The Latest In Mortgage News: Canadians Divided Over Home Prices Expectations

As we begin a new year, it's interesting to hear perspectives from various journalists and finance experts regarding what the forecast will deliver in the year ahead. I have put together a few highlights from various sources giving us a glimpse of what 2022 has in store for us.

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The bank of Canada stated in their last announcement that they are committed to start increasing their benchmark rates by mid-2022. But with the "Omicron variant present and the new restrictions in place, this may threaten tightening plans. Any rate hikes will be modest and gradual in this dangerous environment.

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Fuelling further market strength is immigration, which had a record high of 401,000 newcomers in 2021. This record is likely to be broken again this year taking the gradual reopening of borders into account.

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The Canadian housing market can expect current market dynamics to feed into its sustained growth and robustness well into 2022, according to an independent analyst. A major trend that will likely continue this year is supplied lagging considerably behind soaring demand, analyst Ambrose O'Callaghan said in a recent contribution to the Motley Fool.

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Housing sales in Canada had already surpassed the 2020 total by the end of November.

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Following a record year of home price increases, Canadians remain divided over where they expect (and hope) prices will go from here.

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A new survey from Angus Reid shows nearly even split among those who want to see home price increases continue, and those who would prefer to see prices retreat.

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"High housing prices have divided Canadians into three groups: the haves (40%), who want the boom to continue lifting their assets, the have-nots (39%), who hope for the market to the tank so they can get in, and the status quo (21%), who don't mind prices staying right where they are", the Angus Reid report reads.

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Digging deeper into the findings, more than one in five (22%) would be happy to see prices fall by 30% or more, with another 17% who would like to see prices fall around 10%

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On the other end, 14% would like prices to rise another 30%, while about a quarter (26%) are hoping for a more moderate rise of 10%. As mentioned above, 21% would like prices to remain where they are.

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In the recent forecast for 2022, the Canadian Real Estate Association said it expects prices to grow 7.6%. That follows an anticipated annual growth rate of 2021 of over 20%

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With Interest rates on the horizon this year, Angus Reid also asked respondents how a hypothetical two percentage point rate increase in mortgage rates over the next 12 months would impact their finances. Just over one in five (22%) said it would have a "major negative impact" on their finances. Another (31%) said it would cause a "minor negative" impact. while 24% were unsure.

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Current market expectations are for the bank of Canada to hike interest rates four to five times, which could translate into a 100 to 125 bases point increase in variable mortgage rates. There are 100 basis points in a percentage point. But as indicated at the beginning of my blog, with this new "Omicron virus" these rates hikes will probably be modest and gradual.

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Denise Pisani

Mortgage Broker, Mortgage In The City

LIC # M11002770

Powered By: Get A Better Mortgage Lic #10874

@mortgageinthecity

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Souces of information

Steve Hueble Real Estate

Ephraim Vecina CMP NEWS