Archive for the 'Interest Rate Increase' Category

The Bank of Canada interest rate is staying at 1.75% for the remainder of 2018.

On December 5, 2018, the Bank of Canada (BOC) announced that it would hold the overnight rate at the amount set on October 24, 2018 of 1.75%. The Bank Rate is correspondingly 2% and the deposit rate is 1.5%.

In its decision, the BOC referenced household credit and regional housing markets, saying that both “appear to be stabilizing following a significant slowdown in recent quarters.”

“The Bank continues to monitor the impact on both builders and buyers of tighter mortgage rules, regional housing policy changes, and higher interest rates,” the BOC stated in a release.

However, the regional housing market wasn’t the biggest factor in the Dec. 5 decision.

Oil prices have fallen sharply since the October announcement and benchmarks for western Canadian oil have been further pulled down by transportation constraints and a buildup of inventories. The BOC has said they will be keeping an eye on this economic factor moving forward.

Trade conflicts are also facing uncertainty.

Moving forward, the BOC will be keeping an eye on these factors, plus Canadian household debt and housing levels. They still indicate that further hikes will likely be coming.

For those in the real estate market, this could indicate a reprieve. If clients are shopping for a new home, or you are considering buying a property for investment purposes, interest rates are still at a relatively low level. That could be changing in 2019. Economists are widely predicting that the Canadian interest rate could reach at least 2.5% in the next 12 months.

This hold might mean encouraging clients to deal with outstanding household debt now, or access home equity while they can. As the gross debt service (GDS) ratio — total amount of housing-related debt — and total debt service (TDS) ratio — total amount of all debt — are now weighed more heavily by mortgage lenders, it’s a good idea to get those levels as low as possible before applying for mortgage funding.

The next BOC announcement is scheduled for January 9, 2019.

GeoWarehouse has real estate tools to help find opportunities even with a rising Canadian interest rate. Access our property search, sales comparables, demographics reports, and more all at www.geowarehouse.ca.

Call 1-866-237-5937 to find out how to become a subscriber.

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October 24, 2018

The Bank of Canada overnight rate has gone up to 1.75% after an October 24, 2018 announcement.

This is the fifth interest rate increase since July of 2017, and the third in 2018.

The Bank of Canada (BOC) cited robust U.S. and Canadian economies and the new US-Mexico-Canada Agreement (USMCA) as some of its reasons for the increase.

Other justifications included business investment and export projections, a stable inflation rate, and steady household spending.

There was only one mention of the Canadian housing market in the announcement.

“Households are adjusting their spending as expected in response to higher interest rates and housing market policies,” the BOC stated.

“In this context, household credit growth continues to moderate and housing activity across Canada is stabilizing. As a result, household vulnerabilities are edging lower in a number of respects, although they remain elevated.”

The October 24 rate increase was expected by many, especially once the USMCA deal was approved.

The BOC indicated there will be more increases on the horizon, though perhaps not as many as originally thought.

“In determining the appropriate pace of rate increases, Governing Council will continue to take into account how the economy is adjusting to higher interest rates, given the elevated level of household debt,” the BOC said.

There is one more interest rate announcement scheduled for 2018, on December 5.

The effects of the hike on real estate interest rates remain to be seen.

GeoWarehouse has tools for real estate professionals that can help navigate interest rate changes. Research the latest property data, comparable sales, and more.

Call 1-866-237-5937 or visit www.geowarehouse.ca to learn more.

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The Bank of Canada (BOC) interest rate is remaining at 1.5% for September of 2018.

The BOC increased interest rates from 1.25% to 1.5% in July of 2018 — the fourth increase in a year. On September 5, 2018, the BOC announced that interest rates would stay at 1.5% for now.

High cost of consumer price index inflation due to gasoline prices, the U.S. economy, and uncertain trade policies all influenced the BOC’s decision — as did the Canadian real estate market.

“Meanwhile, activity in the housing market is beginning to stabilize as households adjust to higher interest rates and changes in housing policies,” the BOC said in the September 5 announcement.

“Continuing gains in employment and labour income are helping to support consumption. As past interest rate increases work their way through the economy, credit growth has moderated and the household debt-to-income ratio is beginning to edge down.”

The Teranet-National Bank House Price Index has seen some stabilization over the summer months, although that stabilization has largely been seasonal.

The new mortgage stress test for uninsured mortgages, introduced on January 1, 2018, appears to have affected the market. Mortgage Professionals Canada “Report on the Housing and Mortgage Market in Canada” for July 2018 stated that an estimated 100,000 Canadians have been prevented from buying a home as result of stress testing.

Statistics Canada reported that the Canadian household debt-to-income ratio decreased to $1.68 for every $1 earned as of June 2018, although that figure is still higher than it was a year earlier.

The BOC said in the September 5 announcement that interest rates will continue to increase gradually. Many economists are predicting at least one more hike in 2018 — likely in October.

The next interest rate announcement is scheduled for October 24, 2018.

The property data tools from GeoWarehouse can help real estate professionals adapt to changing housing interest rates and more. Contact us today. Call 1-866-237-5937 or visit www.geowarehouse.ca.

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Looking at news outlets, the current state of the Canadian real estate market can seem pretty doom and gloom. Interest rate increases combined with new Canadian mortgage rules and a declining housing market have presented challenges, to be sure, but could there also be an advantage?

While the housing market has been slowing so far in 2018, the flipside is that houses have become more affordable. For instance, the Teranet-National Bank House Price Index reported in the final quarter of 2017 that the housing affordability measure fell 0.2 per cent. This is the first time that’s happened since the second quarter of 2015.

Even as we are seeing interest rate increases and stricter Canadian mortgage rules, Canadian wage growth is going up. Increased wages and more affordable housing could definitely present real estate sales opportunities if your target market is affected.

Changes to the Canadian real estate market can also be navigated with flexibility, for example, shifting your target market to adapt to new trends. The Teranet Market Insights report March 2018 edition reported that condo demand continues to be high, particularly in Toronto. Not only that, but new condo development is also remaining strong.

According to the Canadian Press, some families are actually choosing smaller living over larger suburban dwellings. Families of five are living in 1,000 sq. ft. condos, or 950 sq. ft. houses. The right buyer might be tempted to consider some out-of-the-box housing arrangements.

BuzzBuzz News Canada reports that there is still more demand in the Canadian housing market than supply, meaning many real estate agents are seeing more buyers than sellers. If that’s the case for you, you can take advantage. Use property valuation tools to identify selling opportunities in your target area and identify new leads.

Another advantage of these changes is that real estate sales professionals aren’t the only ones dealing with them. Mortgage brokers and mortgage lenders also have to work with the same constrictions and they’re developing products to meet shifting demands. You can take advantage of this by making these industry connections. When you know how mortgage professionals are adapting, you can have more options to offer your clients who might be seeking financing.

It’s difficult to say exactly where the Canadian real estate market is headed in 2018, but you can find a way to adapt and perhaps profit even more from recent changes. Understanding your target market is key to identifying new opportunities. Technology, like GeoWarehouse, puts vital property data at your fingertips so you can quickly and efficiently access the information you need to know when you need to know it.

Not only that, but the GeoWarehouse store also provides important fraud detection resources, like Parcel Registers* and Instrument Images*. These tools let you find out whether there’s an encumbrance, such as a lien or an undisclosed mortgage, on a property so you’re not caught unaware.

Not a GeoWarehouse subscriber? You can become one today. It’s easy — just visit www.geowarehouse.ca to learn more.

* An official product of the Ontario government pursuant to provincial land registration statutes.

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August 9, 2017

A few weeks ago, the Bank of Canada announced the interest rate was finally going up – from 0.5% to 0.75%. Many of us have been anticipating such an announcement for months, so this really should not have come as a surprise to anyone. As a real estate professional, this news has led to the question of what the impacts of an interest rate increase may be.

While it is as yet unclear – indeed not enough time has passed to accurately gauge the ways in which a higher interest rate will impact the housing market – there has been some speculation.

According to a Business News Network release from just days before the interest rate announcement wherein some analysts shared their predictions, such a rate hike (25 basis points) shouldn’t have much of an impact on the real estate market. However, as one analyst noted, “one-point higher rates would noticeably drive up real estate listings and further slow sales, especially if OSFI’s new stress test passes and takes more buyers out of the market.”

That being said, as another analyst pointed out, “if we look south of the border, the U.S. has seen three rate increases totaling 75 basis points since December 2016 and demand for homes still appears to be strong.”

You can read more on these predictions here: http://www.bnn.ca/what-a-rise-in-interest-rates-could-mean-for-canada-s-hot-housing-markets-1.801059.

For more on the interest rate hike itself, check out Teranet’s Commercial Solutions’ blog here: http://www.teranet.ca/blog/bank-of-canada-raises-interest-rate-with-more-to-come/.

No matter what happens, GeoWarehouse has the tools to help you succeed. Find out more by visiting www.geowarehouse.ca.

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