is here.
The CMHC Housing Market Outlook for Canada is here.

I’m always happy to answer your Saskatoon real estate questions.  All of my contact info is here. Please feel free to call or email.

Our Saskatoon home search tool offers MLS® listings represented by all real estate brands, presented with more detail than you’ll find anywhere else. Check it out here.

Norm Fisher
Royal LePage Saskatoon Real Estate