Mortgage Bytes

  • Interest-Rates The big banks hiked most fixed mortgage rates about 0.20% today.
  • The Bank of Canada’s David Dodge feels the Canadian economy will have a weak 1st half of 2008 and a stronger 2nd half.  If he’s right, the same may apply to mortgage rates.
  • “More and more first-time buyers are [being] gifted with a significant down payment from their boomer parents, as an advance on their inheritance.” — Don Lawby, president of Century 21 Canada.
  • Do Canadians have a false sense of security with our real estate market?  MacLeans article.
  • From 1997 to 2007 Canadian house prices rose 78%. In the U.S. it was 165%. In England, 213%!  Who knew Canada was such a “bargain?”  (Source:  The Economist)
  • 14% of Canadians say paying down their mortgage is their top financial priority in 2008, according to Manulife.
  • Despite home prices doubling in the last 15 years, the Home Buyers Plan withdrawal limit has stayed the same.  CMHC’s Will Dunning says it must be raised.
  • Since 1990, the GST paid on new homes has jumped 95%.
  • GE Money is axing its “MasterCard with every Mortgage” program Dec. 31, 2007. Client interest was too low.
  • Statistics Canada’s mortgage-interest cost index was up 7% in November compared to a year earlier.
  • 2.6% of Canadian rental units were vacant in October–the same ratio as last year.  If you can believe it, CMHC says idyllic Kelowna, BC actually had 0.0% vacancy!  Windsor, ON was tops at 12.8%.
  • Canada’s most expensive rentals are around Fort McMurray, AB where $2,085 will lease you a 2-bedroom apartment. The most expensive big city is Calgary, which happens to be the (new) best Canadian city to live in according to the Conference Board of Canada.
  • Are Canadian lenders curtailing lending in the wake of big bank writedowns (like CIBC’s)?  “The short answer is no,” says Jim Murphy of CAAMP.  (Bankrate story)
  • Quest Capital, who just launched last week, wants “to become Canada’s largest Mortgage Investment Corporation.”
  • Scotiabank’s mortgage market share increased 0.15% in 2007.  They attribute that to “strong growth” in the branch and mortgage broker channels. 0.15% might be the weakest “strong growth” we’ve ever seen.
  1. From one article above ” . . . Financial planners suggest a mortgage should never take up more than 32 per cent of a household’s gross income . . . ”
    Don’t they recommend that your total housing cost (Mortgage, Heat, Taxes, and Condo Fees) to be less than 32%? Plus total debt payments less than 40%? Maybe they are just trying to make a point that housing prices at 10 times median family income aren’t a bad thing.
    Oh and also, maybe Quest Capital could grow a little bit easier if their web site didn’t look like a cyber-squatter site, or done by a 6 year old for a school fair.
    I don’t know what it is today, but I think I’m feeling cynical :)

  2. These are cool little nuggets of info….bite sized and tasty. You guys do an excellent job with the site.
    Merry Christmas!

  3. House prices are at levels not seen since previous bubble in certain areas. In terms of price to rent ratios and price to household income. Edmonton, Calgary and Vancouver markets have been highlighted as bubble zones by TD Economics. This blog covers the Alberta bubble:

  4. Hello to all,
    FT: Yes, bond yields have been near 1-year lows but perceived credit market risk is keeping mortgage rates up–and spreads wide.
    Traciatim: Correct, the 32% rule of thumb generally includes principle, interest, taxes, heat, and part of the condo fees.
    Kyle: Thank you! We try to make news items easily digestible. :-)
    Michael: Thanks for the insight and links (although I couldn’t access the 2nd one). We’ve done a few stories about bubbles and it seems a handful of Canadian cities do resemble the definition. The tought part is guessing when they’ll burst. They could theoretically inflate a lot more before they do, leaving worried buyers on the sidelines for an indefinite amount of time.
    As high as our prices are, Canada’s real estate is still reasonable compared to many other desirable countries. If Canada’s tax system someday becomes an attractant instead of a repellant (we’re getting there slowly) it’ll lure a lot more foreign buyers in time as well.
    Bobo: Thanks for the feedback and for reading!

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