14 Jun

White Rock Market Update


Posted by: Kimberly Walker

There is a growing sentiment among market watchers that the Bank of Canada’s current fight against inflation is putting home prices in the crosshairs.

In the release of the Bank’s annual Financial System Review, Governor Tiff Macklem mentioned a desire for “moderation” in the housing market several times.  But he made the Bank’s priority clear.

“The housing market, it’s an important part of the economy,” he said.  We are watching it closely, but our focus ultimately is on the whole economy and in getting inflation back to target.”

That has some analysts speculating that the central bank may be willing to let housing prices and the general economy take a hit in the effort to tame inflation

With interest rates on the rise, the housing market has already seen a downturn in sales and prices, especially in the hottest markets.  While a 10% reduction in prices would reverse several months of gains, it would not be devastating to long-term homeowners or the economy as a whole.  But some recent reports have predicted a 15% decline in prices.  That could be particularly hard on those who bought at the height of the pandemic market.

The central bank is also warning that those buyers could be facing a 30% increase in their mortgage payments when they renew in 5 years.  The Bank’s current projections put fixed rates at 4.5% in 2025-26 with variable rates at 4.4%.

Debt-strapped Canadian households could find themselves forced to cut other spending to service their mortgage.  Taking that money out of the broader economy could slow, or reverse, the on-going recovery.

7 Jun

White Rock Mortgages


Posted by: Kimberly Walker

Rising interest rates in Canada have triggered a change in home buyers.  Mortgage brokers across the country have noticed more and more of their clients are opting get their mortgages through credit unions and private lenders.

Figures compiled by Rates.ca show these alternative lenders have handled about 6.7% of Canada’s mortgage business so far this year, compared to about 3.7% for all of last year.

Both fixed and variable rates are rising.  Fixed rates are going up because of increasing yields on the 5-year Government of Canada bonds, that the rates are based on.  Fixed rates are currently running at about 4.0%.  Variable rates are rising because the Bank of Canada is increasing its benchmark lending rate.  Variable rates, are now averaging about 2.5%.

In both cases, home buyers who are getting their uninsured mortgages through one of Canada’s big banks (or any federally regulated lender) are subject to the federal government’s stress test. It forces buyers to qualify for a mortgage at a higher rate; either 5.25% or their contract rate plus 2.0%, whichever is higher.

Even though these rates are closer to traditional, normal rates, they can make qualifying tougher, and they reduce purchasing power.

Mortgages taken through credit unions and private lenders, which tend to be provincially regulated, avoid the stress test.  The alternative lenders also tend to be more flexible which can make it easier to qualify.

But alternative lenders are not relegated to just those buyers who are having trouble qualifying.  Brokers are reporting that well qualified borrowers are choosing them to get better rates or bigger loans.


Weekly Mortgage Rate Update

*2 year fixed @ 3.30%

*3 year fixed @ 3.68%

*4 year fixed @ 3.68%

*5 year fixed @ 3.68%

*Variable Rate Mortgage 2.30%  @ prime -.90% prime rate is 3.20%

*OAC, rates high ratio purchases, subject to certain conditions, rates may change without notice, call for a quote