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TRREB-Making the Smart Choice
▪️با هدف مقابله و مهار با روند تورم، بانک مرکزی کانادا امروز نرخ بهره پایه را 0.75 درصد افزایش داد و آنرا به 3.25 درصد رساند. این افزایش نرخ بهره بر نرخ مورگیج، لاین اف کردیت و حسابهای پس انداز تاثیرگذار خواهد بود.
▪️درحالیکه نرخ تورم کانادا بشکل بی سابقه ای به 8.1 درصد رسید، طی ماه گذشته بخاطر کاهش قیمت بنزین، اندکی نرخ تورم کاهش داشت اما تورم در دیگر بخشهای اقتصاد کاملا مشهود است. طبق گفته بانک مرکزی، فشار تورمی موجود عامل اصلی افزایش نرخ بهره پایه می باشد،و تا زمانیکه نرخ تورم به دو درصد برسد، این بانک متعهد به انجام اقدامات لازم و ثبات قیمت ها می باشد.
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▪️درحالیکه نرخ تورم کانادا بشکل بی سابقه ای به 8.1 درصد رسید، طی ماه گذشته بخاطر کاهش قیمت بنزین، اندکی نرخ تورم کاهش داشت اما تورم در دیگر بخشهای اقتصاد کاملا مشهود است. طبق گفته بانک مرکزی، فشار تورمی موجود عامل اصلی افزایش نرخ بهره پایه می باشد،و تا زمانیکه نرخ تورم به دو درصد برسد، این بانک متعهد به انجام اقدامات لازم و ثبات قیمت ها می باشد.
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Mortgage stress test in focus as rate hikes ratchet up pressure on borrowers
Higher qualifying rates will put homeownership further out of reach, say industry insiders
The Bank of Canada’s move to hike its policy rate by 75 basis points Wednesday will be quickly noticed by variable-rate mortgage holders and those anxious to get off the homeownership sidelines, but if inflation persists and rates have to rise more quickly — something the central bank’s chief acknowledged was a possibility — the effects are not likely to stop there.
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Higher qualifying rates will put homeownership further out of reach, say industry insiders
The Bank of Canada’s move to hike its policy rate by 75 basis points Wednesday will be quickly noticed by variable-rate mortgage holders and those anxious to get off the homeownership sidelines, but if inflation persists and rates have to rise more quickly — something the central bank’s chief acknowledged was a possibility — the effects are not likely to stop there.
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Yesterday’s move indicates the central bank is not letting up on its aggressive approach to tackling inflation, which eased in July to 7.6 per cent from 8.1 per cent in June and has made commercial banks and other financial institutions raise their mortgage rates in tandem with the Bank of Canada’s policy rate.
The series of rapid interest rate increases this year has fuelled concerns that homeowners will eventually begin to have trouble handling their increased mortgage payments.
Based on the Canadian Real Estate Association’s average home price of $629,971 in July, a variable rate of 4.45 per cent would result in monthly mortgage payments of roughly $2,787 assuming a 20 per cent down payment. Prior to today’s hike, the same mortgage holder would have paid $2,577 per month.
Alex Leduc, CEO of Canadian mortgage rate and analytic website www.myperch.io, noted that the difference of $210 per month was “not super material” but that it could still affect the average homebuyer.
Others in the industry see the latest rate hike as a huge strain on Canadians.
“Another 75 bps sucks significant discretionary income from the pockets of floating-rate borrowers,” said mortgage strategist Robert McLister in an email. “It also boosts the minimum mortgage stress test rate, which will dim housing sentiment further.”
The topic of the stress test resurfaced recently after the Toronto Regional Real Estate Board called for OSFI to revisit its rules.
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The series of rapid interest rate increases this year has fuelled concerns that homeowners will eventually begin to have trouble handling their increased mortgage payments.
Based on the Canadian Real Estate Association’s average home price of $629,971 in July, a variable rate of 4.45 per cent would result in monthly mortgage payments of roughly $2,787 assuming a 20 per cent down payment. Prior to today’s hike, the same mortgage holder would have paid $2,577 per month.
Alex Leduc, CEO of Canadian mortgage rate and analytic website www.myperch.io, noted that the difference of $210 per month was “not super material” but that it could still affect the average homebuyer.
Others in the industry see the latest rate hike as a huge strain on Canadians.
“Another 75 bps sucks significant discretionary income from the pockets of floating-rate borrowers,” said mortgage strategist Robert McLister in an email. “It also boosts the minimum mortgage stress test rate, which will dim housing sentiment further.”
The topic of the stress test resurfaced recently after the Toronto Regional Real Estate Board called for OSFI to revisit its rules.
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Climbing “Rate Hike Mountain”: How Buyers and Borrowers Can Adjust to Higher Rates
Since March, homebuyers and existing mortgage holders have had to absorb 300 basis points-worth of rate hikes, as the Bank of Canada has stoked the cost of borrowing in attempts to rein in inflation. The latest increase was delivered this morning in the form of a 0.75% hike, pulling the Bank’s policy interest rate to 3.25% from 2.5%. As a result, the Prime Rate — which consumer lenders base their variable-rate product pricing on — is set to rise to 5.45%.
That’s the steepest rate hike pace since the mid-1990s; and with the central bank alluding to at least one more increase this year, how are consumers grappling with these increased costs?
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Since March, homebuyers and existing mortgage holders have had to absorb 300 basis points-worth of rate hikes, as the Bank of Canada has stoked the cost of borrowing in attempts to rein in inflation. The latest increase was delivered this morning in the form of a 0.75% hike, pulling the Bank’s policy interest rate to 3.25% from 2.5%. As a result, the Prime Rate — which consumer lenders base their variable-rate product pricing on — is set to rise to 5.45%.
That’s the steepest rate hike pace since the mid-1990s; and with the central bank alluding to at least one more increase this year, how are consumers grappling with these increased costs?
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“There was a lot of speculation on whether this would be another supersized rate increase. And we did see a rate increase as expected, but for me, this is not the last rate increase, it’s very clear there is a commitment to more,” said Allison Van Rooijen, Meridian Credit Union’s Vice President of Consumer Credit, to STOREYS. “What I would say is, for borrowers who are really in the middle of this, what I’ll call a ‘rate hike mountain’, so to speak, is that we’re partway up. Borrowers should be planning for what lies ahead just as much as what today’s announcement means.”
Van Rooijen says that while many variable-rate mortgage holders won’t see an immediate change to their monthly payments, they will “see an increase impacting their principal reduction.” For this group, the pain will mostly be felt at renewal time, when it becomes evident how far they’ve veered off their original amortization schedule.
However, this most recent rate hike — in addition to the surprise 1% increase implemented by the Bank in July — will push some of these borrowers past their trigger rate threshold, meaning their monthly payments will fail to cover even the interest on their loans. Those customers can expect a phone call from their lender, says Van Rooijen, looking to sort out either a new repayment schedule, extend their amortization, or perhaps arrange for a lump sum payment.
“It really depends on the lender, but borrowers with variable-rate mortgages should feel comfortable to reach out to their lender to understand what these rate implications mean for their mortgage, both today and in the coming months and year,” she says.
And, while fixed-rate borrowers are largely spared the impact of today’s rate hike, reactive bond market activity has steadily pushed those rates higher in recent months, as well, the brunt of which will also be felt when they renew or refinance.
“What I would suggest is those fixed-rate holders that are coming up for renewal in the next one to two years, and are feeling uncomfortable, now is the time they should start stress testing their mortgage and their budget, so use an online calculator and try to understand what your payment could be at renewal, and start planning for it now,” says Van Rooijen.
While many analysts anticipated this month’s hike would be a large “one and done”, the BoC made it clear in its announcement that at least one more increase is on the horizon, writing that “given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further.”
This is likely to pour more cold water on the housing market, which has only begun to show tentative signs of recovery, following lukewarm demand throughout the spring and summer.
“Given the Bank of Canada’s commentary today, Canadians should brace themselves for further rate hikes in 2022 and 2023,” says James Laird, Co-CEO of Ratehub.ca and President of CanWise mortgage lender.
“The Bank seems pleased that rising rates have caused a pullback from the unsustainable growth in the housing market that occurred during the pandemic. This rate increase will put further downward pressure on home prices across the country, which peaked in the first quarter of this year.”
However, serious buyers are “taking it in stride” says Andy Taylor, Senior Vice President – Broker, Sotheby’s International Realty Canada, especially for high-demand homes. The buyer group he’s seen most impacted, he says, are newcomers to the market, given older buyers have encountered rates above 5% in the late 2000s. “People who have been in the market are familiar with these rates, and people who are even older, like my parents, remember it at 20%,” he says.
“We’ve gone from having extremely low rates to just low rates. They have increased, but they’re still historically typical.”
Van Rooijen says that while many variable-rate mortgage holders won’t see an immediate change to their monthly payments, they will “see an increase impacting their principal reduction.” For this group, the pain will mostly be felt at renewal time, when it becomes evident how far they’ve veered off their original amortization schedule.
However, this most recent rate hike — in addition to the surprise 1% increase implemented by the Bank in July — will push some of these borrowers past their trigger rate threshold, meaning their monthly payments will fail to cover even the interest on their loans. Those customers can expect a phone call from their lender, says Van Rooijen, looking to sort out either a new repayment schedule, extend their amortization, or perhaps arrange for a lump sum payment.
“It really depends on the lender, but borrowers with variable-rate mortgages should feel comfortable to reach out to their lender to understand what these rate implications mean for their mortgage, both today and in the coming months and year,” she says.
And, while fixed-rate borrowers are largely spared the impact of today’s rate hike, reactive bond market activity has steadily pushed those rates higher in recent months, as well, the brunt of which will also be felt when they renew or refinance.
“What I would suggest is those fixed-rate holders that are coming up for renewal in the next one to two years, and are feeling uncomfortable, now is the time they should start stress testing their mortgage and their budget, so use an online calculator and try to understand what your payment could be at renewal, and start planning for it now,” says Van Rooijen.
While many analysts anticipated this month’s hike would be a large “one and done”, the BoC made it clear in its announcement that at least one more increase is on the horizon, writing that “given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further.”
This is likely to pour more cold water on the housing market, which has only begun to show tentative signs of recovery, following lukewarm demand throughout the spring and summer.
“Given the Bank of Canada’s commentary today, Canadians should brace themselves for further rate hikes in 2022 and 2023,” says James Laird, Co-CEO of Ratehub.ca and President of CanWise mortgage lender.
“The Bank seems pleased that rising rates have caused a pullback from the unsustainable growth in the housing market that occurred during the pandemic. This rate increase will put further downward pressure on home prices across the country, which peaked in the first quarter of this year.”
However, serious buyers are “taking it in stride” says Andy Taylor, Senior Vice President – Broker, Sotheby’s International Realty Canada, especially for high-demand homes. The buyer group he’s seen most impacted, he says, are newcomers to the market, given older buyers have encountered rates above 5% in the late 2000s. “People who have been in the market are familiar with these rates, and people who are even older, like my parents, remember it at 20%,” he says.
“We’ve gone from having extremely low rates to just low rates. They have increased, but they’re still historically typical.”
He adds that, ultimately cooler demand will lead to a healthier market, with more choice for buyers, and fewer fraught bidding war situations, which were largely responsible for pushing prices to unsustainable highs during the pandemic. In contrast, today’s buyers are much less eager to compete for a property.
“Even though we’re still seeing some properties being listed on the low side and having multiple offers, [we’re] certainly seeing buyers who would rather put in an offer on a property where they’re not competing,” he says. “Buyers are looking at trying to buy more and better value, and we are seeing price changes on listings, so sellers are coming around to the realization that they have to adjust prices. And when property is priced properly to the current market, and it’s good product [it sells].”
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“Even though we’re still seeing some properties being listed on the low side and having multiple offers, [we’re] certainly seeing buyers who would rather put in an offer on a property where they’re not competing,” he says. “Buyers are looking at trying to buy more and better value, and we are seeing price changes on listings, so sellers are coming around to the realization that they have to adjust prices. And when property is priced properly to the current market, and it’s good product [it sells].”
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از هزینه‌های مواد غذایی گرفته تا وام‌های خودرو، تورم به شدت بر کانادایی‌ها و کیف پول آن‌ها تأثیر می‌گذارد، اما احتمالاً قیمت بالای دیگری در راه است.
هزینه‌های گرمایش خانه تا ۳۰ درصد افزایش می‌یابد که به قیمت گاز طبیعی بستگی دارد، همانطور که بسیاری از رانندگان می‌دانند که در سال ۲۰۲۲ به طور پیوسته افزایش یافته است.
در ژوئن، هیئت انرژی انتاریو افزایش ۲۰ درصدی گاز طبیعی را برای شرکت‌هایی مانند انبریج تصویب کرد.
هیئت انرژی انتاریو می‌گوید که به طور متوسط مشتری انبریج ماهیانه ۱۲۶ دلار برای گرمایش پرداخت می‌کند.
بانک مرکزی کانادا نرخ بهره کلیدی خود را در روز چهارشنبه سه چهارم درصد افزایش داد.
این وضعیتی است که کارشناسان می‌گویند می‌تواند برخی را به نقطه شکست برساند زیرا برای پرداخت هزینه‌های سرسام آور کالاهای روزمره به وام‌های با نرخ بهره بالا و کارت‌های اعتباری متکی هستند.
هزینه زندگی در سراسر کانادا و در واقع در سطح جهان افزایش یافته است، با افزایش تورم در کالاهای ضروری مانند مسکن و انرژی و همچنین بسیاری از کالاها و خدمات دیگر.
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هزینه‌های گرمایش خانه تا ۳۰ درصد افزایش می‌یابد که به قیمت گاز طبیعی بستگی دارد، همانطور که بسیاری از رانندگان می‌دانند که در سال ۲۰۲۲ به طور پیوسته افزایش یافته است.
در ژوئن، هیئت انرژی انتاریو افزایش ۲۰ درصدی گاز طبیعی را برای شرکت‌هایی مانند انبریج تصویب کرد.
هیئت انرژی انتاریو می‌گوید که به طور متوسط مشتری انبریج ماهیانه ۱۲۶ دلار برای گرمایش پرداخت می‌کند.
بانک مرکزی کانادا نرخ بهره کلیدی خود را در روز چهارشنبه سه چهارم درصد افزایش داد.
این وضعیتی است که کارشناسان می‌گویند می‌تواند برخی را به نقطه شکست برساند زیرا برای پرداخت هزینه‌های سرسام آور کالاهای روزمره به وام‌های با نرخ بهره بالا و کارت‌های اعتباری متکی هستند.
هزینه زندگی در سراسر کانادا و در واقع در سطح جهان افزایش یافته است، با افزایش تورم در کالاهای ضروری مانند مسکن و انرژی و همچنین بسیاری از کالاها و خدمات دیگر.
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TRREB recorded 5,627 house sales in August 2022, a 34.2 percent year-over-year drop. The August sales result represented a month-on-month increase over July.
Sales reflected a larger proportion of new listings in comparison to the previous three months. If this pattern continues, it may imply that selling prices will be supported in the coming months. Year on year, the average selling price for all property types grew by about 1%. The average selling price grew considerably month over month in August, indicating that a greater proportion of more expensive property types were sold.
While higher borrowing rates have affected home purchase decisions, current homeowners facing mortgage renewal are also paying more. The federal government has the opportunity to improve housing affordability for existing homeowners by suspending the stress test when existing mortgages are transferred to a new lender, allowing for increased competition in the mortgage market. Is it reasonable to test homebuyers at two percentage points over current inflated rates, or should a more flexible test that follows the interest rate cycle be used? Aside from interest rates, other variables influence housing affordability in the Greater Golden Horseshoe. The capacity to put on extra supply is the longer-term problem. However, we are heading in the right direction.
Source: TRREB's MLS July 2022 Market Watch Report
Sales reflected a larger proportion of new listings in comparison to the previous three months. If this pattern continues, it may imply that selling prices will be supported in the coming months. Year on year, the average selling price for all property types grew by about 1%. The average selling price grew considerably month over month in August, indicating that a greater proportion of more expensive property types were sold.
While higher borrowing rates have affected home purchase decisions, current homeowners facing mortgage renewal are also paying more. The federal government has the opportunity to improve housing affordability for existing homeowners by suspending the stress test when existing mortgages are transferred to a new lender, allowing for increased competition in the mortgage market. Is it reasonable to test homebuyers at two percentage points over current inflated rates, or should a more flexible test that follows the interest rate cycle be used? Aside from interest rates, other variables influence housing affordability in the Greater Golden Horseshoe. The capacity to put on extra supply is the longer-term problem. However, we are heading in the right direction.
Source: TRREB's MLS July 2022 Market Watch Report
Banking watchdog refuses to bow to pressure to loosen mortgage standards as borrowing rates rise
That includes the mortgage stress test now under fire
The head of the Office of the Superintendent of Financial Institutions said Thursday that Canada’s top banking regulator will not heed calls to loosen mortgage underwriting standards as interest rates rise, a condition that has made qualifying to buy a home or renew a mortgage more onerous.
“The uncertainty and anxiety caused by a rising interest rate environment have, understandably, caused some Canadians to advocate for a loosening of the underwriting standards in Guideline B-20,” Peter Routledge acknowledged in prepared remarks for a speech in Toronto.
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That includes the mortgage stress test now under fire
The head of the Office of the Superintendent of Financial Institutions said Thursday that Canada’s top banking regulator will not heed calls to loosen mortgage underwriting standards as interest rates rise, a condition that has made qualifying to buy a home or renew a mortgage more onerous.
“The uncertainty and anxiety caused by a rising interest rate environment have, understandably, caused some Canadians to advocate for a loosening of the underwriting standards in Guideline B-20,” Peter Routledge acknowledged in prepared remarks for a speech in Toronto.
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“Let me reassure those of you who oppose a loosening of underwriting standards that OSFI will not do that,” he said.
The Bank of Canada hiked the key overnight rate by 75 basis points to 3.25 per cent on Wednesday, as it continued to aggressively raise rates to combat inflation.
The Toronto Regional Real Estate Board is among those calling for more flexibility in the mortgage “stress test,” particularly for those trying to renew a mortgage who must re-qualify at the current rate plus two percentage points.
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The Bank of Canada hiked the key overnight rate by 75 basis points to 3.25 per cent on Wednesday, as it continued to aggressively raise rates to combat inflation.
The Toronto Regional Real Estate Board is among those calling for more flexibility in the mortgage “stress test,” particularly for those trying to renew a mortgage who must re-qualify at the current rate plus two percentage points.
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