March Updates
Happy Friday Everyone!
Spring is only a few days away and I wanted to reach out to give you an update on our end & to catch you up on the happenings of the real estate world.
Mortgage Rate News:
I have summarized the big “news” over the first quarter in relation to real estate, finance, mortgage rates & rule changes (provincially and federally) around lending and real estate.o Rates are beginning to fall – in the fixed environment.o Yields took a deep dive following the liquidity issues in the US and some of their Canadian entities – and resulted in downward shifts in bond yields (which impact the fixed rate environment) – they had a slight recovery yesterday – but are down about 0.50%.o This means that lenders should be adjusting their pricing to align with the environment – many big banks are not shifting – mainly due to building their spreads between yields and rates offered in an uncertain climate.o The overnight rate holds steady in the variable rate environment:o The BOC held the overnight lending rate for the second month in a rowo The US Fed meets next Wednesday, March 22nd to decide whether to hike their Fed Rate by .50% or .25% - earlier this week the likelihood was 75% and has now dropped to below 50% - if they raise the rate – we may have too as well shortlyo Inflation is still too high, labour shortages, global uncertainty and CPI are still outperforming here and south of our border – too well to get our hopes up for a full stop.
o The next meeting is April 13th, 2023 – based on the latest announcement and update – their goal is to continue to monitor and not raise the BOC rate yet – but we haven’t shifted in the other direction and most likely won’t until inflation hits 2%.
History in the Making:
S&P/TSX composite drops over 350 points as concern over global banking sector spreads | CTV News
Stock market news today: Futures lower as First Republic rescue weighs on banks (yahoo.com)
OSFI takes permanent control of SVB's Canadian branch assets - BNN Bloomberg
The above are worth the read – if you want to take a deeper dive into the banking systems and what is happening here and around the world this week.
Important Update
OSFI – The office of the superintendent of the financial institutions – publicly announced in January that they will be holding a public consultation period between January and April 2023.They are reconsidering mortgage underwriting practices and procedures to better protect the banks, mortgage backed securities and the security in mortgage lending through financial institutions in Canada.“Sound mortgage underwriting remains the cornerstone of a healthy residential mortgage lending industry. We look forward to stakeholder views on how different debt serviceability measures can support this important policy objective.”- Tolga Yalkin, Assistant Superintendent – Policy, Innovation and Stakeholder Affairs
What does this mean?
· Lending is going to get more rigid and challenging (if you’ve obtained a mortgage in the last 5 + years’ you are aware that qualifications, lending guidelines and documentation – is very thorough, rigid and protective in nature.· This will impact – anyone looking to buy, refinance or restructure their existing mortgage – if they are to further tighten the regulations, and minimize debt exposure for Canadians
What are they considering?
· An income multiplier for maximum debt exposure known as Loan to Income (which they have not disclosed how this will be calculated or in what multiple/percentage)· Further - Debt-to-income (DTI) restrictions, debt service coverage restrictions, and interest rate affordability stress tests.What should you do?· If you are planning on buying, consolidating, refinancing or investing in a new property this year – now may be the best time for us to discuss.· If you are interested in submitting your opinions or comments surrounding it feel free to send them to me and I would be happy to submit them to the powers that be.· Remember – Canadians are resilient – they have tightened regulations in the past but it is best to be prepared and explore your optionsWhen will these changes take effect?· None of the proposed changes will be finalized until after OSFI’s consultation period, which is now open until
April 14, 2023
.There is A LOT going on – around the world, in finance, in Canada, in our lives and within our own communities. Remember to take time for yourself, to turn off the news and get into nature, to connect with those around you – the key in challenging times is to be armed with information, support & patience.
If you would like to schedule a time to connect to discuss your options, questions, gain clarity or to explore a specific scenario – I will be here every step of the way.
National Housing Stats:
National home sales rose 2.3% month-over-month in February. Actual (not seasonally adjusted) monthly activity came in 40% below February 2022. The number of newly listed properties dropped 7.9% month-over-month. The MLS® Home Price Index (HPI) edged down 1.1% month-over-month and was down 15.8% year-over-year. The actual (not seasonally adjusted) national average sale price posted an 18.9% year-over-year decline in February.For more information check out:
I hope you have the opportunity to enjoy your spring break, have some down time with your family & friends – and please reach out if you would like to schedule a call to discuss any of the above or other matters – I am here to assist you through this.
Catherine Ellis
CEO|Award Winning Mortgage Professional
Cultivate + Evolve Financial | The Collective Mortgage Group
778-835-4565 | info@cefinancial.ca
www.cultivateevolvefinancial.com
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