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How Your Home Warranty Can Help You in an Emergency

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How Your Home Warranty Can Help You in an Emergency The last thing you want to face when moving into a new home or condominium is an emergency, such as a total loss of heat or an extensive plumbing leak. After all, everything in the house is spanking new, including the principal systems and materials, and the house was examined at various phases of construction. Even yet, situations do occur from time to time. Fortunately, your Tarion-managed new home warranty covers situations that can be traced directly to your builder’s labor and supplies. What is an emergency? According to Ontario’s new home warranty, an emergency happens within the warranty term and includes a guaranteed fault that, if not addressed quickly, will cause significant damage to your house, condominium unit, or standard condominium features. An emergency might also endangers your health and safety or renders your house uninhabitable. Examples of typical emergencies that may be covered under warranty include: complete loss of heat between September 15 and May 15 complete loss of electricity a gas leak complete loss of water complete stoppage of sewage disposal; a plumbing leak that necessitates shutting off the entire water supply a major collapse of any part of the home’s exterior or interior structure water penetration through the interior walls or ceiling a pool of standing water inside the home and/or the presence of unacceptable levels of hazardous substances. It should be noted that an emergency scenario over which the builder has no control, such as municipal or utility service breakdowns, is not covered by the builder’s guarantee. What should you do in an emergency? In the event of an emergency, you should contact your builder as soon as possible since you are responsible for handling the warranty procedure for your property. Afterward, your builder has up to 24 hours to handle the emergency problem by making your house safe and avoiding future damage. What if you can’t contact your builder or if they don’t handle the situation within 24 hours? That’s when you may contact Tarion for advice on handling the emergency scenario. Tarion has a dual function in this circumstance. First, they ensure homeowners get the warranty coverage to which they are entitled. Second, when builders fail to satisfy their duties, we hold them responsible. If you are unable to contact your builder or Tarion, you or a contractor you hire may do the required repairs to handle the immediate issue and then file a claim to be compensated for the expenditures. You must preserve records of the emergency and repair work done, save all receipts and take photos before and after the repairs. After dealing with the immediate emergency, your builder has 30 days to thoroughly remedy the fault. If they don’t, you may contact Tarion to address the issue. Nobody wants or anticipates an emergency to ruin their first house-buying experience. But, if they do occur, you can be certain that steps are in place to guarantee that you can quickly return to fully enjoying your new home. Related posts 10 July 2023 How Your Home Warranty Can Help You in an Emergency 02 July 2023 Four 2023 new home buyer facts that may surprise you Four 2023 new house buyer facts that may surprise you Tarion revealed the findings of its initial poll… 02 July 2023 3 “warranty exceptions” for warm weather 3 “warranty exceptions” for warm weather Your routines as a new homeowner will likely shift when the… 27 June 2023 Reuters survey predicts rising Canadian housing prices due to high demand Reuters survey predicts rising Canadian housing prices due to high demand According to a Reuters survey… 21 June 2023 Canadian Real Estate Correction Continues, Sales Rise Temporarily: Oxford Econ. Recent Immigrants Cannot Support High Home Prices in Canada After a temporary lull, the real estate market… 24 May 2023 Recent Immigrants Cannot Support High Home Prices in Canada Recent Immigrants Cannot Support High Home Prices in Canada Canada’s population growth is contributing… 16 May 2023 Toronto’s Best Investment Areas for Families Toronto’s Best Investment Areas for Families Don’t be fooled by The Six’s huge towers, high-rises,…

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3 “warranty exceptions” for warm weather

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3 “warranty exceptions” for warm weather Your routines as a new homeowner will likely shift when the temperature outdoors rises. Do you like gardening? Do your kids like spending time in the backyard? Or do you like to read a light novel inside as you cool down this summer?  Unfinished exterior work or a malfunctioning air conditioner might put a damper on your good time no matter what you choose. That’s why it’s important to familiarize yourself with the “warranty exceptions” (as Tarion calls them) that will go into effect in May. Seasonal goods Decks, caulking, and in-ground supports are considered “seasonal” warranty items, as are exterior painting, cement, concrete, mortar, and stucco work because doing so needs warmer weather (preferably drier). Depending on when you filed a warranty form for seasonal products to your builder and Tarion, they will be handled in one of two ways: Suppose you filed a warranty request with a seasonal item between November 16 and April 30. In that case, the builder must do the work as soon as feasible once weather conditions are favorable again, but no later than September 1.  Between May 1 and November 15, if you filed a warranty claim for a seasonal item, your builder has 120 days to execute the repair according to the standard warranty claims procedure. Unique Holiday Merchandise “Special seasonal” warranty items include final grading, sod, driveway, and pathway installations. Municipal permissions and installations (such as sidewalks and curbs) also need more time, thus these projects are given extensions. You must file a warranty claim during the first year of owning your new home if the aforementioned things are not fully functional. From the moment your warranty begins until the end of “seasonal weather” (often around November 15), your builder has 270 days to execute any necessary seasonal modifications. Your builder’s warranty on these things will extend into the second year since there are only 199 days of seasonal weather in a year. Air conditioner Have you unpacked the air conditioner your construction company sold you yet? Avoid overheating this summer by taking it easy. If your air conditioner stops working entirely between May 15 and September 15, you may expect speedier service under your new home warranty. We mean there is no way to cool down your house since either your air conditioner is not installed yet or is broken. Notify your builder and Tarion about the problem. After receiving your request, your builder has 30 days to make the necessary repairs. Not a problem, Tarion is here to assist you. Conclusion What if you own a condo, and the air conditioner and any seasonal or specialty goods are considered part of the common elements? If this is the case, you should notify the board of directors of your condo association. They oversee the warranty for shared facilities and may coordinate resolutions with the developer and Tarion. You can make the most of your house this summer, inside and out, by taking a break from your favorite summer activities to read up on what your warranty covers. Related posts 02 July 2023 Four 2023 new home buyer facts that may surprise you Four 2023 new house buyer facts that may surprise you Tarion revealed the findings of its initial poll… 02 July 2023 3 “warranty exceptions” for warm weather Reuters survey predicts rising Canadian housing prices due to high demand Your routines as a new homeowner… 27 June 2023 Reuters survey predicts rising Canadian housing prices due to high demand Reuters survey predicts rising Canadian housing prices due to high demand According to a Reuters survey… 21 June 2023 Canadian Real Estate Correction Continues, Sales Rise Temporarily: Oxford Econ. Recent Immigrants Cannot Support High Home Prices in Canada After a temporary lull, the real estate market… 24 May 2023 Recent Immigrants Cannot Support High Home Prices in Canada Recent Immigrants Cannot Support High Home Prices in Canada Canada’s population growth is contributing… 16 May 2023 Toronto’s Best Investment Areas for Families Toronto’s Best Investment Areas for Families Don’t be fooled by The Six’s huge towers, high-rises,… 11 May 2023 Sales and prices in Toronto’s real estate market are soaring Sales and prices in Toronto’s real estate market are soaring After last year’s record meltdown,…

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Reuters survey predicts rising Canadian housing prices due to high demand

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Reuters survey predicts rising Canadian housing prices due to high demand According to a Reuters survey of real estate experts, Canadian house prices are expected to decline by approximately 9 percent this year before rising again in 2024 and beyond as purchasers wager interest rates have already peaked and demand for housing remains high. After skyrocketing by over 50% from the onset of the COVID epidemic in early 2020, Canadian house prices have declined by roughly 15% since March due to the Bank of Canada’s quick rate hike from near-zero early last year to 4.25% in January. Home prices in Canada have been on the increase again this year, increasing by 17% according to one metric, since the Canadian central bank decided for a conditional freeze on rate hikes in January. In a survey conducted between May 15 and June 5 by Reuters, 11 industry experts anticipated that house values would drop by around 9% in 2023, which is less severe than the 12% drop predicted in a poll conducted three months ago and the 12% loss in April from a year earlier reported by the Canadian Real Estate Association. The median forecast from the most recent survey predicted that property prices will grow by 2% in 2024 and by 4% in 2025. After a year-long recession, Canada’s housing market is on the upswing in the spring of 2023. As RBC’s associate chief economist Robert Hogue said, “Demand-supply conditions suddenly appear tight.” “Sellers are once again in control in most major markets as rising demand and falling supply have driven prices up and supply down. Now that the Bank of Canada has halted its aggressive rate raise campaign, buyers’ confidence is fast returning to both markets. Despite widespread predictions that the Bank of Canada would leave rates unchanged all year, another Reuters poll found that if economic growth remains robust and inflation remains high, the BoC may be forced to raise rates again. There may be no relief for rising costs if immigration rates continue to rise with demand. Experts who were asked a follow-up question predicted a small increase in delinquency rates among highly indebted families in 2018. Despite efforts, “Canada’s housing affordability problem is not easing,” said Douglas Porter, chief economist at BMO Capital Markets. While many may advocate for a supply-side solution, we’ve always held that it’s naive to imagine that a sector operating at full capacity can suddenly quadruple production, resulting in a glut of new units that drives down prices and rents. Related posts 27 June 2023 Reuters survey predicts rising Canadian housing prices due to high demand 21 June 2023 Canadian Real Estate Correction Continues, Sales Rise Temporarily: Oxford Econ. Recent Immigrants Cannot Support High Home Prices in Canada After a temporary lull, the real estate market… 24 May 2023 Recent Immigrants Cannot Support High Home Prices in Canada Recent Immigrants Cannot Support High Home Prices in Canada Canada’s population growth is contributing… 16 May 2023 Toronto’s Best Investment Areas for Families Toronto’s Best Investment Areas for Families Don’t be fooled by The Six’s huge towers, high-rises,… 11 May 2023 Sales and prices in Toronto’s real estate market are soaring Sales and prices in Toronto’s real estate market are soaring After last year’s record meltdown,… 11 May 2023 Rise in Toronto’s Home Building Costs Rise in Toronoto’s Home Building Price Even if inflation in Canada has slowed, the price of constructing… 05 May 2023 Toronto and Vancouver Home Prices Rise Like Mortgage Credit Toronto and Vancouver Home Prices Rise Like Mortgage Credit Home prices increased dramatically last month…

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Recent Immigrants Cannot Support High Home Prices in Canada

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Recent Immigrants Cannot Support High Home Prices in Canada Canada’s population growth is contributing to rising home costs. The more the demand, the higher the property price, right? Don’t jump to conclusions; the story’s premise could not be accurate. The income levels of immigrants were surveyed in 2021, and the results were just revealed by Statistics Canada (Stat Can). Recent immigrants to Canada have lower wages than the average Canadian, making it difficult for them to afford even the most basic housing needs without raising rents. Recent Canadian immigrants had far lower wages than native Canadians Recent immigrants to Canada (those who came between 2016 and 2019) are paid much less than native-born Canadians. The median annual income of these immigrants was $35.6k, which was about 20% (-$7.2k) lower than their non-immigrant counterparts. It’s not simple to obtain affordable housing if a couple earns the median salary. Rent in Most Canadian Cities Is Too Expensive for Newcomers Finding affordable rental homes is challenging for them. At the 30% poverty line for housing costs, they have a maximum monthly budget of $1,780. Put another way, that’s around 17% less than the $2,140/month a dual-income, non-immigrant family may spend before meeting the shelter poverty criterion. In April, the national average for a one-bedroom rental was a little over $2,000 per month. The average monthly rent is much higher in more costly cities like Toronto ($2,370) and Vancouver ($2,600). Canadians could only afford to buy a home in a few urban centres It will also be difficult to purchase a property at this salary. The maximum price they could pay is roughly $400,000 if they used 100% of their available credit and a high-ratio mortgage. It’s around $65k less than a family of four without immigration status could afford. In all of Canada, that amount of money won’t go very far. According to CREA, the national average house price in March was $709,000 nationwide. Winnipeg ($331k), Moncton ($309), Quebec City ($323k), St. John’s ($313k), Regina ($309k), Mauricie, QC ($231k), Fredericton ($273k), or Saint John ($270k) are among the few places that come close to the budget. For a while, a story can keep a trend going, but it becomes difficult to maintain after that. Immigration and population expansion may boost demand, but wages couldn’t keep up in the long run. Taking increasing proportions of family earnings is the only way to continuously boost rents without fast, inflationary rise of income. On the other hand, widespread acceptance of shelter poverty isn’t exactly a selling factor for future immigration. Related posts 24 May 2023 Recent Immigrants Cannot Support High Home Prices in Canada 16 May 2023 Toronto’s Best Investment Areas for Families Toronto’s Best Investment Areas for Families Don’t be fooled by The Six’s huge towers, high-rises,… 11 May 2023 Sales and prices in Toronto’s real estate market are soaring Sales and prices in Toronto’s real estate market are soaring After last year’s record meltdown,… 11 May 2023 Rise in Toronto’s Home Building Costs Rise in Toronoto’s Home Building Price Even if inflation in Canada has slowed, the price of constructing… 05 May 2023 Toronto and Vancouver Home Prices Rise Like Mortgage Credit Toronto and Vancouver Home Prices Rise Like Mortgage Credit Home prices increased dramatically last month… 29 April 2023 To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years What is Canada’s secret for having… 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine…

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Rise in Toronto’s Home Building Costs

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Rise in Toronoto’s Home Building Price Even if inflation in Canada has slowed, the price of constructing a new house continues to soar. According to Stat Can, Q1 2023 saw a significant increase in the price of constructing a new house. Instead of slowing down, growth has been picking up steam and is already over five times the inflation objective. In Toronto, the “high rise crane capital of North America,” construction prices have increased by over 9 times the rate of inflation. The price of constructing a home in Canada is rising rapidly Despite the reduction in inflation, Canadian homebuilding costs continue to rise. First quarter 2023 construction costs increased by 1.8% from the previous quarter’s levels. Despite apparently slowing inflation, annual growth has increased to 11.1%. Almost every category of expense has increased. Growth was highest in Conveying Equipment (+4.0%) and Masonry (+4.0%). The Woods, Plastics, and Composites category was the only one to see a decrease (-0.2%), and this was due only to a drop in timber prices. Despite a precipitous decline in recent years, current timber prices remain much above levels predicted by 2020. Home construction costs in Toronto are rising at a rate that is 60% higher than the national average Home construction expenses in the first quarter were relatively high throughout Canada, with Toronto being an exception (+3.2%). Compared to Stat Can’s urban index, it grew at a rate 23 percentage points quicker, well above even Halifax (+2.6%) and Vancouver (+2.3%). Only in Calgary (-0.2%) did prices fall throughout the quarter. Toronto, the construction hub of North America, is expanding at a pace that is causing shortages in the industry. Annual growth exceeded 17.7 percent, about 60 percent greater than the national average, in the city with the most high-rise cranes. Although inflation in Canada has slowed, construction costs, particularly in Toronto, continue to increase. In an extreme case of diseconomies of scale, the country’s rapid population growth has hampered its economic development. Demand is higher than productive capacity, therefore rising costs cannot be offset by increasing production. As a result, the price per unit rises, as can be shown. It’s a risky move for a nation whose economy is 30 percent more reliant on the property market than the United States’ was in 2006. Related posts 11 May 2023 Rise in Toronto’s home building costs 05 May 2023 Toronto and Vancouver Home Prices Rise Like Mortgage Credit Toronto and Vancouver Home Prices Rise Like Mortgage Credit Home prices increased dramatically last month… 29 April 2023 To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years What is Canada’s secret for having… 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s…

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Toronto and Vancouver Home Prices Rise Like Mortgage Credit

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Toronto and Vancouver Home Prices Rise Like Mortgage Credit Home prices increased dramatically last month in Canada’s two most populous real estate regions. In April, home values in both Toronto and Vancouver increased. There has been a gain in sales and a decrease in inventory in both markets, but this probably hasn’t led to the same level of expansion in both locations. More likely to blame are falling mortgage rates, which introduced leverage proportional to the price rises The Value of a Toronto Home Increased by 2.4% in the Past Month Although they are still down from a year ago, Greater Toronto real estate prices increased last month. In April, the median price of a home, or the composite benchmark, increased by 2.4%, or $27,200, to $1,145,700. This is the third consecutive monthly increase, and it follows a gain of 2.5% the month before. Even though home prices are still down dramatically from last year, they are recovering quickly.  It’s a huge increase, and once you consider Canada’s other major and expensive market, the word “unusual” takes on further significance. The Value of a Home in Vancouver Increased by 2.4% Previous Month After hitting rock bottom in January, property prices in the Greater Vancouver are also rising rapidly. The index rose for the third month in April, increasing by 2.4% ($27,400) to $1,170,700. While prices are still lower than this time last year, at the current rate the difference will be made up in less than three months. Today’s experts from both locations didn’t waste any time blaming a lack of stock for the problem. Similar price increases indicate that supply shortages were a factor in both cities. Lower mortgage rates have provided a similarly powerful source of leverage Probably more The easing of credit standards in Canada may be to blame. Borrowers have moved toward fixed rate mortgages as the Bank of Canada (BoC) has kept rates steady. The average fixed mortgage rate dropped by 0.3 percentage points from March to April, increasing the borrower’s leverage by about 2.6% assuming the borrower maintains the same income. It’s also important to remember that the monthly installments won’t change. The standard property purchased in March using a conventional mortgage is essentially the same in April, despite a significant rise. Home prices ate up any “savings” from the reduced interest rate. Both Toronto and Vancouver saw similar results. Price increases in response to rising demand are capped by what can be afforded in terms of servicing existing debt. When the cap is on, squeezing a tube of toothpaste doesn’t accomplish much. It can spread out and take up more space after the top is removed. For the same reason, despite Canada’s record population growth, home prices have fallen due to a lack of mortgage credit. It wasn’t until mortgage rates started going down that prices started going up in tandem with the economy’s growth. Isn’t that shocking? It shouldn’t be, according to Bank of Canada (BoC) studies. Lower interest rates, according to the former Deputy Governor, did not increase affordability because housing values simply adjusted to absorb the decrease. Either that, or your local think tank is correct, and buyers evaluated economic trends, immigrant patterns, and liquidity before concluding that prices should absorb the payment discount from lower rates. Related posts 05 May 2023 Toronto and Vancouver Home Prices Rise Like Mortgage Credit 29 April 2023 To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years What is Canada’s secret for having… 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?…

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To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years

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To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years What is Canada’s secret for having such low delinquencies despite its high-interest rates? Evidently, they never paid off those enormous mortgages. A significant portion of mortgages had remaining amortizations of 30 years or more in Q1 2023, according to reports from Canada’s Big Six banks. Most of the Big Six reported that at least 30 years of payments would still be made on at least 25 percent of their portfolio. The share was almost nonexistent only a year ago Suddenly, the Big Six Banks of Canada have a large number of mortgages with lengthy remaining terms The majority of mortgages with 30 or more years left to pay off are held by more than half of the Big Six banks. With over a third (32.4%) of its portfolio still in existence as of Q1 2023, BMO topped the list. RBC (27%), TD (29.3%), and CIBC (30.0% of its portfolio) were close behind. It’s important to emphasise that these aren’t 30-year mortgages. They are mortgages with a minimum remaining repayment term of 30 years. Before we go, it’s crucial to understand that not all banks are experiencing this issue. The market shares at National Bank (1%) and Scotiabank (1%) are unchanged from year to year. This indicates that the problem is isolated to those particular institutions and is, at the very least, not a general banking issue. For Canadians, even interest-only mortgages could have been too much How in the world can you ever qualify for a mortgage that long? To receive a loan that long, a specialist product is often needed. The explanation is negative amortisation, which is what lenders are attempting to prevent with borrowers who purchased an excessive amount of real estate. The majority of variable-rate mortgages in Canada have a set monthly payment. Therefore, although the amount applied to the principal varies, borrowers still receive the predictability from month to month. If interest rates drop, more money is put towards the principal of the mortgage and less towards interest. It is a pleasant surprise and generally what occurred over the 30 years before 2021. Renewal borrowers often discover they paid back more than they anticipated. It’s also true that higher rates have a negative impact on principal and a positive one on interest. A sudden rate increase may indicate that the borrower isn’t making enough payments to cover interest. This is negative amortisation, in which the payback period is lengthened. On a long enough time horizon, anyone can afford anything, but it comes at a high interest cost. Some people are prepared to make that compromise in order to manage their payback plan. Canadian Homebuyers Want Lower Payments and Longer Terms Usually, the maximum amortisation is 35 years, but it seems that banks do not believe that is sufficient. The portfolios of the aforementioned institutions still have at least 35 years remaining in them. In the first quarter, there are still at least 35 years of amortisation on almost a quarter (27.4%) of TD’s Canadian residential portfolio. RBC (26%), and CIBC (27%), are not far behind. For almost 30 years, BMO did not break out amortisations. Long Mortgage Terms Almost Didn’t Exist To see how rare this circumstance is, one merely has to compare it to the same time period the previous year. In the first quarter of 2022, just three banks—Scotiabank (1.4%), National Bank (1.3%), and TD (0.3%)—had amortisations greater than 30 years. Seeing two points would have been concerning, but more than one-fourth of mortgages at certain institutions hardly draw attention. Although delinquency rates may continue to be low, this does not guarantee that the nation is safe. A significant portion of wealth has already been diverted from the “productive” economy by the housing sector. If the debt is prolonged for repayment, an economic slowdown caused by more debt would only worsen. Related posts 29 April 2023 To Avoid Defaults, Canadian Banks Extend Amortisations 35 Years 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?… 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish…

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Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again

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Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine why real estate prices have suddenly increased. However, the data from the Bank of Canada (BoC) points to a more direct explanation: witchcraft. In reality, it’s the return of easy access to debt and the resulting increase in leverage. The decrease in new mortgage interest rates in February provided leverage comparable to that seen in March’s increase in home prices. Interest rates for Canadian mortgage borrowers are dropping Lenders in Canada are benefiting from a flood of new home loans with reduced interest rates. In February, rates on new loans were 5.53%, down from 5.63 in January. The current rate is 3.14 percentage points more than it was this time last year, and it is higher than January. That’s more than in the previous month but less than in the same period last year. This is a crucial reminder as we continue to analyze the data. There Is Minimal Effect At This Point On Canada’s Mortgage Stress Test At present levels of mortgage debt in Canada, changes in interest rates are felt quite keenly. Canadian banking watchdog  OSFI has a stress test for mortgages called Guideline B-20. Borrowers will be able to pay either 5.25% interest (the maximum allowed by the Guideline) or the contract rate plus 2 percentage points. It performs an excellent job of limiting credit up to the 5.25% line, but thereafter leverage starts swinging wildly. The amount people are able to borrow responds extremely instantly to changes in the interest rate. It’s important to note that not all mortgage lenders are subject to the stress test Non-stress-tested lenders have their own methods of reducing exposure to risk. If the interest rate is over a certain threshold, then the quoted rate is used for the computation. This morning, I opened my go-to mortgage app to find that helpful hint waiting for me. There’s no harm in reminding folks that they have more leverage than they realize, right? So, are you any closer to understanding the stress test now? Imagine you were able to negotiate a 6.00% interest rate on your mortgage (by the way, your mortgage broker is lousy) and an 8.00% stress test rate. Now let’s say your pal decides to borrow a month from now and locks in a mortgage rate of 5.75 percent. They’ve also gotten an additional 0.25 percentage points off their stress test rate.  It didn’t matter much when mortgage points were 2 and the minimal stress test rate was 4.75%. The floor was put in place, reducing the impact on everyone other than those with big pockets. The Effects of Interest Rates and Borrowing in Canada You need to know that leverage is related to housing prices in order to appreciate the significance of this. This is common knowledge, as evidenced by a recent explanation from a former BoC Deputy Governor on how low interest rates encouraged borrowers to spend more money on the same home. Interest savings due to lowering rates were formerly widely accepted. Over the past 30 years, historically, low-interest rates have not benefited purchasers, but given sellers more bargaining power. For thirty years, prices rose to compensate for the shortfall, until someone eventually did the math. To borrow money, or use leverage, is to squander the fruits of your future effort right now. A certain way to drive up housing costs is to provide incentives for individuals to buy what they need and then allow them to borrow more and more of their future earnings to pay for it. This is Canada’s housing catastrophe, and it was made this way on purpose. Recent Home Price Growth in Canada Is Reflected in Falling Mortgage Rates Take another look at the uninsured mortgage rate. Although a 0.12-point decline in February may not seem like much, it would increase a buyer’s purchasing power by about 1.2%. That’s an additional $11,500 in debt for a couple making $200,000 annually. It’s extremely close to the $12,300 gain that the median house saw in March. It is quite likely that the whole growth was due to the use of leverage. For the return of low-cost leverage, the Bank of Canada should just ease off on quantitative tightening. Government bond liquidity has not been tightened, thus falling fixed mortgage rates continue to stimulate demand. Related posts 24 April 2023 Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Canada’s Cheap Mortgage Credit Drives Real Estate Prices… Again Everyone in Canada is trying to determine… 14 April 2023 Canada maintains 4.5% interest rate, What’s next Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on… 11 April 2023 TRREB: GTA Competition increases due to tight market conditions  TRREB: GTA Competition increases due to tight market conditions In March 2023, the Greater Toronto Area… 08 April 2023 Why Canadian Homeowners Aren’t Selling Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s… 08 April 2023 Toronto Real Estate Correction Pauses, Prices Upto $27k Toronto Real Estate Correction Pauses, Prices Upto $27k Is the Greater Toronto real estate market overpriced?… 05 April 2023 Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate prices will “rip” higher: SCOTIABANK Canadian real estate may be sluggish… 05 April 2023 After just 86 days, Canada quietly reversed sections of its foreign buyer ban After just 86 days, Canada quietly reversed sections of its foreign buyer ban After hours of enforcement,…

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Canada maintains 4.5% interest rate, What’s next

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Canada maintains 4.5% interest rate, What’s next? The Bank of Canada will reveal its decision on the benchmark interest rate it will use going forward. Even if the economy performs better than projected, most economists believe the central bank will maintain its key interest rate at 4.5 percent. The economy started the year strong, even with interest rates at a record high, and unemployment around record lows. The Bank of Canada has stated that it would like to see an additional economic slowing in order to return annual inflation to its objective of 2%. For the second month in a row, February’s inflation rate of 5.2% was lower than expected. Today’s monetary policy report will also include the Fed’s most recent growth and inflation forecasts. The prime interest rate has increased dramatically during the past year, from near zero to its highest level since 2007. The Bank of Canada issued its eighth straight rate increase in January and said that it plans to keep its key interest rate unchanged if economic growth continues in line with its projections. Most economists believe the Bank of Canada will keep its benchmark interest rate unchanged on Wednesday, arguing that further rate hikes would come too soon. The central bank’s goal of dampening economic activity has been aided by the general trend of the economy. “There really were no significant surprises here,” said Douglas Porter, chief economist at BMO. The Federal Reserve in the United States has recently indicated that it intends to continue raising interest rates. Still, the Bank of Canada’s policy is beginning to diverge from that of the Fed. Stephen Gordon, an economics professor at Laval University, argued that the United States’ monetary policy does have consequences in Canada. The Canadian dollar may weaken and import costs may rise if investors decide to move their money to the United States in response to higher interest rates there. “It’s not an automatic thing of,” Gordon said, “the (Bank of Canada) has to follow the Fed.” The Canadian economy stalled in the fourth quarter, and inflation dropped to 5.9% in January, according to recent figures. Although “the labor market remains very tight,” the central bank stated conditions should improve and wage growth should slow. Suppose the 150,000 jobs added in January were a one-time occurrence or a sign of underlying strength in the labor market. In that case, we should learn more from the February labor force survey, which will be released on Friday, according to Porter. The Bank of Canada maintains its forecast that annual inflation in Canada will decline to around 3% by the middle of the year. There will need to be a “surprise” for the Bank of Canada to act again in the form of an interest rate hike, according to Gordon. Inflation in Canada is predicted to remain low this year due to base year effects, barring any unforeseen developments. The influence of price changes from the previous year on the determination of the annual inflation rate is referred to as the base-year effect. Price increases accelerated in the first half of 2022 as fears of a Russian invasion of Ukraine materialized, but analysts anticipate that the annual inflation rate will continue to decline in the coming months. The rate of inflation is currently declining, as Gordon has stated. Further time is required for the economy to react to past interest rate hikes, which can take as long as two years. The Bank of Canada reports that international economic growth is trending roughly as predicted. However, it noted that “upside risks” that could increase inflation include the robustness of China’s economic recovery and the impact of Russia’s war in Ukraine. In the future, Porter predicts that the Bank of Canada will have “limits” in its ability to diverge from the Federal Reserve. Because of their interconnected economies and shared stresses, he continued, both countries would benefit from higher interest rates. “If the U.S. economy is really showing more underlying strength and greater inflation pressures, those will probably get reflected eventually in Canada as well,” he added. The Bank of Canada is scheduled to release its next interest rate decision and quarterly monetary policy report on April 12. 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Why Canadian Homeowners Aren’t Selling

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Why Canadian Homeowners Aren’t Selling There hasn’t been the usual rush of vendors at Canada’s popular Spring market thus far. Investors may have a greater issue than slow sales, BMO Capital Markets said. They point to many causes but ultimately conclude there is no incentive to sell. Less than a year after the Canadian real estate market started falling, the government is implementing a series of stimulus measures. Homeowners in Canada aren’t rushing to put their properties on the market Most Canadian homeowners wait until the spring market to put their home up for sale, but activity has been modest thus far. Toronto (-44%) and Vancouver (-34%), two market leaders, decreased in new listings in March. Although data from other areas has yet to be reported, brokers from throughout the nation say the data from the middle of the month will reveal that sellers were limited in all markets. Toronto may have a greater problem than slow sales, according to BMO economist Robert Kavcic. Investors, he said, should be aware that last month was the region’s slowest for new listings since 2001. Following are some of his observations that might explain the slowdown: They are not obligated to sell in such a poor market. This is not a recession, with its accompanying layoffs and forced home sales, but rather a correction in asset prices. As a result, most homeowners in today’s market aren’t under significant payment pressure. As a result of OSFI’s buyer stress testing, no transactions were ever forced. People are remaining put because of the high price of relocating or trade. The rental sector provides solid returns for investors. There must be a reason to buy or sell an asset All valid arguments, incentives, in particular, seem to be at the heart of most. Asset holders in any given market will do so for as long as they see a benefit in doing so. Would you part with a mystical piece of paper that guaranteed you $20,000 per month? Very likely not. You’ll probably attempt to use the worth of the paper to get even more “magic” paper. Several financiers are buying homes with negative cash flow. This occurs when the speculator/landlord must supplement the tenant’s rent in order to meet the property’s carrying expenses. In this case, investors still made money despite a small inconvenience by increasing rents. Holding back causes a severe scarcity in the market, which in turn drives up the price. As prices rise, there is less of a surplus to store, which causes supplies to become even more limited. While prices are dropping, an unexpected influx of stock is common. The motivation to avoid having your gains wiped away lies in the fact that you don’t earn any money until you sell. The cheaper pricing made possible by the larger inventory encourages even more buying. Major trend shifts are more likely to occur with a financialized asset when there is momentum in either way. Most people treat real estate as if it were an investment vehicle, analyzing market forces like supply and demand. There are x persons in need of a home, thus they will place bids on y properties. Investments don’t function that way; rather, their value is determined by how much cash they can be converted into. Due to investors seeking returns through asset inflation, there will never be enough “affordable” homes built. House prices tend to fall as interest rates rise because buyers can’t take advantage of as much debt. In times of crisis, central banks are expected to step in as a “lender of last resort.” Governments shouldn’t offer economic stimulus just because they can, but rather when there has been a sustained shortage of investment. Since the 2008 financial crisis, that is not how things have worked. As expected, rising interest rates stifled lending and drove down housing prices. Nevertheless, Canada lacks the stomach for tough love less than a year later. As a financial liquidity crisis bolstered moral hazard by suggesting credit stimulus was on the horizon, the market is now salivating. The Federal government has also recently increased subsidized demand while also opening the market to international investment only days after deciding it was essential to limit such activity. The message to potential investors is clear: Canada is essentially a house-trading hub. In other words, the motivation to hang onto your inventory is larger than any correction factor at this time since it couldn’t endure a complete year without providing stimulation. Why would anybody sell before your government, which is basically an army of real estate speculators, buys up all the available properties? They are incentivised to artificially inflate the asset in which they have a financial stake. 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