“Interesting Times In The Canadian Mortgage And Housing Markets”
Its a strange and interesting time in the world of real estate and mortgage financing here in Canada.
With all the recent changes in mortgage regulations that have made mortgage qualifying more difficult, especially for first time home buyers, housing sales have been on the down tick.
So you would think that there would be a lot of listings than buyers on the market, right?
Recently here in Ontario, I’ve noticed that good properties are still hard to land. Clients are putting in offers on listing and finding themselves in the middle of a bidding war with other potential buyers.
There seems to be a scarcity of good properties on the market at a time when you would think the opposite would be true.
Because of the changes is mortgage qualifications, mortgage applicants are moving down market into the newly renewed Canadian sub prime space for uninsured mortgages.
This part of the market was almost wiped out a few years ago, but now makes up to around 20% of the whole mortgage pie.
Private lenders are also seeing an upswing in business due to the recent changes in regulations.
The rental market is also in a state of change now that mortgages on rental properties are basically capped at 80%, requiring a not more equity to be in the rental game.
And then there is the totally unclear view as to where interest rates are heading.
Being that we are so closely tied to the U.S. market, and there being no sign of an interest rate happening any time soon south of the border, its hard to imagine much of an interest rate increase here, but then again anything is possible.
With all the focus on the global financials in the news, there are several reports now saying that the average consumer is moving to reduce their debt to help guard against whatever is going to happen next with interest rates and financial programs.
As we continue to move into the summer period and peak real estate season, it’s going to be interesting to see what trends or patterns may emerge.
Right now its more of a head scratch as to why the markets are behaving as they are.
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