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Latest in Mortgage News: Canadians Say Low Interest Rates to Blame for High Home Prices

More than three-quarters of Canadians (77%) believe home prices in suburban and rural areas have risen to unsustainable levels, and most feel that ultra-low interest rates are to blame.

A full 8 out of 10 people say low borrowing costs are to blame for the recent run-up in home prices, according to a survey from Zoocasa.

The findings reveal disagreement about the impact of low interest rates, with 47% saying they believe it has increased affordability, while 34% disagree with that statement.

The survey also found that more than a third (38%) agree that low interest rates have impacted their desire to buy a property.

With the average home price in Canada as of July at more than $661,000, according to the Canadian Real Estate Association, buyers are needing ever higher incomes in order to afford their purchase. The Zoocasa survey found that half of buyers (50%) have a household income of over $100,000, while 32% reported a household income of under $100,000 and another 20% reporting a household income of over $160,000.

In terms of demographics, the largest cohort of first-time buyers identified as Millennials (born between 1981 and 1996). The next largest segment was Gen X (1965-`1980) at 23% and Baby Boomers (1946-1964) at 6%. Just 3% of Gen Z (1997-2012) self-identified as first-time homebuyers.

Online home sale auctions are now a thing

An Ottawa-based start-up has brought the concept of online auctions to Canadian real estate sales.

Unreserved, which is aiming to reinvent how homes are bought and sold, recently launched its auction platform.

“Our plan is to run a real-time transparent process and it starts by rolling out the red carpet for buyers,” CEO Michael Ryan O’Connor said in the company’s promotional material. “Our goal is to increase buyer confidence by providing full transparency in every step of the process…Also, by removing 4-5% commissions paid by sellers this essentially allows buyers to pay less and for sellers to keep more.”

O’Connor added that by using its platform, buyers can see the other bids, meaning they’re not over-paying by tens of thousands of dollars in a blind-bid process.

“We looked at the current environment, the blind bidding, the pre-emptive bully offers, zero home inspections, and we said ‘its time to bring transparency into the entire process,'” O’Connor noted.

The company is piloting its platform in Ottawa but plans to expand to other cities going forward.

National Bank invests $103 million in Flinks

National Bank of Canada announced that it has invested $103 million in Flinks, a Montreal-based fintech company that enables businesses to connect to their clients’ financial accounts.

Flink recently launched in the U.S., and this investment will allow it to continue its growth to serve “asset managers, credit unions and banks with tools that enable innovation with financial data in North America,” the company said.

“Leveraging financial data still today requires technical know-how,” said Yves-Gabriel Leboeuf, CEO of Flinks. “We want to empower service providers of all sizes to drive positive outcomes for their customers, using financial data.”

Updates from FSRA

The Financial Services Regulatory Authority of Ontario (FSRA) said it is seeking feedback on its proposed licensing exemption for certain businesses engaging in mortgage transactions.

The exemption would apply to select businesses that do not deal with individual consumers. The move is part of the agency’s work—in collaboration with industry partners and the Ministry of Finance—to implement proposed recommendations to the Mortgage Brokerages, Lenders and Administrators Act, 2006, based on a 2019 government review.

To review the proposed guidance and submit your feedback by October 8, 2021, visit FSRA’s website.

FSRA also recently unveiled a new process for criminal background checks as part of its mortgage broker licence applications.

FSRA will have to outsource criminal reference checks to remain compliant with the Police Record Checks Reform Act (PRCRA). Among other things, this process will involve a fee of $40 and require the applicant to initiate a Canada Police Information Centre (CPIC) check through an approved third-party criminal record check provider. To learn more, click here.