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The Mortgage/Housing Year in Review

We have seen a number of challenges in the housing market over the past few years. Housing prices have been up and down; housing sales were down but have rallied in many areas of the country in the last half of 2019. The government also introduced the First Time Home Buyer Incentive and enhancements to the RRSP Home Buyer’s Plan. Yet, affordability continues to be a hot topic across Canada.

Interest rates inched up slightly for variable rates and lines of credit. We’ve also seen a slight increase to fixed-rates in recent weeks due to the upward pressure on bond yields and increases to the cost of funds. Still, rates are relatively low – perhaps this is the new normal.  

The Canadian dollar is trading at approximately 75 cents to the US dollar (at the time of this writing) and there is continued concern about high consumer debt, but we continue to look on the bright side, supported by some new information.

" Canadians have adjusted to the mortgage stress test "

According to a recent report from RE/MAX, an increase in consumer confidence could be a key factor affecting the housing market in 2020. 

The report found that Canadians have adjusted to the mortgage stress test, which was introduced three years ago on mortgages with less than 20% down payment and expanded to include all bank mortgages a short time after.

The report also found that older millennials are now moving into their peak earning years and will drive the market in 2020. RE/MAX found that more than half (51%) of Canadians are considering buying a property in the next five years, especially those under the age of 45. This is up from 36% at the same time last year.

A Reuters’ poll found that a strong domestic economy, rising immigration and lower mortgage rates have helped the housing market make a comeback in the second half of this year. "It is not just low interest rates that are helping the housing market – the fundamental support is demographic and that is largely from a rapidly growing population driven by international migration," Sal Guatieri, senior economist at BMO said in an interview with Reuters.

The Canadian Real Estate Association’s (CREA) prediction for 2020 are that housing sales will continue to improve through 2020, albeit slowly. National home sales are forecast to rise by 7.5% to 518,100 units next year. Ontario and Quebec are predicted to see sales rise by about 7% in 2020, while activity in Alberta will recover by about 5% compared to 2019. The number of homes trading hands in other provinces is predicted to edge up or down only marginally.

With all the positives going into 2020, if you’re thinking of buying a new home, renewing a mortgage or refinancing an existing mortgage, or just want an update about your local market, let’s talk

Wishing you health, happiness, and prosperity in 2020.

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