Two people discussing about real estate

Canadian Mortgage Landscape: Inflation, Interest Rates, and Real Estate Market Trends

The Canadian mortgage landscape is currently a subject of intense scrutiny, following recent changes in interest rates and inflation figures. Here's a comprehensive look at the current scenario, merging insights from two recent articles, specifically tailored for the Wilson Team audience.

Inflation Figures Stir Debate

Canada's headline inflation rate spiked from 2.8% in June to 3.3% in July, driven by a 0.6% increase in consumer prices. These figures have divided experts over the implications for the central bank's policy interest rate.

Doug Porter, chief economist at BMO Capital Markets, has identified a 30% likelihood of the Bank of Canada (BoC) raising rates next month. Porter noted that this inflation rate is now higher than the U.S. for the first time since pre-pandemic days, calling it "not a good report for the Bank of Canada."

However, Porter also anticipates that a recent rise in Canada's unemployment rate, coupled with slower spending, could strengthen the case for a BoC rate pause.

Desjardins economist Tiago Figueiredo remarked that the central bank is still far from its 2% inflation target. Former BoC Governor David Dodge emphasized that elevated interest rates would likely need to continue through 2024 into 2025 for the BoC to reach its target.

Impact of Rate Hikes on Home Sales

The two latest rate hikes from the Bank of Canada have had a visible impact on home sales, which fell 0.7% from June to July. This was the first monthly contraction in six months. While sales rose in Saskatchewan (+9%), Quebec (+5.1%), and Alberta (+4%), declines in B.C. (-2.6%) and Ontario (-5.5%) reversed the upward trend. Calgary, however, saw an increase of 9%.

National Bank's Daren King noted that record demographic growth in Canada is aiding in preventing a significant drop in sales.

Home Prices: A Cross-Country Roundup

The national average home price continued to slide in July to $668,754. Although this figure is 6.3% higher than the previous year, it's down over 18% from February 2022's peak of $816,720.

A brief overview of provincial and municipal average house prices as of July illustrates varied trends, with some regions experiencing growth while others face declines.

Resale Market Moving Towards Balance

The Canadian Real Estate Association (CREA) reported that the number of newly listed homes increased for the fourth consecutive month, rising 5.6% from June. This has caused the sales-to-new listings ratio to ease, and the supply has also ticked up slightly.

"With sales dipping and resale supply on the rise, markets are moving towards being more balanced," observed TD Economics' Rishi Sondhi.

Looking Ahead

While the real estate market appears to be settling down, some experts warn of continued headwinds from elevated interest rates. Interest rates are expected to remain at current levels into next year, according to BMO's Robert Kavcic, which will continue to challenge the housing market.

The interplay of inflation, interest rate policies, and market trends paints a complex picture for potential homebuyers and sellers. Understanding these dynamics is key to making informed decisions, whether you are looking to buy a home, sell one, or gauge the market's overall direction.

With the Wilson Team's guidance and tailored mortgage strategies, you can navigate this evolving landscape with confidence.

Mortgage papers with approval stamps with a set of keys on the paper

Navigating the Shifts in Canadian Real Estate: The Mortgage Dilemma and the Recreational Property Market

The Canadian real estate landscape is evolving rapidly, impacted by a confluence of factors such as the rise in interest rates, the pandemic-induced boom in recreational properties, and the subsequent cooling off in demand.

Let's look at information from two distinct but interrelated aspects of the real estate market in Canada: the mortgage situation and the changes in recreational property prices.

The Mortgage Situation in Canada

The Regretful Mortgage Landscape

According to a new survey by the Real Estate and Mortgage Institute of Canada Inc. (REMIC), 34.1% of Canadians regret their current mortgage situation. This unsettling sentiment is largely a result of the Bank of Canada's efforts to combat inflation by steadily increasing interest rates.

Rise in Interest Rates

Interest rates have climbed to 5% from an historic low of 0.25%. Indications suggest that rates could rise again in early September. The hike has caused 21.8% of those surveyed to find their mortgages “unaffordable.” A staggering 68.4% of Canadians were unaware of what their mortgage payments would be at a 5% interest rate.

Long-term Implications

The fear of being unable to pay off mortgages is palpable. Nearly half of Canadians do not believe they will be able to pay off their mortgage by age 60, while 8.2% think they will be 80 or older before their mortgage is paid.

Connection to Recreational Property Market

The mortgage situation has implications on other aspects of the real estate market, including recreational properties. High borrowing costs and economic uncertainty are two overlapping areas affecting both sectors. We will further explore this in the next section.

Recreational Real Estate Markets

The Pandemic Boom and Subsequent Decline

During the pandemic, the aggregate cost of recreational homes surged. Now, 2023 is seeing price declines in all markets except Alberta. The aggregate price of single-family homes in recreational regions is predicted to decline by 4.5% to $592,005. Still, the national aggregate price will be 32% higher than 2020 levels.

Regional Breakdown

Alberta: The only region expected to see an increase in aggregate prices, owing to stable demand and a shortage of inventory.

British Columbia: Lower inventory and pent-up demand are leading to modest price decreases.

Ontario: Reduced demand and a trend toward normalcy, with some areas such as Muskoka remaining desirable.

Quebec: Greater decrease due to high borrowing costs and economic uncertainty.

Atlantic Canada: Fluctuation in demand and inventory, with a cautious outlook on the future.

The Prairies: Steady demand with decreasing inventory, keeping recreational prices high.

Future Prospects

Buyers are showing a willingness to wait for the right property, a sharp contrast to the competition seen during the pandemic. The combination of reduced demand, economic uncertainty, and low housing inventory is reshaping the market.

Connecting the Dots

Impact of Mortgage Rates on Recreational Properties

The rise in interest rates has led to regret and unaffordable mortgages, affecting the broader economy. This has trickled down to the recreational property market, causing reduced demand and a cautious approach by buyers.

The New Normal in Recreational Markets

The pandemic-driven surge in demand for recreational properties has settled into a more traditional pattern, impacted by higher borrowing costs. However, the lasting effects of the pandemic, such as full-time relocations to recreational regions, have created a new normal in certain areas like Alberta.

Opportunities and Challenges

For those in a position to buy, the willingness to wait may offer opportunities for well-priced properties. However, the uncertainty and fluctuations across different regions present challenges that require careful navigation.

The Canadian real estate landscape is at a complex crossroads. The connection between the mortgage landscape and the recreational property market showcases how intertwined and multifaceted the real estate sector is. As interest rates continue to shape mortgages and borrowing, the recreational property market is also adapting to new realities.

Whether it’s the challenge of navigating mortgages or capitalizing on opportunities in the recreational market, understanding the broader context and regional nuances is vital.

For buyers, sellers, brokers, and policymakers alike, the current landscape offers a rich tapestry of insights and lessons that reflect not just economic shifts but also changing lifestyles and preferences in a post-pandemic Canada.

The Bank of Canada Raises Interest Rates for the Third Time This Year

The Bank of Canada raised its key interest rate again this month to 5%. This is the third rate hike of 2023 and the tenth since March of last year.

According to a Bank of Canada press release, inflation has fallen from 8.1% at its height in 2022 to 3.4% this past March. However, the central bank indicated there are signs that inflation is not slowing quickly enough to meet its target of a 2% inflation rate by 2025. The central bank cited labour shortages and rising housing prices as two factors putting upward pressure on inflation numbers.

This move is not without its critics. Benjamin Tal, deputy chief economist at CIBC, took issue with the central bank’s calculation methods. In an interview with the Financial Post, he explained that the Bank of Canada includes mortgage rates when determining inflation. This practice could be inaccurately increasing the inflation rate.

“Higher interest rates are leading to higher mortgage payments that are adding to inflation,” he said. He comparedthe policy to “putting a humidifier and a dehumidifier in the same room and letting them go at each other.”

Tal speculated that if the Bank of Canada were to drop mortgages from its calculations, Canada’s inflation rate would already be at or below the Bank of Canada’s 2% target.

What This Means for Home Buyers

Mortgage fees have increased as a result of the interest rate hike. As of late July, most mortgage rates are over 6%. Variable mortgages have the highest rates while fixed five-year terms tend to have the lowest.

Some banks such as Toronto Dominion and the Royal Bank of Canada do have some lower rates on products called “High Ratio Mortgages.” In order to qualify for these products, home buyers must make a down payment of more than 20% of the home’s total value.

New Buyers

The higher rates may make qualifying for a mortgage more difficult, putting a new home out of reach for many.

However, those who do qualify at this higher rate may enjoy future savings when the interest rates come down again.

Renewing Home Owners

Most homeowners seeking to renew their mortgages this year will likely face higher monthly payments and some tough decisions.

Variable-rate mortgages currently have higher costs, but will be more responsive to a future drop in interest rates. However, they will also go up if interest rates rise again. Fixed mortgages have lower interest rates but require buyers to lock into a particular rate for a specific time frame. Currently, fixed one-year terms have higher rates than the longer five-year options. Renewing homeowners will need to decide whether to gamble on the rates coming down next year or lock in for a longer period.

According to CBC News, some homeowners are avoiding higher monthly payments by extending the amortizations on their mortgages. However, this does increase a home’s cost in the long run.

The Takeaway

Although we are seeing fewer interest rate increases this year compared to 2022, the mortgage market continues to have its share of surprises.

Navigating both the buying and renewal process is more complicated than ever. Industry professionals recommend working with a mortgage broker. Having an expert in your corner can save you time and money.

Is this recent interest rate hike stressing you out? Drop us a line. We’re here to help!

New Housing Minister Steps Up to the Plate

Central Nova MP Sean Fraser was sworn in as Canada’s new housing minister on July 26. Fraser tweeted, “Our economy is growing and so are our communities. We need to help build enough housing to make sure every Canadian has a safe and affordable place to call home.”

Fraser previously held the office of Minister of Immigration, Refugees and Citizenship. He is replacing York South-Weston MP Ahmed Hussen, who is now taking up the role of Minister of International Development.

The change in ministers also comes with a change in the portfolio. Whereas Hussen dealt with housing, diversity and inclusion, Fraser’s portfolio covers housing, infrastructure and communities.


Fraser was first elected to the federal government in 2015. He previously worked as a lawyer specializing in commercial litigation and international dispute resolution.

In Fraser’s tenure as Minister of Immigration, Refugees and Citizenship, the department began the Atlantic Immigration Program to help businesses hire skilled foreign workers in the region. It also introduced new
technology in an effort to reduce processing times and fast-track visa applications for immigrants highly likely to become permanent residents.

What This Means for Housing in Canada

This change may signal the government’s intent to make housing a priority. Combining the housing portfolio with infrastructure and communities could lead to a more integrated approach to tackling housing supply issues.

Cabinet ministers are given mandates by the prime minister to carry out specific priorities. Fraser’s future decisions will depend on the mandate he receives. However, he is entering his new office with some ideas. After being sworn in he said, “The answer is, at least in part, to continue to build more stock.”

Housing stock is an important piece of the puzzle, but, as Fraser acknowledged, it is only part of a complete approach. It takes years to build houses; increasing housing stock won’t relieve pressure on the market in the short term.

Other proposed solutions include introducing new legislation to deter individuals from purchasing multiple properties for investment purposes, and creating incentives for developers to build rental properties.

Recent Approaches to Canada’s Housing Shortage

During Hussen’s tenure as housing minister, the federal government introduced several strategies to make housing more affordable.

New legislation called the Prohibition on the Purchase of Residential Property by Non-Canadians Act barred foreign businesses and individuals from buying residential property in Canada. The act was amended in March of this year to allow immigrants with work permits to purchase residences. Foreign businesses and individuals may also purchase vacant land zoned as residential or mixed-use. Non-Canadians may also purchase residential property to be developed for housing.

Hussen also implemented the Housing Accelerator Fund which, according to the Canada Mortgage and Housing

Corporation, “Provides incentive funding to local governments encouraging initiatives aimed at increasing housing supply. It also supports the development of complete, low-carbon and climate-resilient communities that are affordable, inclusive, equitable, and diverse.”

The Takeaway

Although the federal government does seem to recognize that housing is becoming a key issue for Canadians, any changes made now will take time to bear fruit.

In the meantime, if you’re thinking of purchasing a property in the next year, contact us today. We’d be happy to help you navigate today’s complicated housing market.

Graphic of homes showing the rise of interest for mortgage

Canadian Bonds Resilience Amid Rising Mortgage Rates: What it Means for Homebuyers

Despite a challenging economic landscape characterized by high interest rates and continued inflationary pressures, Canada's covered bonds have demonstrated robustness that bucks the current trend. In a recent report, Fitch, the renowned credit ratings agency, maintained Canada's AA+ Long-Term Foreign Currency Issuer Default Rating (IDR), lending a reassuring outlook amidst rising mortgage rates.

These persistently high ratings were achieved in spite of a tumultuous 2022, marked by falling home prices, significant inflation, and increased interest rates. Key to this resilience is the structure of the B-20 guidelines governing the loans that form the covered bond pool of assets. A crucial component of these regulations is the mortgage stress test, which mandates that potential homebuyers qualify for an interest rate two percentage points higher than their contractual rate.

But while this resilience bodes well for the market at large, increasing fixed mortgage rates are stirring concerns for a variety of homebuyers. Let's delve into what these developments could mean for new or first-time home buyers, families looking to upsize, and retirees or seniors considering downsizing.

First-time Home Buyers

New entrants into the housing market could feel the pinch of rising fixed mortgage rates, as lenders continue to adjust their rates in line with the surging Government of Canada bond yields. Increases in the rates for 1- and 2-year terms to up to 6.25% and 6.40% respectively have been observed, pushing the financial boundaries for first-time buyers.

Any potential buyers should remain vigilant, considering both their current financial state and potential future rate hikes. On the positive side, first-time buyers could benefit from the stability of bond ratings, indicating a certain degree of resilience in the housing market.

Upsizing Families

For families looking to upsize, higher interest rates may mean larger mortgage payments. While families might have more financial flexibility than first-time buyers, an additional rate hike could strain their budget.

Consequently, families considering upsizing might need to reassess their plans and perhaps delay their move until the market stabilizes. On the flip side, falling house prices might present an opportunity for those with secure financial footing to upgrade their living situation at a potentially lower cost.

Retirees and Seniors

Rising mortgage rates might have a different impact on retirees or seniors, particularly those looking to downsize. If they have an existing mortgage, they could face higher payments with adjustable rates.

Now, those who own their homes outright may find this an advantageous time to sell, particularly in areas where demand remains high despite the falling home prices. They may then opt to rent or move to areas with lower housing costs, effectively capitalizing on the current market conditions.

Given the economic landscape, the Bank of Canada’s recent increase of the overnight rate to 4.75% further compounds these concerns. With persistent high inflation, the bank’s decision puts additional pressure on mortgage borrowers. Current market forecasts suggest another quarter-point rate hike could be around the corner, meaning all categories of buyers need to factor these potential hikes into their planning.

These rising rates have been driven in part by hawkish comments from Federal Reserve Chair Jerome Powell, suggesting more policy tightening is on the horizon. Rate hikes by other global central banks have only amplified concerns about inflation and the economic impact of higher-than-expected policy rates.

The resilience of Canada's covered bonds provides a silver lining to the rising mortgage rates. However, the implications vary greatly for different demographic groups. Whether you're a first-time homebuyer, a family seeking to upsize, or retirees looking to downsize, it's critical to stay informed about the latest market trends. Consider seeking professional financial advice to make decisions that align with your financial goals and the current market landscape.

While the situation might seem daunting, let's put the pieces together and look at the big picture. Despite the falling home prices, the overall economic health of Canada remains positive. This is good news for all segments of buyers, as it reflects a sturdy financial environment that can absorb shocks and rebound from downturns.

Retired couple happy to have moved into their new home

Unlocking Your Home's True Potential: The Unbeatable Advantage of a CHIP Reverse Mortgage

In the throes of 2023, we're witnessing a decline in real estate transactions attributed to towering interest rates, marking an opportune moment for us, The Wilson Team, to reassess and refine our financial strategies. Despite temporary pauses in interest-rate hikes by central banks, inflation remains a major concern, compounded by demographic and economic transitions which will undoubtedly have an impact on the lending and real estate spheres.

This shifting landscape calls for an expansion of our services, offering lending solutions that effectively address the evolving needs of our valued clients. At the forefront of these solutions is the CHIP Reverse Mortgage from HomeEquity Bank – a bespoke answer to current financial challenges, particularly for our senior and retired clients.

Retiring With a Plan

In today's aging demographic, the need for accessible cash flow is palpable. Statistics from StatCan reveal that roughly 22% of Canada's working population, aged between 55 and 64, is on the brink of retirement. This group has been grappling with the effects of all-time high inflation rates, a scenario that continues to add pressure even with a slight deceleration. The persistent rise in the cost of food and services exacerbates this burden.

The next few years could present tough choices for Canadians entering their golden years, especially given that the 55+ age group relies heavily on services like healthcare, home care, and leisure. Whether they plan to supplement their pensions, manage unexpected expenses, support their children's first home purchases, or enhance their own homes for comfortable aging in place, seniors will require convenient access to cash flow.

Dealing with Lending Regulation Changes

However, upcoming regulatory changes concerning mortgage lending might complicate this. The traditional cash flow source for homeowners, Home Equity Lines of Credit (HELOCs), could be hit by these changes. The Office of the Superintendent of Financial Institutions (OSFI) has indicated a decrease in the maximum Loan-to-Value (LTV) for combined loan plans from 80% to 65% by the end of 2023. This, coupled with proposed changes to the loan-to-income, debt-to-income restrictions, and interest rate affordability stress tests, could limit borrowing capacity through conventional methods, possibly steering Canadians towards alternative and private lenders.

In this evolving scenario, the CHIP Reverse Mortgage offers an increasingly compelling solution. This program, without any qualifying income criteria, allows Canadians aged 55+ to access tax-free cash up to 55% of their home's value. Without any monthly mortgage payments until they decide to move or sell their homes, retirees gain additional financial flexibility.

Misconceptions About CHIP Reverse Mortgages

Misconceptions about reverse mortgages can deter some people, largely due to a mistaken belief that they're unregulated. However, reverse mortgages in Canada are strictly regulated, with HomeEquity Bank operating as a Schedule 1 Canadian Chartered Bank. Misunderstandings include fears of losing home ownership, owing more than their home's value, and that interest rates and setup costs are exorbitant. These beliefs are far from the truth, with several safeguards in place to protect homeowners' financial security and property rights.

The CHIP Reverse Mortgage from HomeEquity Bank, designed for the current economic climate, can enhance your cash flow by unlocking the equity in your home. This is particularly beneficial for seniors and retirees aiming to secure their financial future. At The Wilson Team, we believe that serving you optimally paves the way for a prosperous financial future, and we're committed to facilitating this process with innovative, long-lasting solutions.

Let's dispel some common misconceptions about reverse mortgages.

Losing Home Ownership

First, the notion that you might lose ownership of your home. The reality is that you continue to hold the title and maintain full control of your home, just like a conventional mortgage. Your only obligations are to live in the home, maintain it well, and manage property taxes and insurance payments.

Owing More Than Your Property Value

Secondly, the concern that you could end up owing more than your home's worth. However, HomeEquity Bank's No Negative Equity Guarantee* ensures that homeowners will never owe more than the fair market value of their property at the time of sale or relocation. This guarantee is an essential safeguard in the current unpredictable economic climate, promising that even if home values fall below the mortgage amount owed, HomeEquity Bank will cover the difference.

*The No Negative Equity Guarantee applies as long as the homeowner maintains the property in good condition, pays property taxes and property insurance, and the property is not in default. The Guarantee excludes administrative expenses and interest that have accumulated after the due date.

Higher Interest Rates

The third misunderstanding is that reverse mortgage interest rates are significantly higher than traditional mortgages. While the rates are a bit higher, the difference is not extreme and has significantly narrowed in the past year. These slightly higher rates balance the fact that clients aren't required to make monthly mortgage payments, thus improving their cash flow.

Long and Costly Process

Finally, there's a belief that arranging a reverse mortgage is a costly process. In reality, like a conventional mortgage, clients need to pay for a property appraisal and independent legal advice. The only additional cost is a one-time closing and administration fee.

The Wilson Team is proud to work with HomeEquity Bank, Canada's leading provider of reverse mortgages, committed to assisting Canadians aged 55+ in enjoying a fulfilling retirement with solutions tailor-made for their needs. With a keen understanding of the market, we can provide robust support to meet your financial needs.

Our dedicated team of Mortgage Specialists manage each file from application to funding. Additionally, we offer comprehensive online tools and resources to keep you well-informed.

To wrap up, our suite of products, including the CHIP Reverse Mortgage can meet your income objectives. Amid this changing economic climate, the CHIP Reverse Mortgage can provide a valuable solution to boost your cash flow by tapping into the equity in your home.

Don't let the fear of the unknown stand in your way. Contact us today to learn more about how we can help secure your financial future with our innovative, long-term solutions.

Canadian couple looking at the their computer reviewing their mortgage

More Canadians Expected To Default On Their Mortgages

According to a recent Royal Bank of Canada (RBC) report, mortgage delinquencies could rise by more than one-third of current levels over the coming year.

This is largely due to high housing costs, increased interest rates, inflation, and the end of pandemic government support programs.

Although mortgage defaults are currently low, the report noted increases in late payments on other types of products like car loans and credit cards. Mortgage payments may soon follow suit.

Interest Rates

The low rates of 2021 are now a thing of the past. Canadians with variable rate mortgages are already feeling the effects of higher monthly payments.

Those who locked in low fixed rates may experience increased financial pressure when their agreements come up for renewal in the next few years.

High Debt Levels

Canadians are also carrying high levels of debt. According to the report, the debt-to-income ratio of most Canadians is now higher than pre-pandemic levels and is likely to rise.

Canadians now have the highest household debt levels of any country in the G-7. High housing costs have been blamed for this. On average, home prices are now more than double the cost compared to 2011.

Discontinuation Of Pandemic Assistance

The last of the benefits offered by the Canadian government to help people weather the pandemic ended in 2022. These benefits helped many Canadians stay financially stable between during lockdowns and other pandemic restrictions. The RBC report noted net worth actually increased during the pandemic.

With these programs ending, more people could be in financial difficulty this year.

Slowing Economy

The RBC report further predicted a slowing economy in the coming months. How much? The language was cautious, predicting a “modest contraction.” However, the report’s authors believe job losses are likely.

For many Canadians, the loss of a job can mean the difference between keeping up with mortgage payments, and defaulting or selling.


Whether you already have a mortgage or are getting into the housing market for the first time, there are things you can do to help ensure financial stability.

It’s important to have a good understanding of your finances. Review them at least monthly so you know where you stand.

It’s also vital to have enough savings to last you at least three to six months without work.

Optional mortgage insurance is another great option that can help protect you and your family from default in the event of job loss, critical illness, or death. Policies usually offer to continue mortgage payments for a specific period, or pay off the mortgage entirely.

Getting a good rate on your mortgage can also make a big difference. While prime lending rates are set by the Bank of Canada, there are differences in the products offered by various institutions. Spending the time to research and compare different offerings can save you thousands of dollars in the long run.

The Takeaway

Although the housing market does seem to be picking up, it’s still best to be cautious when taking on any kind of new debt, even a mortgage.

Make sure you understand the risks and know what you can afford, even if interest rates increase or your financial situation changes.

Working with a mortgage broker can help ensure you get the best rates and terms on your mortgage. Contact us today and we can help you build a secure financial future.

Canadian homes lined along the street to represent the housing market

The Ins and Outs of Canada’s Limited Housing Supply

One of the chief issues behind Canada’s high real estate prices is limited housing supply. More and more data show that construction just isn’t keeping up with demand.

But what is causing Canada’s housing crunch? There are many factors ranging from the types of dwellings being built to population growth.

Focus On Apartments And Condos

Although housing development is booming in many cities, there is often more focus on apartment buildings and condominiums. While these are important, especially for first-time buyers, these types of homes don’t always fit the demand.

In an interview for BNN Bloomberg, Bob Dugan, chief economist at the Canadian Mortgage and Housing Corporation (CMHC) noted there is a mismatch between current developments and the needs of many Canadians.

“We have a lot of very small units that aren’t necessarily suitable for families,” he said. “There’s a real lack of say, three-bedroom units being built in urban areas.”

In a recent article for the Fraser Institute, authors Josef Filipowicz, urban and regional policy specialist, and Steve Lafleur, an independent public policy analyst, echoed similar sentiments. They point out that ground-oriented homes (not apartments and condos) sold at the highest volumes during the pandemic. But in the 2010s, this type of development had the fewest completions since the 1960s.

This keeps the demand – and prices – for family homes high.

Land Use Regulations

Land use regulations are necessary to manage city planning and reduce urban sprawl. However, these regulations can significantly slow down or even reduce new housing.

A study by the Fraser Institute found that municipalities with more regulations did in fact grow less. Long project approval times, uncertainty around timelines, and community opposition had the most impact on reducing supply.

Population Growth

According to a report from the Canadian Imperial Bank of Commerce (CIBC), 58% of new Canadian permanent residents in 2022 were new to the country – not already in Canada on student visas, for example. The report authors estimate this increased housing demand by 108%.

The federal government’s new immigration targets could make the situation worse. In November of 2022, the federal government announced it would seek to accept 500,000 new permanent residents annually by 2025. This represents a 75% increase from pre-pandemic levels.

According to Statistics Canada, there were 437,180 new permanent residents in 2022. There were also 607,000 non-permanent residents who entered the country that year. Canada is leading other G-7 countries in population growth.

In order to keep up with housing demand, the CMHC estimates 5.8 million homes will need to be built by 2030.

What Is Being Done

Awareness of the housing supply issue is growing, with many provincial governments and the CMHC committed to solving the problem.

The Ontario government recently proposed an act designed to increase housing supply faster by giving cities more flexibility to expand their boundaries, among other changes. Critics say this could increase urban sprawl and threaten green belt areas.

Housing starts had a record-breaking year in the Ottawa area last year with 11,032 new units, according to a CMHC report. Of these, over 50% were rental units and condominiums. This is good news for renters, investors, and those new to the housing market.

The Takeaway

Financial markets are complicated and real estate is no exception. There are many factors putting pressure on housing supply and demand today.

However, governments and regulators do seem to be taking this issue seriously. The next few years could see a continued growth in supply that may lower demand and improve the market for buyers.

If you’re thinking of buying one of the new builds in the Ottawa area this year, get in touch! We can take a look at your financial picture and help you reach your goals.

Is Qualifying for a Mortgage About to Get Harder?

Canada’s banking regulator says it is considering whether to extend the scope of its mortgage guidelines to include existing mortgages.

OSFI (Office of the Superintendent of Financial Institutions) is a regulatory body in Canada that supervises and regulates financial institutions to ensure their safety and soundness. Recently, OSFI has proposed some changes to the mortgage rules that lenders must follow.

The proposed changes aim to tighten the mortgage underwriting standards to ensure that borrowers can afford their mortgage payments even if interest rates rise, and to address some of the risks associated with the current hot housing market in Canada.

Some of the key changes include:

  • A new minimum qualifying rate, which will be the greater of either the contractual mortgage rate plus 2%, or a new "floor" rate of 5.25%. This means that borrowers will need to show that they can afford to make mortgage payments based on a higher interest rate, even if they are getting a lower rate from their lender.
  • A tighter debt service ratio limit for uninsured mortgages, which will be reduced from the current limit of 44% to 42%. This means that borrowers will need to have a higher income relative to their debt payments to qualify for a mortgage.
  • Stricter requirements for verifying income and assessing the borrower's ability to repay the mortgage.

Overall, these proposed changes are designed to make it harder for some borrowers to qualify for a mortgage, but they are intended to promote stability in the housing market and reduce the risks associated with high levels of household debt.

Real estate agents agree to buy a home and give keys to clients at their agency's offices. Concept agreement

Is Now the Time to Buy? - April Update, 2023

When is the best time to buy real estate? 5 year ago and we will say this for the next 100 years. There are several reasons why buyers may want to consider purchasing a home in Canada now, even in a balanced market:

  • Interest rates have started to decrease on the fixed rates: Interest rates play a significant role in determining the affordability of a mortgage. With interest rates currently dropping in Canada, buyers may be able to secure lower monthly mortgage payments and potentially save money in the long run.
  • Market stability: A balanced market means that there is a relatively equal number of buyers and sellers, which can lead to a more stable market with less volatility in prices. This can provide buyers with more confidence in their purchasing decisions.
  • Long-term investment: Real estate is typically viewed as a long-term investment, and historic trends show that real estate in Canada has generally increased in value over time. Purchasing a home now may be a wise investment for buyers looking to build equity and potentially benefit from appreciation in the future.
  • Lifestyle considerations: For many buyers, purchasing a home is not just about the financial investment, but also about the lifestyle benefits that come with homeownership. Owning a home can provide a sense of security and stability, and allow buyers to customize their living space to suit their needs.
  • Higher rates or equity: When houses were selling at record highs last year, there was little room to make an equity position quickly even with lower rates. Mortgage rates will go up and down but when the rates start to get lower, the market picks back up and gives confidence to buyers and again which increases the values of the homes again. This is the perfect time to jump in and buy. Would you rather stress about rates or create equity in the home value.

Overall, while market conditions should certainly be considered when making a home purchase, there are many factors beyond the current state of the market that may influence a buyer's decision. It's important for buyers to carefully consider their personal circumstances and goals before making any major financial decisions.