BC Housing and Mortgage Insights Newsletter August 15, 2024
This week ~ Insights related to British Columbia’s real estate market, including recent trends in home sales, the evolving landscape of Canadian lending, residential activity in the Okanagan, potential impacts of market volatility on mortgage rates, and new mortgage rules.
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Home Sales Up Slightly on Bank of Canada Rate Cuts
In July 2024, the British Columbia Real Estate Association (BCREA) reported 6,943 residential unit sales in the Multiple Listing Service® (MLS®) Systems, marking a 2% decrease from July 2023. The average MLS® residential price in BC during July 2024 declined by 0.8% to $959,480 compared to the previous year’s average of $967,298. Despite this, home sales activity across BC is showing signs of normalization, especially with the Bank of Canada reversing rate hikes that impacted the market in 2023. Year-to-date, BC residential sales dollar volume is down 2.1% at $45.2 billion, while residential unit sales have decreased by 3.8% year-over-year to 45,579 units. The average MLS® residential price has risen by 1.8% to $991,606
The evolving landscape of Canadian lending: Key trends in mortgage and non-mortgage loans
In Canada, mortgage loans constitute approximately 70% of total loans, while non-mortgage loans make up the remaining 30%. Recent trends show a shift in uninsured mortgage loans, with a decrease in loans below $500,000 and an increase in loans ranging from $500,000 to $1,000,000. Rising debt levels, inflation, and interest rate changes impact household indebtedness and financial stability. Data from chartered banks informs this analysis.
Residential real estate activity trending upwards across the Okanagan
Residential real estate activity in the Okanagan is trending upwards, according to the Association of Interior Realtors. In July 2024, 1,351 residential sales were recorded, slightly below last year’s figures. However, new listings rose by 4.1%, and active listings increased by 31.5%. Benchmark prices for single-family homes dipped slightly, while townhouse prices dropped by an average of 5%
Market volatility could drive some mortgage rates lower. Here’s why
Canadians gearing up for the fall housing market and existing homeowners with mortgage renewals may benefit from lower interest rates due to recent market volatility. Stock markets worldwide have rebounded, impacting the bond market—a key driver for fixed mortgage rates. The five-year government of Canada bond yield briefly dipped below three percent, potentially setting the stage for additional fixed mortgage rate discounts.
New mortgage rules kick in today. What is changing?
First-time homebuyers can now apply for a 30-year mortgage for newly built homes. This extension provides five additional years to pay off an insured mortgage. However, for other mortgages requiring default insurance, the 25-year amortization limit remains in place. The changes aim to restore generational fairness and support younger buyers, but it’s essential to consider individual circumstances.
