Housing starts dip but are there stronger intentions ahead?

Latest News & Economy DAZADA DIAMOND 28 Feb

Housing starts dip but are there stronger intentions ahead?

Housing starts dip but are there stronger intentions ahead?Canadian housing starts were slightly lower last month on a 6-month trend basis compared to December 2019.

CMHC figures show that the seasonally adjusted annual rate of starts was 210,915 in January, down from 212,212 in December while the monthly standalone figure for the month was up 8.8% to 213,224 units in January from 195,892 units in December.

“The national trend in housing starts essentially held steady in January.” said Bob Dugan, CMHC’s chief economist. “Lower-trending starts in Vancouver were partly offset by stronger activity in Montréal, while the trend in Toronto was stable at the start of the year.”

The SAAR of urban starts increased by 9.8% in January to 202,407 units. Multiple urban starts increased by 13.6% to 155,140 units in January while single-detached urban starts decreased by 0.9% to 47,267 units. Rural starts were estimated at a seasonally adjusted annual rate of 10,817 units.

Multifamily permits increase
Meanwhile, Canadian municipalities issued multifamily building permits totaling $2.9 billion in December, a 15.9% increase mostly due to increases in Montreal and Vancouver.

Single-family permits decreased 3.2% to $2.2 billion, with the largest decline in Ontario (-$76 million).

The value of commercial permits rose 19.7% to $2.0 billion.

  • https://www.mortgagebrokernews.ca/archived/housing-starts-dip-but-are-there-stronger-intentions-ahead-326132.aspx?utm_source=GA&utm_medium=20200211&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

1 in 6 Canadians keeps financial secrets from their partner

Credit & Debt DAZADA DIAMOND 27 Feb

1 in 6 Canadians keeps financial secrets from their partner

1 in 6 Canadians keeps financial secrets from their partnerMillions of Canadians could be facing future financial challenges due to secrets kept by their partners.

Financial infidelity has been identified in 1 in 6 respondents to a survey by rates.ca and that means hidden debt, poor credit scores, or spending are prolific.

Among younger Canadian adults, 30% admit financial infidelity and the report warns this could cause issues later on.

“Hiding a poor credit score or a large sum of debt can have consequences in the future. Especially for partners buying their first home or financing a car. Being transparent and taking the right steps to manage debt or correct poor credit can prevent disappointment and further financial woes,” said Sara Kesheh, Vice President, Money, Rates.ca.

Three in ten (31%) Canadians are hiding purchases they make from their significant other. Almost one-third are concealing their poor credit score, 21% have hidden cash, 14% have hidden bank accounts, and 10% have a secret line of credit or a long-term loan.

Of those in a relationship, 47% say the value of their financial secret is at least $1,000.

Married or separated couples are more likely to have financial secrets below $1,000, at 46% and 53% respectively.

  • https://www.mortgagebrokernews.ca/archived/1-in-6-canadians-keeps-financial-secrets-from-their-partner-325914.aspx?utm_source=GA&utm_medium=20200206&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Policies should focus on housing supply, not on stress test

Banks & Bank of Canada DAZADA DIAMOND 26 Feb

Policies should focus on housing supply, not on stress test

Policies should focus on housing supply, not on stress testAmid the considerable market impact of the B-20 regulations, multiple observers and industry organizations have called for revisions of the mortgage qualification stress testing, but the chief of the Bank of Nova Scotia has argued that such changes would not address the root of the nation’s housing crisis.

Scotiabank president and CEO Brian Porter recently said that what policies should actually focus on is improving the number of homes available to Canadians.

“I don’t think a lot of tinkering is necessary on the stress test,” Porter said in an interview with the Financial Post last month. “But we have to make sure that these housing markets are in balance. So, rather than look at the demand side of the equation, let’s look at the supply side. Everybody wants to talk about the demand side without looking at the supply side.”

A crucial component of any wide-ranging strategy should be adapting the housing that needs to be built to whatever land is available, especially in geographically challenged markets.

“You can’t have single-family homes in densely populated cities running right up to [Southern Ontario’s] Greenbelt,” Porter noted. “You have to have multi-use facilities, you have to have rental units, you have to have condominiums of some sort. Each of these cities has to rethink their zoning, or application for zoning, policies.”

This is where federal, provincial, and municipal governments enter the picture, as they need to ensure that their respective policies are coordinated towards providing better housing supply.

Porter’s statements came in the wake of Prime Minister Justin Trudeau’s December letter to Bill Morneau, which encouraged the Finance Minister to re-examine the B-20 stress test.

Among Trudeau’s top items for consideration were to “review and consider recommendations from financial agencies related to making the borrower stress test more dynamic.”

  • https://www.mortgagebrokernews.ca/news/policies-should-focus-on-housing-supply-not-on-stress-test-325803.aspx?utm_source=GA&utm_medium=20200204&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Real estate, construction helps boost Canadian economy

Real Estate DAZADA DIAMOND 25 Feb

Real estate, construction helps boost Canadian economy

Real estate, construction helps boost Canadian economyThe real estate and construction industries played their part in helping Canada’s economy grow in November, the latest month of stats published by Statistics Canada.

Overall, GDP was up 0.1%, offsetting most of the decline in October, as 15 of the 20 industry sectors posted gains. This was enough to offset losses in the mining, quarrying and oil and gas extraction and transportation and warehousing sectors.

Construction posted gains in all sectors, for a total 0.6% increase, following four stagnant months.

The residential subsector posted a 0.6% as alterations and improvements rose along with apartment construction. The commercial sector drove the 0.4% in non-residential construction.

Real estate agents
Offices of real estate agents and brokers saw a 1.3% boost thanks to increased resale activity in the housing market, led by Montréal, Toronto and Vancouver.

National home sales grew by 0.6% month-over-month in November, and by 11.3% annually. Compared to the same time last year, housing market activity intensified in nearly all of the largest urban areas.

  • https://www.mortgagebrokernews.ca/archived/real-estate-construction-helps-boost-canadian-economy-325734.aspx?utm_source=GA&utm_medium=20200203&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Albertan, federal governments to add new affordable housing supply

Real Estate DAZADA DIAMOND 24 Feb

Albertan, federal governments to add new affordable housing supply

Albertan, federal governments to add new affordable housing supplyLate last week, the governments of Alberta and Canada pledged to contribute $11 million for the creation of more low-cost housing supply in the province.

The initiative will specifically focus on people who are at-risk of homelessness in Lethbridge, with the allocated sum to be used for the construction of 42 affordable housing units.

“Alberta Seniors and Housing will support the development of the facility, while Community and Social Services will be responsible for the on-site social supports,” the provincial government stated in its announcement.

“Planning and design work is underway and construction will begin later this year. The housing management body, Lethbridge Housing Authority, will operate the facility. The project will create about 80 jobs.”

Elsewhere in Alberta, housing markets will likely benefit from gradual recovery this spring, according to a recent Royal LePage analysis.

With the national aggregate home price growing by 2.2% annually in Q4 2019 (reaching $648,544), the Western Canadian province has seen modest housing growth levels in its largest cities.

In Calgary, the 2.1% price increase from Q2 2019 to the final quarter of that year has “been encouraging for homeowners,” Royal LePage stated. This helped offset the 2.3% year-over-year price decline in Q4 2019, down to $469,916.

Meanwhile, Edmonton home prices remained virtually flat during the fourth quarter, with a miniscule 0.7% annual decline to $379,426. The trend suggests a market steadily regaining its footing.

  • https://www.mortgagebrokernews.ca/news/albertan-federal-governments-to-add-new-affordable-housing-supply-325737.aspx?utm_source=GA&utm_medium=20200203&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Housing market vulnerability has reduced in several Canadian cities

Real Estate DAZADA DIAMOND 21 Feb

Housing market vulnerability has reduced in several Canadian cities

Housing market vulnerability has reduced in several Canadian citiesSeveral housing markets in Western Canada have seen vulnerability decrease while the national risk remains moderate.

CMHC says that risk ratings for Edmonton, Calgary, Saskatoon and Winnipeg have been downgraded from moderate to low in its Housing Market Assessment released Thursday.

The level of vulnerability on a national level remained moderate in February 2020 compared to November 2019; it’s the fourth consecutive quarter that vulnerability at this level.

The evidence of overvaluation remains moderate, with higher house prices in the third quarter of 2019 partly sustained by population growth and the decline in mortgage rates.

“We continue to see moderate evidence of overvaluation at the national level” said Bob Dugan, CMHC’s chief economist. “The growth in inflation-adjusted prices in the third quarter of 2019 was slightly larger than the increase supported by the sustained population growth in Canada and the decline in the nominal mortgage rates.”

Regional highlights

  • Victoria keeps a high overall degree of vulnerability as price acceleration and overvaluation imbalances are still signaled. However, home prices continue to stabilize and imbalances are easing.
  • In Vancouver, evidence of overvaluation remains moderate, as does the overall vulnerability rating.
  • In Edmonton and Calgary, evidence of overbuilding was still present as new home inventories remained high. The intensity and persistence of the overbuilding signals no longer sustain an overall moderate degree of vulnerability, which decreased to low in these two centres.
  • In Saskatoon the degree of vulnerability was lowered from moderate to low in the overall assessment as evidence of overbuilding eased from moderate to low.
  • Winnipeg’s overall assessment moves to low vulnerability due to the easing evidence of overvaluation. Population growth and low mortgage rates increased the price levels supported by housing market fundamentals, while observed home prices continued to decline. Evidence of overvaluation has eased from moderate to low.
  • In Regina, overall vulnerability remains moderate as evidence of overbuilding remains high.
  • In Toronto and Hamilton overall housing market vulnerability remains moderate. Overheating and price acceleration are still signaled in both regions. However, evidence of overvaluation remains low as stronger price growth remains aligned with economic and demographic fundamentals, such as personal disposable income, population growth and interest rates.
  • Ottawa, Montréal, Québec City, Moncton, Halifax and St. John’s maintained low overall vulnerability ratings. Evidence of overheating persist in the resale markets of Montréal and Moncton.

  • https://www.mortgagebrokernews.ca/archived/housing-market-vulnerability-has-reduced-in-several-canadian-cities-326554.aspx?utm_source=GA&utm_medium=20200221&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Construction delays are making Canada’s housing supply issues worse

Real Estate DAZADA DIAMOND 20 Feb

Construction delays are making Canada’s housing supply issues worse

Construction delays are making CanadaThe lack of housing supply in Canada’s hottest markets is further aggravated by delays brought about by regulatory red tape, according to a major industry investor.

In a new interview with BNN Bloomberg, Centurion Asset Management CEO Greg Romundt said that the past half century was essentially a prolonged chronicle of missed opportunity for home construction.

“In the 1960s and ‘70s, Canada was building 60,000 to 70,000 apartments a year. When [the government] brought in rent control in the ‘70s, it absolutely cratered new apartment construction; it kind of just petered out to around 1,000 to 2,000 a year,” Romundt stated.

“About 40,000 new apartments were built across Canada over the last decade – absolutely nothing compared to population growth and new demand of around 500,000 units per year.”

Veteran markets observers Murtaza Haider and Stephen Moranis argued a similar point in their recent piece for the Financial Post.

The duo noted that while the current surge in purpose-built rental housing development is most welcome, the pace needs to be even faster to fulfill demand in Canada’s largest urban markets.

Data from Statistics Canada showed that PBR starts stood at 45,569 in 2019, considerably above the 36,796 measured a year prior.

However, the duo voiced concern that the speed of development “falls considerably short of the rate at which rental units were being built in the early seventies, when rental construction began to nosedive.”

“Changes in tax regulations and the introduction of rent control as vacancy decontrol disincentivized investors who left the rental construction business in droves,” Haider and Moranis explained.

Fortunately, this is likely to change soon: Romundt predicted a “renaissance” of apartment development in the very near future.

Such a shift will stem from the sustained demand for apartments, itself being driven by a growing need for more affordable options, as well as by demographic changes and intensified immigration.

Romundt said that Toronto (which has around 70,000 new apartments in various stages of approval) and Vancouver (around 50,000 new units) indicate the sector’s running theme for the next decade.

“In the next 10 years or so, we will build as many apartments across Canada as we did over the last two generations, notwithstanding rent control.”

  • https://www.mortgagebrokernews.ca/news/construction-delays-are-making-canadas-housing-supply-issues-worse-326145.aspx?utm_source=GA&utm_medium=20200211&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

OSFI considering new benchmark rate for uninsured mortgages

Down Payment & Buying DAZADA DIAMOND 19 Feb

OSFI considering new benchmark rate for uninsured mortgages

OSFI considering new benchmark rate for uninsured mortgagesThe Office of the Superintendent of Financial Institutions (OSFI) has announced that it is considering a new benchmark rate to determine the minimum qualifying rate for uninsured mortgages. OSFI is seeking input from interested stakeholders on this proposal before March 17, 2020.

OSFI’s mortgage underwriting guideline (B-20) sets the minimum qualifying rate for uninsured mortgages. Currently, the minimum qualifying rate is the higher of the contractual mortgage rate plus two percent, or the 5-year benchmark rate published by the Bank of Canada. The current benchmark rate is based on the posted rates from the six largest banks in Canada.

Earlier this year in remarks to the C.D. Howe Institute, OSFI indicated that it was reviewing the benchmark rate used for qualifying uninsured mortgages. OSFI has observed that the gap between actual contract rates and the current benchmark rate has widened, suggesting a less responsive floor than originally intended. The goal of the review is to identify a measure that is more accurate and responsive to market changes.

“Sound mortgage underwriting and B-20 contribute to financial stability throughout the economic cycle. Continually reviewing our prudential measures is part of an effective regulatory framework. This proposal aims to address the limitations of the current benchmark rate while preserving the integrity of the overall qualifying rate,” said Ben Gully, assistant superintendent, regulation.

OSFI is considering replacing the current benchmark rate with the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus a two percent buffer. This would be the same benchmark rate that’s going to be used for insured mortgages as of April 6th, as the Minister of Finance announced yesterday, following consultations with OSFI and other federal financial agencies.

OSFI’s proposed new benchmark for uninsured mortgages is based on rates from mortgage applications submitted by a wide variety of lenders, which makes it more representative of both the broader market and fluctuations in actual contract rates. In addition to introducing a more accurate floor, OSFI’s proposal maintains cohesion between the benchmarks used to qualify both uninsured and insured mortgages.

OSFI is seeking input from interested stakeholders on this proposal by email to b.20@osfi-bsif.gc.ca before March 17. OSFI will communicate final amendments to the benchmark rate for uninsured mortgages by April 1, with changes effective on April 6.

  • https://www.mortgagebrokernews.ca/news/osfi-considering-new-benchmark-rate-for-uninsured-mortgages-326406.aspx?utm_source=GA&utm_medium=20200219&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Mortgages are the fast growing credit product among Gen Zs

Credit & Debt DAZADA DIAMOND 18 Feb

Mortgages are the fast growing credit product among Gen Zs

Mortgages are the fast growing credit product among Gen ZsThe sizeable share of the Canadian population that was born since 1995 (28%) is emerging as a generation with no problem living on credit.

A new report from Transunion shows that 8% of the Generation Zs in Canada are over 18 and of these 63% are credit active. Of the six nations selected for the study (which also includes the US, Colombia, Hong Kong, India, and South Africa), the US leads for credit active Gen Zs with Canada the only country to come close (63%).

Almost all (99.8%) of credit active Gen Z adults have a credit card while 28% have a student loan, 5% an auto loan, 23% have a private label card, and 16% have an unsecured personal loan.

The fastest growing credit product among this cohort though is mortgages at 71% followed by home equity lines of credit at 48%. Personal loan, bankcard, and auto loan complete the top 5 in this regard.

A previous Transunion report predicted that the average mortgage balance is likely to go up 3.6% by the end of 2020, reaching around $285,000. Delinquency levels are projected to remain nearly flat at 0.51%.

“Gen Z is the first generation of digital natives, and they have come to expect a seamless consumer experience across all walks of life – including how they access, use and manage credit,” said Jason Laky, executive vice president and head of financial services at TransUnion. “Our belief is that the desire for credit among this generation is significant across the board and improving economic conditions will likely serve as a springboard for more credit, especially in emerging credit markets. It’s critical for lenders in both emerging and established economies to have the ability to make more informed decisions on prospective customers and earn their trust as well as their business.”

Despite the thirst for credit among Gen Zs, the report also highlights that a sizeable share are prime and above.

  • https://www.mortgagebrokernews.ca/archived/mortgages-are-the-fast-growing-credit-product-among-gen-zs-325683.aspx?utm_source=GA&utm_medium=20200131&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Romance may be in focus but finances make or break relationships

Credit & Debt DAZADA DIAMOND 14 Feb

Romance may be in focus but finances make or break relationships

Romance may be in focus but finances make or break relationshipsIt’s the most romantic day of the year but one thing that won’t be masked by flowers or a meal at a favourite restaurant, is the state of a potential partner’s finances.

A new survey from Canada’s largest lender shows that 85% of those in a relationship say that sharing financial values is crucial for a healthy, long-term relationship.

And for those that may be asked to be someone’s Valentine today, 80% said discussing finances is important before the relationship gets serious with 90% saying a couple should have similar spending and saving opinions, and 62% saying the state of a partner’s finances could be a deal breaker.

“When you’re committing to a relationship, you’re inviting that special someone into your life, along with their finances,” says Sandra Abdool, Regional Financial Planning Consultant, RBC Financial Planning. “That’s a lot of sharing, and as a couple, it’s important to set clear financial boundaries to make sure you’re on the same page when it comes to spending, saving and managing your money.”

National and Regional Findings: RBC 2020 Relationships & Money Insights Poll