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Thursday, January 24, 2013

Refinace changes come home to roost

A new report identifying a spike in consumer loans may be the strongest indication refinance rules are forcing Canadians into higher-interest borrowing.

Fourth quarter 2012 saw a 3.2 per cent rise in non-mortgage loans compared to the year-old period, according to Equifax’s latest National Credits Trends study, released Thursday. That’s over and above the near-2 per cent climb recorded between July and September – again a year-over-year comparison.

That new debt came in the form of bank loans, lines of credit, car leases and credit cards, says the report. Those loans generally carry interest rates as much as 1,800 basis points higher than mortgage debt.

The grow starting in Q3 coincides with the introduction of the government’s latest round of mortgage rule changes, which reduced the ceiling on refinances to 80 per cent loan-to-value from the then 85 per cent.

Brokers have argued the move as detrimental to borrowers looking to manage debt without resorting to the kind of high-interest credit cards that may have contributed to their financial woes in the first place.

Those mortgage professionals are likely to find support for their conclusions in this latest Equifax report.

Still the study does offer some good news for an economy still grappling to contain rising household debt levels – ostensibly, the reason the government introduced those more stringent mortgage rules in July.

The percentage of unpaid non-mortgage debt in arrears, or more than 90 days past due, stood at 1.19 per cent in the fourth quarter, down slightly from 1.22 per cent in Q3.

Wednesday, January 09, 2013

Canadian Housing Starts to Moderate, Resales Stable in 2013

OTTAWA, November 5, 2012 — Canada’s new home market is expected to continue to moderate in the last quarter of 2012 and into 2013. Meanwhile, activity in the existing home market is expected to hold steady, leading to house price growth in line with or slightly below inflation, according to Canada Mortgage and Housing Corporation’s (CMHC) fourth quarter 2012 Housing Market Outlook, Canada Edition.

“A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year. Nevertheless, employment growth and net migration will help support housing starts activity going forward,” said Mathieu Laberge, Deputy Chief Economist for CMHC.

On an annual basis, housing starts will be in the range of 210,800 to 216,600 units in 2012, with a point forecast of 213,700 units. In 2013, housing starts will be in the range of 177,300 to 209,900 units, with a point forecast of 193,600 units.

Existing home sales will be in the range of 449,200 to 465,600 units in 2012, with a point forecast of 457,400 units. In 2013, MLS®2 sales are expected to move up in the range of 433,300 to 489,700 units, with a point forecast of 461,500 units.

The average MLS® price is forecast to be between $363,200 and $367,000 in 2012 and between $363,100 and $377,900 in 2013. CMHC’s point forecast for the average MLS® price calls for a 0.2 per cent gain to $365,100 for 2012 and a 1.5 per cent gain to $370,500 for 2013.
As Canada's national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable housing solutions. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.