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Genworth Canada 2013 Homeownership Education Week SeminarGenworth logo

Author Credit: Kiki Sauriol-Roode, VP, Strategic Alliances, Genworth Canada

On April 9, 2013, Genworth Canada hosted a half-day seminar for real estate sales professionals  and mortgage industry professionals. Craig Alexander, Chief Economist at TD Group, delivered the keynote speech about the current state of Canada’s economy and real estate market. His presentation was followed by a review of Genworth Canada’s annual Homeownership Study.

The results of the survey were discussed in a panel discussion featuring Phil Soper of Royal LePage, Stuart Levings of Genworth Canada, Henrietta Ross of the Canadian Association of Credit Counselling Services, and David McDonald of Environics Research Group. Following this discussion, Paul Belanger of Blakes LLP, and Mark Tamburro of Get A Better Mortgage Inc., deliberated over a number of probing regulatory issues.

Here are some key take-aways from the seminar:

  • Canada has out-performed the U.S. during the economic recovery
  • The Canadian economy is expected to deliver moderate economic growth in 2013 and 2014
  • A soft-landing is expected in Canadian real estate.  Home sales have fallen in response to the tightening of mortgage insurance rules and slower economic growth, but there has not been a price correction (outside of  Vancouver). This reflects the fact that listings have declined in tandem with sales.  The result is balanced market conditions in most Canadian cities
  • The effects of the recent tightening of mortgage insurance rules will abate with time. There is no catalyst for a major correction in real estate, as Canada’s labour market will remain healthy and interest rates will remain low
  • Consumers have reduced their willingness to take on additional debt. This will constrain household spending, but it is a healthy outcome and spending will likely continue to advance at roughly the pace of income growth
  • TD Bank does not expect interest rates to rise until late 2014 to early 2015
  • The exception would be if the housing market rebounds and it leads to acceleration in debt growth, in which case the Bank of Canada could be forced to raise interest rates sooner or the government could tighten mortgage lending rules further.  An option that does not get attention, but could be prudent, is a change in the qualifying interest rate
  • People are putting more money down, but people are also buying smaller homes – both indications that people are opting for more affordable mortgages
  • There is still a need for increased financial literacy among Canadians (27% do not know what their credit rating is)
  • The Canadian government was concerned with a rising debt-to-income ratio and changes to mortgage regulations were a quick way to address the issue
  • This is likely not the end of changes in the mortgage industry; much depends on how changes made to date continue to affect the industry

To find out more about Homeownership Education Week visit www.genworth.ca.

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