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Canadian existing home sales rose in September for a second straight month while average prices reversed the falling trend with a 1.9% increase from August, the Canadian Real Estate Association said in its latest report.
Seasonally adjusted unit sales rose to 33,913 homes from 32,933 units in August, the group said. Sales in September were 20 percent below year-ago levels and the average price for a home was little changed at C$331,089 ($329,180), the group added.
“Supply and demand are rebalancing, and that’s keeping prices steady in many markets,” said Georges Pahud, president of CREA.
The interest-rate environment continues to help the housing market. While the prime lending rate has jumped after the Bank of Canada raised its overnight lending rate three times since June to 1 percent from a record 0.25 percent, long-term rates continue to fall. Canada’s mortgage rates are now close to the lowest since the Korean War The central bank said in July it expects housing to contribute 0.6 percentage point to Canada’s 3.5 percent growth this year.
Most analysts now expect the Bank to hold off on any further rate hikes this year while it gauges the effects of recent tightening on the domestic economy, and watches the very uncertain situation south of the border. However, the overall tone of the Bank’s statement was more hawkish than expected, and this has led some economists to suggest this may not be the last hike of the year. Much will depend on economic data out over the next month and a half in advance of the Bank’s next decision on October 19th.
“Mortgage lending rates eased in the third quarter, which helped support sales activity over the past couple of months,” said Gregory Klump, chief economist with CREA. “Interest rates are going nowhere fast, so home ownership will remain within reach for many homebuyers.”
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New home prices keep climbing
A new report from Statistics Canada showing that new home prices are up 2.9% from a year ago, is seen as positive news for the industry. The report follows news from last month that sales of existing homes climbed in August for the first time in four months.
Although many analysts had predicted new home prices to decline by about 0.1 per cent in August, instead rices rose 0.1 per cent during the month, after having declined 0.1 per cent in July.
However, Craig Alexander, chief economist with TD Bank Financial Group, was cautious about interpreting the latest results as a turnaround for a resale housing sector:
“The bulk of the change in new home prices is reflective of what is happening to construction costs not what is happening to supply and demand in the real estate market,” says Mr. Alexander, suggesting it may not play out for the entire housing market.
He did see the trend on new home prices does look good. “It’s is consistent with the view that the Canadian economy has picked up,” says Mr. Alexander. “Overall the housing market is showing signs of stabilizing.”
Don Lawby, chief executive of Century 21, seems to agree. “It’s just pretty stable. Inventory levels are slowing down but it won’t drive prices because the consumer today that is buying is looking around and is pretty conservative in the offers they are going to make.”
Read more:
http://www.financialpost.com/news/home+prices+still+climbing/3665841/story.html
BMO lowers residential mortgage rates
BMO Bank of Montreal announced today it is decreasing its residential mortgage rates, effective today October 13, 2010.
According to their press release, fixed rates have been lowered across the board by 10 basis points (or 0.1 per cent).
The new rates stand now as follows:
Special Offers*
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To:
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Change:
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4 year fixed closed
|
3.79%
|
-0.10% |
5 year low rate fixed closed
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3.49%
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-0.10% |
5 year fixed closed
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3.89%
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-0.10% |
7 year fixed closed
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4.75%
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-0.10% |
10 year fixed closed
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4.85%
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-0.10% |
Please view the Mortgage Girl’s CURRENT BEST MORTGAGE RATES on the right side bar for a comparison of rates.
The Mortgage Girl team takes pride in providing our clients with the best rates available anywhere in Canada.
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Fixed Rates: |
To: |
Change: |
|
6 month fixed convertible |
4.45% |
-0.10% |
|
6 month fixed open |
6.30% |
N/C |
|
1 year fixed open |
6.30% |
N/C |
|
1 year fixed closed |
3.20% |
-0.10% |
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2 year fixed closed |
3.45% |
-0.10% |
|
3 year fixed closed |
4.00% |
-0.10% |
|
4 year fixed closed |
4.94% |
-0.10% |
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5 year low rate fixed closed |
5.29% |
-0.10% |
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5 year fixed closed |
5.29% |
-0.10% |
|
6 year fixed closed |
5.70% |
-0.10% |
|
7 year fixed closed |
6.30% |
-0.10% |
|
10 year fixed closed |
6.40% |
-0.10% |
|
18 year fixed open |
8.85% |
N/C |
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The interest rate for a fixed rate mortgage is calculated half-yearly not in advance.
*These special discounted rates are not the posted rates of BMO Bank of Montreal.
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Reading between the lines, this decrease seems to be the logica reaction to the poor state of the US economy. Bond interest rates have fallen as the Federal Reserve prepares to provide further stimulative measures.
“The (bond) market expects the Federal Reserve to undertake more stimulative measures to reduce long-term interest rates, most likely by purchasing treasury notes in the coming months,” said Sal Guatieri, a senior economist with BMO Capital Markets.
Moneyville anticipates some side-effects for consumers:
“While it is unclear how low mortgage rates will ultimately go, some observers suggest that bond yields could dip further over the coming months. That could be a boon for consumers in a slowing housing market.”
Toronto-Dominion Bank later matched BMO’s posted rate of 5.29 per cent for a five-year closed mortgage, also effective Wednesday. Other retail banks are expected to follow suit during this week.
Housing Starts in Edmonton rise in August
According to the latest “Housing Now” report for September, published by CMHC, total housing starts in the Edmonton Census Metropolitan Area (CMA) amounted to 690 units in August, up from 558 units in August 2009.
This represents the 14th consecutive month of year-over-year gains in new home construction. Year-to-date August, there have been a total of 7,018 housing starts in the Edmonton CMA, up from 2,921 units at this time last year.
There were 519 single-detached units started in August, an increase of 38 per cent from the 375 units started a year earlier. The higher number of housing starts this year has lifted supply levels back to the level experienced in 2008.
Single-detached completions reached 592 units in August, more than twofold the 258 units completed this time last year. Absorptions increased by 51 per cent year-over-year in August to 539 units, falling short of completions by 53 units. This resulted in an uptick in the month end inventory of unabsorbed singles, including show homes, to 436 units.
While 13 per cent below August 2009 levels, the inventory is now at the highest level since last November but is still considered low by historic standards.
Multi-family housing starts, which consist of semi-detached units, rows, and apartments, totaled 171 units in August, down almost seven per cent from the 183 units started in
August 2009. An absence of apartment condominium starts contributed to the lower activity in August. Multiple units under construction stood at 4,869 in August, down by just over three per cent from this time last year. Through two-thirds of this year, multi-family starts across the region have amounted to 2,700 units, up 134 per cent from the 1,156 units started in the corresponding period last year.
Multiple unit completions totaled 361 units in August compared with 1,346 units during the same month last year. Absorptions also dropped substantially year-over-year to 358 units. With absorptions coming close to completions, inventory levels were largely unchanged on a month-over-month basis. Compared with this time last year, inventories were up by 4.3 per cent to 1,019 units. At 605 units, condominium apartments represent the largest component of the completed and unabsorbed multiple units across the region. These numbers have remained largely unchanged since the beginning of 2010.
More Information:
http://www.cmhc-schl.gc.ca/