Mortgage, Money and Dream – Our thoughts on Canadian Mortgage Market
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Bank of Canada is expected to keep its overnight rate at the same level.

Housing affordability is improving in Canada.

These two are in the headlines today.

The Housing Trends and Affordability Report, issued by RBC says;

Canada’s housing market made further steps on a promising path in the closing months of 2011 as affordability improved for the second consecutive quarter.

This time in BC, a slight improvement was mostly due to a further reversal of earlier substantial increases in home prices, according to the report.

At the same time Scotiabank’s report says;

Even in Canada, housing has lost its prior exuberance. Home prices have levelled out over the past six months as market conditions become better balanced and as high prices, tighter mortgage regulations and slowing job growth cool demand. Average inflation-adjusted prices were up just 1% y/y in Q4.

We continue to maintain that the risk of a major price correction remains low, barring a major economic or financial shock. There remains little evidence of widespread overbuilding or speculative buying activity. Canada’s mortgage market is sound, and delinquency rates are low. Said the Scotia report.

While our affordability is improving and housing prices are levelling out, BMO is waging a new mortgage rate war. These both are good news for any first time home buyer.

With this new low rate war, things are only looking brighter for a borrower. Bond yields are at their record low and the banks still have enough spread at their disposal.

  • BMO kicks off new mortgage fight – Globe and Mail
  • BMO brings back 2.99% mortgage – Financial Post
  • Bank of Montreal brings back 2.99 per cent five-year mortgage – Toronto Star
  • If you are looking for a fixed rate mortgage then it might be the time you give those low rates a serious consideration.