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housing market outlook

Latest in Mortgage News: House Price Growth to Cool by End of Year: TD

TD Bank is forecasting that home prices have further to rise yet before finally starting to lose steam by the end of the year.

“…with markets remaining historically tight, more near-term gains are in the cards,” wrote TD economist Rishi Sondhi in a recent report.

But, with home prices already up 31.6% in March on an annual basis, and with sales up 76.2%, Sondhi added that such growth is “unsustainable.”

“Accordingly, we anticipate some cooling in sales starting in the second half of the year, as rising interest rates begin to bite,” he wrote. “This should also sap some steam from price growth.”

In the near-term, watch for some potential “pull forward” of sales as buyers try to get in before a stricter stress test takes effect June 1 for uninsured mortgages (those with a down payment of 20% or more). On the other hand, Rishi notes that the third wave of the pandemic could also weigh on activity.

Filogix Unveils Expert Pro and Expert Plus

Filogix announced recently that it has enhanced its Filogix Expert offering by launching Filogix Expert Pro and Expert Plus.

Expert Pro is largely a rebranding of Doorr, a company Finastra bought in 2020 that provided a client-facing portal, digital signatures, CRM, document management, broker workflow automations, online appointment scheduling, SMS and NOA retrieval.

Together with Expert Plus, both are being promoted as solutions to digitize the end-to-end mortgage process.

“Smaller lenders have been looking for a solution that provides a cost-effective and easy method to receive mortgage applications while at the same time ensuring their broker partners are able to submit an application in an efficient and secure manner,” said Siobhan Byron, SVP, Technology Enabled Managed Services (TEMS) at Finastra.

“Coming this spring, Filogix will bring to market a new solution that fulfills this need.”

The platforms will allow mortgage professionals to “centralize their business through workflow optimization,” Finastra says, adding that for broker-owners, this means improved visibility over brokerage operations, with insight into performance metrics and business analytics.

Warnings Against Unconditional Offers

While housing activity in British Columbia isn’t as super-charged as some markets in Toronto, a “heightened level of activity” has caused provincial regulators to issue a warning to homebuyers.

A statement was released by the Real Estate Council of BC (RECBC) and Office of the Superintendent of Real Estate (OSRE), with the goal of encouraging buyers to do their due diligence when buying a home.

“Buying a home is one of life’s biggest financial decisions. There are potential risks at the best of times, but with the added pressure and stress of the current market conditions, those risks are amplified,” said Micheal Noseworthy, Superintendent of Real Estate. “In a competitive market, it’s more important than ever to do your research and make a well-informed decision.”

In a separate release, the British Columbia Real Estate Association (BCREA), said it and other associations have been watching the developing trends “with concern.”

“As a result of the current housing market conditions, consumers are facing challenging circumstances,” said Darlene Hyde, Chief Executive Officer, BCREA. “We understand the pressures both buyers and sellers are facing, and we encourage consumers to seek a clear understanding of the risks associated with these emerging trends by talking to your REALTOR®, and other professionals when advised.”

“Purchasers who enter into unconditional offers without sufficient committed financing to complete their purchase risk losing their deposit and being sued for damages if they are unable to complete,” Samantha Gale, CEO of the Canadian Mortgage Brokers Association, added.

*Note: This blurb has been edited to clarify that BCREA’s statement was separate from the original release put out by B.C.’s regulators.

Majority of Homeowners Plan to Stay Put

Despite many homeowners sitting on newfound wealth in the form of highly valuable home equity, a majority say they have no plans to cash in and sell.

Just 6% of homeowners planned to sell their home pre-pandemic, and 77% say that hasn’t changed, according to a recent poll from CIBC. Additionally, three quarters (75%) say they have no plans to move in the next two years.

“As a potential homebuyer, these results suggest that supply won’t be improving in the near term…” Carissa Lucreziano, Vice-President, CIBC Financial and Investment Advice, said in a release.

But with homes serving as personal sanctuaries amidst the pandemic, a growing number of homeowners have turned their focus to renovating their current properties as opposed to buying new.

More than a third (31%) of homeowners said they carried out some form of renovation during the pandemic, while another 34% said they plan to remodel over the next 12 months.

The CIBC survey also found that half of renters say they are unable to purchase due to high home prices. Nearly half, on the other hand, say their lack of owning a home is not due to the current mortgage stress test.