NEWS UPDATE: Federal Government Raises Insured Mortgage Cap to $1.5M, Expands 30-year Amortizations
Good Housing Market This Summer? Unfortunately, The Fall Could Be Literal…
This summer, the housing market nationwide was better than anticipated; but we shouldn’t let it give us too much hope. Experts believe we won’t see the full effects of the pandemic on Canada’s real estate market until later this year. The upcoming reality check could be a painful one, according to a report on Canadian housing and mortgage trends.
Also this summer, mortgage deferral programs helped offset the economic shock to households across the country. Now that these programs are ending, it could lead to an influx of properties on the market as some Canadians may no longer be able to afford their homes, triggering a slump despite low mortgage rates.
“It’s very hard to say right now if the blistering house price gains we’ve seen in the past few months will continue into the autumn and winter season. That’s when the market will really be tested,” said an expert. “The overall economy is continuing to struggle with elevated unemployment and businesses hesitant to spend. So far, hot housing markets like Toronto’s have shrugged this off, but there’s higher risk than normal now of that reversing.”
“Something that will continue to at least help housing prices will be ultra-low mortgage rates, which we expect will continue to stick around for at least a couple of years, if not more,” they added.
According to the Canadian Mortgage Rates and Housing Trends 2020 report:
- Toronto’s 17% YOY increase in average selling prices in July is the result of a short-term demand shock from the housing market shutting down at the beginning of the pandemic
- National mortgage rates could drop even further than the current 1.69% fixed rates we’re seeing. Rates are expected to remain low for years
- A lull in immigration could significantly impact the Toronto and Vancouver markets
- Negative interest rates, such as those implemented in Denmark, are not on the horizon for Canada
“There is too much volatility right now for the Bank of Canada to raise interest rates. But this doesn’t guarantee stability in Canada’s housing market.” he finished.
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