"Evolving Trends in the Canadian Mortgage Landscape"

 

 

 

 

 

 

 

 

 

 

 

In recent years, Canadians have faced challenges with the significant increase in interest rates and inflation. This has led to tough times for many individuals, prompting them to reconsider their real estate plans, whether it involves buying or selling property.

Earlier this month, the Bank of Canada made its final rate hold announcement for 2023. However, the mortgage industry has undergone significant changes due to the 10 rate hikes implemented since March 2022. Let's explore the key developments that have taken place.

Various types of lenders and loan terms

 

 

 

 

 

 

 

 

 

 

 

In the first quarter of 2023, there has been a noticeable shift in market dynamics, with non-traditional lenders such as non-bank mortgage lenders, mortgage investment entities, and other chartered banks gaining an increased market share. During this period, the prominent big six Canadian banks: TD, Royal Bank, Bank of Montreal, Scotiabank, CIBC, and National Bank—experienced a 5.9 percent decrease in the issuance of newly extended mortgages. Despite this dip, it's important to note that these major banks continue to maintain the largest share of outstanding mortgages.

According to Statistics Canada, non-bank mortgage lenders experienced a positive growth of 1.9 percent, while mortgage investment entities saw an increase of 2.9 percent.

According to the latest report from the Canada Mortgage and Housing Corporation (CMHC), there has been a 44 percent decrease in new mortgages and a 34 percent decrease in refinanced mortgages from chartered banks compared to the previous year, 2022. This decline is attributed to reduced interest in the real estate market earlier this year, following the heightened activity in 2022 before the commencement of interest rate hikes.

To address the challenge of increased monthly mortgage payments, a significant number of homeowners opted to re-amortize their loans. This resulted in a notable shift, with two out of three mortgages in the first half of 2023 now having amortization periods extending beyond 25 years, compared to one in two mortgages in 2022.

The preferred choice continues to be fixed-rate mortgages.

 

 

 

 

 

 

 

 

 

 

 

Whether you're renewing your existing mortgage or embarking on a new home financing journey, many homeowners still favor fixed-rate mortgages. At present, these fixed-rate options are more cost-effective compared to their variable-rate counterparts.

Many homeowners are increasingly recognizing the likelihood of sustained higher interest rates. This realization has prompted mortgage holders to opt for fixed rates, seeking a measure of certainty in their financial planning, an aspect crucial to homeowners. Analysts point out that officials from the Bank of Canada are reinforcing this perspective, advising Canadians to prepare for an era of elevated borrowing costs, as reported by Zoocasa.

According to CMHC, a total of $244.5 billion was extended for new and renewed fixed-rate mortgages during the initial two-thirds of this year. This stands in stark contrast to the $20.4 billion allocated for variable-rate mortgages during the same period.

According to CMHC, a total of $244.5 billion was extended for new and renewed fixed-rate mortgages during the initial two-thirds of this year. This stands in stark contrast to the $20.4 billion allocated for variable-rate mortgages during the same period.