Oct 1, 2019
Following the implementation of the mortgage
stress test in 2018, the housing market has been steadily re-stabilizing
itself throughout 2019. RBC's
Canadian Housing Market Report indicates that the home sales market has had
continuous growth since February.
Up until now, the Bank
of Canada has kept the interest rate steady in
2019 rather than the predicted rate hikes. This was a relief to
homeowners and homebuyers as increasing the overnight rate would affect
mortgage rates and other interest rates.
As well, home buyers benefited from lower long-term mortgage
rates. For the first time in almost three years, the Bank of Canada decreased
its benchmark five-year mortgage rate. CREA’s Resale
Housing Market Forecast argues that this was one of the most important
developments because this is the rate that’s used in the stress test.
Other economic factors that influenced the housing market
include steady population and employment growth.
The Bank of Canada lowering its benchmark rate means that
Canadians applying for mortgages can qualify for more home. This helps to
alleviate the financial burden for first-time homebuyers who also benefit from
the recently launched First-Time
Home Buyer Incentive.
The Bank of Canada believes that because housing activity
has picked up with the support of lower mortgage rates that there is a risk of
adding to high household debt levels. For this reason, it’s expected that the
Bank of Canada will not raise interest rates for the time being. They will
continue to keep a close eye on current global economic conditions, including
escalating trade conflicts that can impact Canada’s economy.
CREA anticipates that the national average home price will
stabilize in 2019 and continue to increase in 2020. Although sales activity is
predicted to improve, it will still be lower than before the implementation of
the stress test. It’s also expected that sales in British Columbia will
decrease in 2019, but this will be offset by sales increases in Ontario and
As the housing market is forecasted to rebound, there is
good news for homebuyers, home sellers, and homeowners!
Looking to buy a
home? Research the cost
of buying a home in your city, save up and secure
a pre-approved mortgage, then start your search
for your perfect home.
Planning to sell your
home? See our step-by-step
plan to help make the process as easy as possible.
Are you a homeowner? Capitalize
on the low interest rates and pay
off your mortgage faster. Or, if your financial situation allows, refinance to get a better
term or interest rate.
Homicity helps you find your dream home in the perfect community. Whether you are buying, renting, or selling, you can navigate the Canadian real estate market with confidence with our expert advice, market news, and recommendations powered by AI.
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