Canada’s major banks have been quick to react to the Bank of Canada’s decision to raise interest rates to 1.25%.


Major lenders hike rates following BoC decision

Canada’s major banks have been quick to react to the Bank of Canada’s decision to raise interest rates to 1.25%.

CIBC, RBC, Scotiabank and TD were among the first lenders to increase their prime lending rates by 25 basis points to 3.45%; the new rates take effect from today (Jan 18,2018).

The BoC rate hike was widely expected but what happens next is the burning question.

Although BoC governor Stephen Poloz painted a rosy picture of the Canadian economy at the end of 2017, his speech Wednesday noted that growth is forecast to slow to 2.2% this year and 1.6% in 2019, compared to the forecast 3% growth in 2017.

NAFTA also presents a challenge to the economy and the governor sounded a cautious tone over its uncertainty.

Governor Poloz said that while interest rates would need to rise over time, the Bank would need to provide some continued “monetary policy accommodation” to keep inflation in check and keep the economy operating close to its potential.

So when might those increases come?

CIBC Economics chief economist Avery Shenfeld says one more increase is likely this year – he’s forecasting early in the third quarter – with two further increases (50 basis points) in 2019.

TD’s senior economist Brian DePratto says that July is penciled in for the next increase but notes that data may present a case for that to be moved forward or pushed back.

Source: Canadian Press

https://gtarealtyagent.wordpress.com/2018/01/19/canadas-major-banks-have-been-quick-to-react-to-the-bank-of-canadas-decision-to-raise-interest-rates-to-1-25/

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Big 5 banks increase prime rates after Bank of Canada’s interest rate hike


Big 5 banks increase prime rates after Bank of Canada’s interest rate hike

The Bank of Canada raised its key interest rate by a quarter of a point to 1.25% on Wednesday January 17, 2018.

Effective Wednesday January 17, 2018, the prime rate at the five banks will rise to 3.45 per cent from 3.20 per cent, matching the 0.25 percentage point increase to the Bank of Canada’s overnight rate.

A bank’s prime interest rate gets factored into a variety of loans, from variable-rate mortgages to lines of credit. Bank customers with loans based on the prime rate will see an immediate increase in their interest / mortgage payments.

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https://gtarealtyagent.wordpress.com/2018/01/17/big-5-banks-increase-prime-rates-after-bank-of-canadas-interest-rate-hike/

Average sales price in tight GTA market jumps 13% soaring high.


Average sales price in tight GTA market jumps 13% soaring high.

Homes in the Greater Toronto Area were selling for an average $822,681 in 2017, up 12.7% from the previous year.

The tight market put upward pressure on prices at the start of the year while the latter two thirds saw fewer sales and increased listings, helping to moderate price increases.

Toronto Real Estate Board members sold 92,394 homes through the MLS last year, down 18.3% compared to 2016 which was a record year. Provincial policy had a noticeable impact on the market.

“Much of the sales volatility in 2017 was brought about by government policy decisions,” said TREB president.

He added that research, including TREB’s own, showed that foreign home buying was not a major driver of sales in the GTA. But the Ontario Fair Housing Plan (FHP) had a psychological impact on the market.

In the fourth quarter though, the FHP’s influence weakened and sales increased following two quarterly declines. This was in part due to the impending OFSI mortgage underwriting rule changes.

“Looking forward, government policy could continue to influence consumer behavior in 2018, as changes to federal mortgage lending guidelines come into effect,” said TREB Officials

Means:

Sales Volume went low but Price went soaring high. What does it mean?

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Closing 2017 & 2018 Forecast due to Incoming Tighter Mortgage Rules


Closing 2017 & 2018 forecast due to incoming tighter mortgage rules

The Canadian Real Estate Association says it has cut its home sales forecast for next year due to the impact of tighter mortgage regulations taking effect in the new year, which will erode affordability.

The association representing real estate agents across the country also downgraded projections for 2017.

It now expects national sales activity this year to decline by four per cent to 513,900 units this year due to weak activity in Ontario, after the province in April announced measures to cool the market.

However, it says the national average price of a home is still expected to rise to $510,400, up 4.2 per cent compared to 2016.

CREA is now forecasting a 5.3 per cent drop in national sales to 486,600 units next year. That new estimate shaves about 8,500 sales from its previous 2018 forecast.

The national home price is expected to slip by 1.4 per cent in 2018 to $503,100.

Still, the November figures show the number of homes sold through its MLS system rose by 3.9 per cent compared with October, led by a 16 per cent sales spike in the Greater Toronto Area.

Source: The Canadian Press

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https://gtarealtyagent.wordpress.com/2017/12/14/closing-2017-2018-forecast-due-to-incoming-tighter-mortgage-rules/

Bank of Canada announces rate -Unchanged /Dec 06, 2017


Bank of Canada announces rate -Unchanged

Dec 06, 2017

The Bank of Canada stuck with its trend-setting interest rate Wednesday ,but it offered fresh, yet cautious, warnings to Canadians that increases are likely on the way.

The central bank has now left the rate locked at one per cent for two straight policy announcements after the strengthening economy prompted it to raise it twice in the summer.

In announcing the decision, the bank pointed to several recent positives that could support higher rates in the coming months. They included encouraging job and wage growth, sturdy business investment and the resilience of consumer spending despite higher borrowing costs and Canadians’ heavy debt loads.

On top of that, there’s increasing evidence in the economic data that the benefits from government infrastructure investments have begun to work their way through the economy, the bank said.

But on the other hand, the bank noted exports have slipped more than expected in recent months after a powerful start to the year, although it continues to predict trade growth to pick up due to rising foreign demand.

It also said the international outlook continues to face considerable uncertainty mostly because of geopolitical- and trade-related factors.

“While higher interest rates will likely be required over time, (the bank’s) governing council will continue to be cautious,” the bank said in a statement Wednesday that accompanied its decision.

It will be “guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity and the dynamics of both wage growth and inflation.”

The bank said inflation, a key factor in its rate decisions, has been slightly higher than anticipated and could stay that way in the short term because of temporary factors like stronger gasoline prices. Core inflation, which measures underlying inflation by omitting volatile items like gas, has continued to inch upwards.

Governor Stephen Poloz raised rates in July and September in response to an impressive economic run that began in late 2016. The hikes took back the two rate cuts he introduced in 2015 to help cushion, and stimulate, the economy from the collapse in oil prices.

From here, the bank must assess how to proceed with the interest rate while taking into consideration that Canadian households have amassed high levels of debt and the presence of still-hot housing markets in areas like Toronto and Vancouver.

Last month, the Bank of Canada flagged the steady climb of household debt and these real estate markets as the financial system’s top vulnerabilities.

The bank’s statement Wednesday said recent economic indicators have been in line with its October forecast, which projected a moderation following the country’s exceptional growth in the first half of 2017.

The document contained a few differences compared with the statement that accompanied its last rate announcement in October.

This time, the bank once again noted the unknowns over the future of trade policy, however, it did not specifically mention the ongoing renegotiation of the North American Free Trade Agreement.

Source:The Canadian Press

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https://gtarealtyagent.wordpress.com/2017/12/06/bank-of-canada-announces-rate-unchanged-dec-06-2017/

Happy Thanksgiving to All!!


To All Those Who Are Celebrating:

We would like to wish you and your family a very Happy Thanksgiving .

& Happy Thanksgiving to All!!

Hope all of you have an Enjoyable, Fantastic and Safe Long weekend with your friends, family and Love Ones !

Vijay Gandhi

Real Estate – Mortgage -Investments

Direct: 647-267-6338

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Toronto housing market downturn to be short lived, federal housing agency CMHC says.



Toronto housing market downturn to be short lived, federal housing agency CMHC says

The recent downturn in Toronto's real estate market, brought on after Ontario introduced measures this spring including a foreign buyers' tax, is expected to be brief, the federal housing agency said Wednesday.

Property prices in the city which fell from an average of $919,589 in April to $793,915 last month, according to data from the Toronto Real Estate Board should pick up again due to supply constraints and a stronger economy, Canada Mortgage and Housing Corp. said.

"The response we're seeing in the Toronto market seems almost emotional and a knee-jerk reaction to some of the changes, which suggests that these impacts will be short-lived,'' Dana Senagama, CMHC's principal market analyst for Toronto, said during a conference call to discuss the agency's latest housing market assessment.

The provincial government's measures, which were retroactive to April 21, include a 15 per cent tax on foreign buyers in the Greater Golden Horseshoe region, expanded rent controls and legislation allowing Toronto and other cities to tax vacant homes.

"If job creation continues in Toronto ? and the economy continues to fuel the housing demand, we can expect some of the pressures on house prices in Toronto to resume,'' said Bob Dugan, CMHC's chief economist.

Like Toronto, Vancouver also experienced a real estate slowdown following the implementation of a tax on foreign buyers a year ago. But there have been signs this year that the city's housing market is heating up again.

In its latest quarterly house price survey released two weeks ago, Royal LePage said home sales in Vancouver began to recover in the April-to-June period after the tax “bruised consumer confidence.'' The realtor reported in April that sales in Vancouver's housing market jumped by almost 50 per cent on a month-over-month basis.

CMHC, in its latest housing market assessment released Wednesday, kept its overall risk rating for the national housing market at strong. The quarterly report, which is based on data from the first three months of this year, precedes the Ontario government housing rules.

Source:The Canadian Press
https://gtarealtyagent.wordpress.com/2017/07/27/toronto-housing-market-downturn-to-be-short-lived-federal-housing-agency-cmhc-says/

New protections for condo owners and rules for managers and directors in Ontario are taking effect this fall 2017.


New rules for condos in Ontario taking effect this fall (2017)

New protections for condo owners and rules for managers and directors in Ontario are taking effect this fall.

Government and Consumer Services Minister Tracy MacCharles says more than one in 10 people in the province live in a condo and more than half of the new homes under construction are condos.

Starting this fall, new rules will make it easier for condo owners to participate in owners' meetings and will make it easier for them to access records of their condo corporation.

Directors will have to disclose whether they are owners or occupiers of units in the building or if they have interests in contracts involving the corporation, which MacCharles says will improve governance and address conflicts of interest.

Directors will also have to undergo training and there will be mandatory education requirements for condo managers applying for a general licence.

Two new administrative bodies will launch this fall :
-the Condominium Authority of Ontario will provide education about condo owner rights and responsibilities and will manage the tribunal that resolves disputes about access to records, and
-the Condominium Management Regulatory Authority of Ontario will regulate and licence condo managers.

All together condo owner are expected to see improvement in overall.

Source:The Canadian Press
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Ontario Passes Real Estate Legislation, Which Brings in New Laws to Tackle Housing Affordability.


Ontario passes real estate legislation

The Ontario government has passed its Budget Measures Act which brings in new laws to tackle housing affordability.

The measures include a 15 per cent non-resident speculation tax targeting certain foreign buyers in the Greater Golden Horseshoe, including corporations and trusts.

The tax applies to all residential properties bought in the region from April 21 2017 but there will be rebates for those who become permanent Canadian residents within 4 years of purchase, who work in Ontario for a continuous 12 month period following purchase, and for foreign students subject to conditions.

“Our government is working to make life more affordable for everyone in Ontario,” commented Charles Sousa, Ontario’s finance minister, following the passing of the act Thursday. “This legislation will help to both address the recent price increases in our housing market.”

The lawmakers also passed legislation to reduce the cost of public transit for seniors.

Source: Canadian Press, Repmag

https://gtarealtyagent.wordpress.com/2017/06/02/ontario-passes-real-estate-legislation-which-brings-in-new-laws-to-tackle-housing-affordability/

The Bank of Canada is sticking with its trendsetting interest rate of 0.5 per cent, saying uncertainties continue to overshadow the economy’s stronger-than-expected start to the year.


Bank of Canada makes interest rate announcement

The Bank of Canada is sticking with its trendsetting interest rate of 0.5 per cent, saying uncertainties continue to overshadow the economy’s stronger-than-expected start to the year.
In explaining its decision Wednesday to hold the rate, the central bank once again highlighted weak wage growth and the softening rate for underlying inflation as examples the economy still has room for improvement.

The bank’s scheduled rate announcement comes after it raised its 2017 growth projection last month following a surprisingly healthy start to the year in areas such as employment, consumer spending and the housing markets. In Wednesday’s statement, the bank added better business investment numbers to the list.

“Recent economic data have been encouraging,” the bank said.

“Consumer spending and the housing sector continue to be robust on the back of an improving labour market, and these are becoming more broadly based across regions.”

The bank’s statement, however, also predicted that the “very strong growth” over the first three months of the year will be followed by some moderation in the second quarter, even though at the same time it expects the U.S. economy to rebound.

Analysts had widely predicted governor Stephen Poloz to keep the rate locked at its very low level of 0.5 per cent, as significant unknowns underlined by the bank in the past continue to swirl around the U.S. agenda on trade and taxation.

“The uncertainties outlined in the April (monetary policy report) continue to cloud the global and Canadian outlooks,” said the bank, without making any specific mentions this time about the potential policy path of Canada’s largest trading partner.

With no monetary policy report released Wednesday, observers will scrutinize the commentary in the bank’s one-page statement for clues about its thinking on the trajectory of the economy.

The bank’s statement also said while recent government policy measures on real estate have contributed to more sustainable outlooks for household debt, the rules have yet to have a substantial cooling effect on hot housing markets.

On core inflation, the bank noted that recent readings for its three measures, which reduce the influence of some more volatile consumer items like gasoline, have stayed below its ideal target of two per cent. That signals the entire economy has yet to catch up to the recent momentum.

by The Canadian Press | May 24, 2017

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