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Mortgage News Summary: Rates, Recovery, Wealth

Mortgage Rates Dive Below 5% this Spring.

In an article by Candyd Mendoza, published on March 11, 2024, it was reported that mortgage rates have taken a welcome dip, descending below the 5% threshold just in time for the spring real estate season. The latest figures show uninsured five-year fixed mortgages have gone under 5%, with insured borrowers enjoying even lower rates at 4.64%, setting the stage for a bustling housing market. Moreover, major banks are now extending more attractive variable rates to eligible uninsured borrowers who are open to expanding their banking relations, with offers reaching as competitive as prime minus 0.75%. This financial landscape shift occurs amidst anticipation in the bond market for a potential easing of rates by the Bank of Canada, with predictions leaning towards a one in four likelihood of a cut by April 10 and a complete reduction anticipated by July, as outlined by McLister.

The is based on information primarily sourced from a March 11, 2024 article from the CMP, entitled: “Mortgage rates slide below 5% in time for spring market.” https://www.mpamag.com/ca/mortgage-industry/market-updates/mortgage-rates-slide-below-5-in-time-for-spring-market/480562

Is Real Estate in Canada in the Recovery Phase?

In a recent Special Housing Report by Robert Hogue, published on March 8, 2024, it was stated that 'Canada’s housing market isn’t out of the woods yet.' Despite witnessing month-to-month increases in home resales across several of Canada's major markets during the prior two months, February saw a decline. This underscores the ongoing challenges related to affordability, which continue to significantly constrain potential buyers. The report also noted an increase in sellers entering the market, potentially in anticipation of the spring selling season. Although there was a slight uptick in home prices across all major markets last month, suggesting a possible turning point. The report concludes that a vigorous and sustained recovery in the housing market is unlikely to materialize until there is a more meaningful decline in interest rates.

The is based on information primarily sourced from a March 8, 2024 article from the RBC, entitled: “Reality check: Canada’s housing market isn’t out of the woods yet.” https://thoughtleadership.rbc.com/reality-check-canadas-housing-market-isnt-out-of-the-woods-yet/?utm_medium=email&utm_source=salesforce&utm_campaign=Housing

Canada's Households Experienced Increased Wealth in 2023.

According to a report published on March 13, 2024, by Randall Bartlett, Senior Director of Canadian Economics at Economic News, households in Canada experienced increased wealth but also faced greater financial strain last year. In Q4 2023, Canadian households saw a 1.8% ($300 billion) increase in net wealth, reversing the previous quarter's decline. However, borrowing continued to rise, reaching $29.5 billion, indicating a reliance on credit. Despite a slight decrease in household debt to 178.7% of disposable income, the debt service ratio remained high at around 15.0%, mainly due to mortgage debt. With rising interest rates squeezing household budgets, the Bank of Canada's restrictive policy aims to curb consumption. As inflation slows, the bank may consider interest rate cuts, potentially starting in June, to ease financial strain and spur economic growth.

The is based on information primarily sourced from a March 13, 2024 article from the Desjardins, entitled: “Reality check: Canada’s housing market isn’t out of the woods yet.” https://www.desjardins.com/on/en/savings-investment/economic-studies/canada-national-balance-march-13-2024.html
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