House prices and market activity continue to increase especially in Vancouver and Toronto even after measures taken by Finance Minister Bill Morneau which took effect in February. Increasing the required down payments for home purchases valued above $500,000 was intended to stabilize a hot real estate market but the fact is that home prices in some areas have increased more than expected. Maybe it’s too early to tell if the recent rule changes will have a real effect. As mentioned by Mr. Morneau “we are only one month into that change and we want to make sure that our housing market stays one that is working effectively. As we see challenges, we will of course think about ways that we can respond that ensure that our market remains stable”.
One real possibility causing the Canadian real estate prices to continue to move at an accelerated pace could be foreign ownership. Mortgage and Housing Corporation (CMHC) is looking for new methods of tracking and measuring foreign buyers, and the impact this could have in overall home prices. As quoted recently by CMHC Chief Economist Bob Dugan “It remains a top priority for CMHC to continue to get more information on foreign investment in Canada’s housing market”.
On another note,
The Bank of Canada has decided to keep its benchmark lender rate unchanged at 0.5 percent which indicates that the Bank of Canada feels that there is no need for any further cuts to stimulate the economy. “it does appear that the positive forces at work in the economy are starting to outweigh those that are negative” said a Bank spokesperson. This is good news for everyone looking to buy or refinance today.
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