Here’s two factors that suggest Canada’s housing market might not succumb to the same type of housing "correction" as in the U.S.
- The number of Canadians with mortgages in arrears is at a record low. In the U.S. mortgage foreclosures are up 42% in the past year.
- In the U.S., real estate comprises 34% of typical household assets. In Canada that number is only 20%.
Source: The Gazette
Canada Mortgage and Housing Corp. has become the third Canadian mortgage insurer to offer 40-year mortgages. See this National Post Story.
Don’t be suprised if CMHC’s new competitors force it to up the ante to 50-years before too long.
Mortgage debt jumped almost 11% in 2006 and will increase 10% more in 2007. With mortgages becoming easier to get every day, this trend will likely continue for a while.
The Ottawa sun says this and record home buying has sunk Canada’s national savings rate from 20% two decades ago to almost 0% today.
Here’s the latest buzz from the largest gathering of mortgage professionals in Canadian history, CIMBL’s 2006 Annual National Mortgage Conference and Expo .
- CIMBL Chairman Paul Grewal wants Ottawa to encourage more competition in the Canadian mortgage market. (CBC Story)
- Grewal also wants the government to raise the amount people can borrow from their RRSPs to purchase a house, from $20,000 to $25,000.
- CIMBL will change its name to the Canadian Association of Accredited Mortgage
Professionals (CAAMP) on May 1, 2007 to reflect it’s push of the AMP designation.
A new CIMBL survey quantifies the value that mortgage brokers add with several interesting statistics. (see CIMBL Survey)
Among the more interesting points:
- Mortgage brokers, in part, have helped Canadians negotiate roughly 1.38% off typical posted bank rates in the last year.
- The number of Canadians using mortgage brokers has jumped 24% since 2005.
- Among those who renewed or refinanced over the past 12 months, 84% remain with the same lender, most likely a mistake given the intense competition out there.
- 88% of Canadians say they are happy with their mortgage terms.
- The average Canadian interest rate in October was 5.05%, versus 4.62% in September 2005.
Those crazy Europeans lead the world with innovative (read risky) mortgage products. The latest "loose loan" comes out of the U.K. where England’s biggest mortgage lender is set to launch a 125% mortgage. (See Times Online story)
That extra 25% puts cash in the homeowners pocket, enough to cover the stamp tax and buy some nice new furniture! Just don’t scare yourself by calculating the interest expense or worse, the implications of negative equity as noted by Jaya Narain of the Daily Mail. (See story)
Now let’s see what Canada’s three new mortgage insurers can come up with.
It’s a $1.5 billion problem and Ontario plans to fight it. The province will likely raise maximum mortgage fraud fines to $50,000 and create a new database of real estate fraudsters, among other things… (CTV Story)
iHere are the latest Vancouver area housing statistics for October (thanks to VHMB):
- House listings in October: +19%
- Condo listings in October: +29%
- October house sales: -13%
- October condo sales: -19.5%
The above figures represent year-over-year data (e.g. October 2006 vs. October 2005). Read more of VHMB’s post: here
- Parts of Alberta are also cooling off ( Edmonton Sun Story)
- 42% of Vancouver condos coming to market 9/1 to 10/31 remain unsold ( Vancouver Sun Story )
- Calgary prices still rose 1.1% in October despite a flood of new listings ( Calgary Sun story )
- Toronto’s housing prospects aren’t much better. This Toronto Star article cites forecasts of only 1.8% gains in 2007, the lowest in 10 years.
When will too little space start scaring condo buyers?
Take Lumiere for example. It’s one of the latest new shoebox-sized condominiums being sold in Toronto. With its biggest non-penthouse suite having just 895 square feet (and the smallest offering only 495 square feet), Lumiere seems like further evidence of how developers are hoping to cram more people into less space.
This makes us wonder; will their be a strong enough resale market for the flood of new units this small? Don’t be surprised if there comes a time when you can no longer fit a bed in your new condo’s master bedroom.
A judge has released a North York, Ont. couple from a mortgage that was fraudulently taken out on their home…much to the chagrin of Toronto Dominion Bank. It was a precedent-setting case whereby the judge criticized TD for not doing enough to verify the mortgage was bona fide. (Toronto Star story)