Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada’s Bank Regulator Wants Tighter Rules To Address Real Estate Risks
Canada’s bank regulator is looking to protect the financial system from mortgage risks. Last week, OSFI began a public consultation on new mortgage measures. They include limits on loan-to-income ratios, new debt service coverage regulations, and a revised stress test. All of the measures are different but ultimately have one goal—reduce leverage.
Canadian Real Estate Is Facing Disruption After 33 Years, With Mortgage Expert Ron Butler
Canadian mortgage industry veteran Ron Butler updates us on the industry, and market. Advice on dealing with soaring rates, and insight on the end of HELOC-levered speculators, are some of the gems in this interview.
Nearly 1 in 3 Canadian Mortgages Are Still Going To Overleveraged Borrowers
Canada’s mortgage market is dependent on overleveraged borrowers post-pandemic. After rate cuts in 2020, highly indebted borrowers became a large part of the market. Still today, nearly 1 in 3 mortgages went to high leverage borrowers. As leverage rises, so do risks—and Canada’s bank regulator wants new rules to address these risks.
Canada’s Real Estate Correction Is Just Getting Started, W/ Oxford Econ’s Tony Stillo
Canada’s real estate correction might be looking tired, but the recession is coming. Tony Stillo, director of Canada at Oxford Economics explains his controversial call. He expects home prices to fall even further, and a recession to start showing up in the data.
Canadians Are Still Leaving Major Cities In Big Numbers: BMO
Canada’s big cities are seeing residents flee, warns BMO Capital Markets. Toronto, Vancouver, and Montreal have all seen large net migrations out of the city in 2022. A year before, these historically large outflows were seen as temporary moves. However, the bank says this is no longer temporary and now expected with the demographic. Younger families are seeking more space they can afford.
Canadian Mortgage Payments Surge In Size, Largely Due To Real Estate Prices
Canada’s soaring real estate prices eroded affordability significantly before rate hikes. Existing mortgages had an average monthly payment of $1,440 in Q3 2022, up 5.5% from last year and 4.0% in the prior year. In contrast, new mortgages had an average payment of $1,910 in Q3 2022, up 17.8% from last year and 11.7% in the prior year. New mortgages grew at 3x the rate of existing mortgages even at record low interest rates.
Canadian Building Intentions Remain Elevated, But Inflation Killed Growth
Canada is still spending a lot of money on building, but it’s not going nearly as far. The value of building permits hit $11.0 billion in November, only slightly lower than last year. When adjusted for inflation, the value of permits drops over 13.9% in real terms. The value is higher than pre-2020, but inflation is killing a lot of the growth.
Toronto Real Estate
Toronto Residents Are Leaving At A Record Pace, Immigration Takes Over Growth
Greater Toronto residents are leaving the region at an unusually fast rate. In 2022, the city saw a net outflow of 78,100 people, following 73,500 people a year before. Just a few years ago, these numbers were positive as Canadians piled into the region. Immigration is propping up growth, but it’s problematic to depend on that. If residents are leaving for more opportunity, how long until immigrants move to where residents are heading?
Yes,to get information and to deal with these crisis is very essential.