Mortgage, Money and Dream – Our thoughts on Canadian Mortgage Market
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Canada_housing-affordability-on_map-2014According to RBC’s latest housing affordability report – despite of lower fixed mortgage rate Canadian housing affordability has worsened. An accelerated pace of the housing price has forced the cost of home ownership higher. Single family homes were the worst offender. Single-family homes in Canadian metropolitan cities went up substantially.

RBC’s report hinted that there have been intense competitions in the mortgage industry. The competition brought fixed-rate mortgages down during the first quarter of 2014. Lower mortgage rates didn’t provide much relief to the homeowners or mortgage holders.

The bank put a lot of blames on bad winter for the uneven start of real estate market in the beginning of this year. The lender underscored the issue of low mortgage rate again in its report. According to the bank the current low rates will act as a cruise control for the housing market – for a short period of time.

RBC believes that by the end of 2014 fixed-rate mortgages will start to rise. The rising interest rate will further hurt housing affordability in Canadian markets.

It also gave a hint towards “eventual normalization of monetary policy”. Probably it is expecting the government or Bank of Canada to pull back from excessive intervention in the lending rates. So the risk of a rate rise in Canada is looking to be pretty good.