BC Housing and Mortgage Insights Newsletter - January 31, 2024

A curated collection of insightful articles chosen for offering a comprehensive overview and expert analysis of the latest trends, predictions, and changes in BC's mortgage and housing sectors. Updated weekly, a great resourse whether you're a homebuyer, seller, or investor, each article chosen for the purpose of helping to equip you with the vital information needed to navigate this ever evolving market. Subscribe

CMHC's Housing Market Retrospective and Projections

The Canada Mortgage and Housing Corporation (CMHC) released a report highlighting a revised projection of Canada's housing stock by 2030, decreasing from 18.58 to 18.19 million homes. This represents a 2% drop, with British Columbia's projected housing stock reducing by 0.06 million. CMHC identifies population growth, urbanization, and evolving household structures as contributing factors to the housing crisis. Canada's Housing Action Plan includes increased financing for apartment construction and affordable housing, and repurposing federal lands for housing development.

Canadian Monthly Mortgage Report: January 2024 from nesto.ca:

In the 'Canadian Monthly Mortgage Report' for January 2024, nesto.ca highlights key trends in the mortgage market. The report notes increases in fixed and variable mortgage rates throughout most of 2023, with a decrease in fixed rates starting in September. A notable shift from mortgage renewals to refinances was observed due to higher rate-induced payment shocks. The year also saw a closing gap between potential buyers 'just looking' and those 'ready to buy', indicating a gradual re-entry of buyers into the market. Furthermore, the high-interest rate environment influenced homebuyers to opt for lower-priced homes and larger down payments.

Stability in Canadian New Home Prices

In December 2023, new home prices in Canada remained largely unchanged or slightly declined in 21 of 27 metropolitan areas. The national new home prices decreased by 0.9% annually, with significant declines in Ottawa and Victoria. Factors influencing this trend include the Bank of Canada's interest rate hikes in 2023, which cooled the housing market. The supply of unabsorbed single-family homes increased by 37.6% from the previous year.

Impacts of the Bank of Canada's Rate Hold on Mortgage Holders

The Bank of Canada's decision to hold interest rates has implications for mortgage holders. High interest rates continue to affect homeowners, especially those with fixed-rate mortgages facing renewal. Daniel Vyner and Alana Riley highlight the ongoing financial pressure on borrowers, with a noticeable shift in preference towards variable-rate mortgages over shorter-term fixed mortgages. The current rate environment is expected to have lasting impacts on household cash flows.

Potential Increase in Fixed Mortgage Rates Due to Bond Yield Rise

Recent increases in bond yields might reverse the trend of falling fixed mortgage rates. The rise in yields is linked to Canadian inflation and economic data, potentially delaying expected rate cuts by the Bank of Canada. Mortgage experts recommend securing rate holds for imminent purchases but anticipate lower rates in the future. This fluctuating rate environment suggests a non-linear trend towards lower mortgage rates over time.