October 2022 Mortgage & Market Report

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Each Executive Summary Report is for a specific TRREB zone combination and includes a map of the included zones and a 4 page summary for each property type (detached, semi-detached, townhomes, condos)
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The Information / statistics you can find in each Executive Summary Report include:

• Data comparing the – 1, 3, 5 and 10 year sales averages.

• Stats categories – Sales, New Listings, Active Listings, Average Price, Months of Inventory (MOI), Sales to New Listing Ratio (SNLR)

This Month’s Outline

The housing market will always face periods of volatility.  In a down-market cycle, it can often make a lot of dollars and sense to consider moving up given the shrinking price gaps between property types and price points (even in an environment of rising interest rates).

In this edition of the Monthly Outline, we analyze the numbers for moving up the property ladder and comment on the Bank of Canada’s most recent 0.50% increase.

Is it Time to Climb the Property Ladder? (Download)

Click the image to download the document.

Bank of Canada Raises Again – Why and What’s Next? (Download)

Click the image to download the document.

Mortgage Rates & Trends

Variable Rate forecast – as variable rates are linked to a lenders’/banks’ prime lending rate, any interest rate movement by the Bank of Canada (BoC) typically results in an immediate change to variable rates. A summary of the 2022 BoC meeting dates, actual changes, and our expectations are as follows:

Jan 26, 2022 (actual: no increase)
Mar 2, 2022 (actual: +0.25% increase)
Apr 13, 2022 (actual: +0.50% increase)
Jun 1, 2022 (actual: +0.50% increase)
Jul 13, 2022 (actual: +1.00% increase)
Sep 7, 2022 (actual: +0.75% increase)
Oct 26, 2022 (actual: +0.50% increase)
Dec 7, 2022 (anticipated: +0.25% or 0.50% increase)

As at the time of writing, the Big 6 Banks are generally forecasting the BoC to increase their overnight rate an additional 0.25% to 0.50% in December 2022, remain relatively flat during 2023, and then decline back to the 3.0% range by the end of 2024. For reference, the current Bank of Canada overnight rate is 3.75% with lenders’/banks’ prime lending rate at 5.95%. As we are in unprecedented times (the BoC has never raised rates so quickly), we will continue to monitor the forecasts and impact closely and update the information when applicable.

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Fixed Rate Forecast – 5-year fixed rates typically follow the Government of Canada’s 5-year Bond Yields which is the market’s view/prediction of where interest rates will be in the future.

5-year bond yields began their ascent in late 2021 and early 2022 in anticipation of the Bank of Canada rate increases that started in March 2022. Yields moved from the 1.5% range in January 2022 to a peak of 3.8% in October with 5-year fixed rates increasing accordingly. That being said, 5 year Canadian bond yields dropped on November 10th when US inflation figures came in below expectations (signalling that the economy is responding to Fed/Central bank rate hikes). Bond yields are now in the 3.30% range, and if they hold, we could see lenders/banks lower their 5 year fixed rates in the coming weeks.

Timely News Articles & Video Links:

• Canada’s inflation surge stalls at 6.9%: What you need to know (Financial Post)
• What is the Bank of Canada Interest Rate (Financial Post)
• Are Canadians worse off financially now than in the 1980’s? (Globe & Mail)
• BoC’s Macklem says interest rate hikes are nearing an end, but to expect borrowing costs to rise before levelling out (Globe & Mail)

Market Report Downloads

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