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your mid-week mortgage market minute
with Jim Cook, Broker
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in the mortgage marketplace ...
Last week, I mentioned Feb 20th as a key date with Canada releasing its January CPI report.  It certainly was.  Year over year inflation is down to 2.9%, average core inflation is down to 3.35% and month over month was 0%.  All of these results were under what the market was expecting.

The result?  Bond rates and swap rates were both declining yesterday, setting the stage for stable or softening fixed mortgage rates as we approach the spring market.  

Less inflation drama in the media should nudge more buyers off the sidelines.  What we need now is inventory.  And that's the rub.  In a recent BMO Economics report, it indicated we need at least 500,000 home completions in the next year to meet expected demand and we have never had a year with more than 250,000 complete.  

This is just one of many reasons why I believe home prices are likely close to or at their trough.  That is likely also why the Bank of Canada continues to watch house price pressures very closely.  It expects shelter inflation to account for half of total inflation over the next two years.  [Realtors - share that with your Buyers!]

In spite of this, OSFI indicates that they no longer have any immediate plans to raise the bar on mortgage qualifying.

Interestingly, as an aside, the Toronto Star reports that we have 44,900 less Realtors in Ontario compared to Dec 2022 and Realtor earnings are down 40% since the February 2022 peak in home prices.  Is this a reflection of fewer total sales in units - or a reflection of the impact of TRESA?
rate snapshot ...
No change in rates - yet.  For properties priced below $1 million, with less than 20% down payment, example rates would be:
  • 1 yr fixed  7.50% or $7.32 per $1k in mortgage
  • 3 yr fixed  5.14% or $5.90 per $1k in mortgage
  • 5 yr fixed  5.09% or $5.87 per $1k in mortgage
For clarity, a $500,000 at 5.09% on a 25 yr amortization would have payments of 500 x 5.87 = $2,935 monthly.

Note also that rates can change daily, certainly differ between lenders and definitely differ based on down payment, mortgage features and hidden costs.
in Jim's practice ...
This is a more typical February - slower but steady level of activity - with a primary focus being preparation for what I expect to be a very active 2024.

I'll keep this section short this week - we'll be highlighting more of our process in weeks to come.

Have a successful week!  
Highly recommend! Very trustworthy, honest and explains everything  :)  
(VC, Jan 2024)
chatwithjim.ca

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Jim Cook is a nationally-recognized broker with some quarter billion in mortgages funded. 
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