Bank of Canada Held Its Benchmark Interest Rate
Last week the Bank of Canada held its benchmark interest rate at 1.75% and the expectation is that we should not see many increases in the mortgage rates this year. Some of the banks have already started to reduce their fixed rates this week. The New Year has started with plenty of anxiety and predictions about real estate and mortgage lending. Last year was a challenging period with the rise of interest rates, mortgage lending constraints and the introduction of many new taxes and policies on local real estate. Our political landscape hasn’t helped drive much confidence either. As are result Metro Vancouver home sales last year were the lowest annual total in the region since 2000. This has led to a reduction of mortgage originations and a softening of home prices.
It has been recently reported that over ¾ of our country’s wealth is represented by real estate. Although a housing crash is not expected it does have many economists worried about the vulnerability of Canadians economic health. In Vancouver alone, there has been over $60 billion drop in the net worth of home owners.
2018 seemed to have been the perfect storm against real estate but the prediction for this year is much rosier. Interest rates are not expected to rise significantly and the inventory levels of homes listed for sale ended the year trending lower. This should help stabilize prices. The Mortgage environment is starting to improve with new products and relaxing of lending criteria. Buyers appear to be jumping of the fence and taking advantage of market conditions which for the most part is considered to be ‘balanced’.
Mortgage rates:
Prime lending rate: 3.95%
Five year fixed rates range from: 3.59% to 3.79%
Five year variable rate range from: 3.10% to 3.70%
Line of credit mortgage: 4.45%