Housonomix - Nov 17, 2023: Winds of Change: Navigating Consumer Shifts and Mortgage Renewal Realities

🔍 Rate Watch: Navigating the Numbers ⚓️📊

Welcome back to our Mortgage Rate Update! As always, we're here to untangle the numbers and help you navigate the ever-changing seas of mortgage rates. 🧭 Check out what's fresh off the press this week:

• Insured Mortgage Rates 🛡️

  For those making a purchase with less than 20% down – there's good news! The 3-year fixed rate has dipped to 5.84%, down by 0.10%. The 5-year variable rate remains unchanged, anchored at a solid 6.10%.

• Uninsured Mortgage Rates 🏠💼

  For the high rollers refinancing or buying over $1M, the rates are holding their ground this week. Both the 3-year fixed and the 5-year variable rates stand firm at 6.44% and 6.70%, respectively.

• Flexible Lenders 💡

  If your financial story needs a lender who listens, the 2-year fixed rate from our flexible lenders is unwavering at 6.89% – stability in these dynamic times.

• Private Lenders 🔑

  And for those who prefer the straightforwardness of interest-only payments with minimal income and credit requisites, the first mortgage rate up to 80% LTV is a steady 8.99%, fees not included.

We wrap up with a reminder: These rates are just starting points. Your unique narrative will influence your final rate. Ready for a tailor-made mortgage strategy? 📐 Dial our number or drop us an email 📧. Together, let's craft a mortgage plan that fits you to a T.

Until next week, keep your finances buoyant and your future bright!

Real Estate radar 🏡📡

In this edition's "Real Estate Radar," we decode the latest shifts and patterns in Canada's rental market. As we delve into the numbers for October 2023, let's uncover what these trends mean for you, whether you're looking to rent, invest, or simply stay informed:

In October 2023, Canada's rental market saw a 9.9% year-over-year increase, slightly down from September's 11.1%. Average rents rose by 1.4% from the previous month, with the six-month trend showing an 8.8% increase.

The Rentals.ca November report paints a comprehensive picture of the fluctuating rental landscape as we progress through the final quarter of 2023. This edition highlights the changes in 1-bedroom apartment rents and overall condo rent fluctuations, key indicators of market dynamics for renters and investors.

• Toronto, ON 🏙️: The 1-bedroom rent is at $2,607, showing a modest 1.4% increase over the past year, while overall condo rent has decreased slightly by 0.8% to $2,908. (This is the first time in over 2 years that condo rentals have fallen in Toronto, and already it’s being explained to be a blip and not a longterm trend)

• Mississauga, ON 🌆: A 1-bedroom is now going for $2,352, up by 11.9% from last year, with overall condo rent also increasing by 12.6% to $2,700.

• Brampton, ON 🍁: 1-bedroom rent has grown to $2,195, reflecting an 8.1% increase year-over-year, with the condo rent also up by 2.2% to $2,668.

• Burlington, ON ⛵: Renters are paying $2,189 for a 1-bedroom, a 3.1% uptick from last year, while condo rent has climbed by 3.6% to $2,521.

• Kitchener, ON 🌳: 1-bedroom apartments have seen a slight increase in rent by 1.2%, now at $1,915, with the overall condo rent also up by 2.2% to $2,167.

• Hamilton, ON 🏘️: The 1-bedroom rent has risen to $1,868, marking a 9.5% increase year-over-year, with condo rent also showing a healthy rise of 8.2% to $2,044.

• Oshawa, ON 🚗: Oshawa's 1-bedroom apartments are renting at $1,845, an increase of 9.0% from the previous year, with overall condo rent also making a significant jump of 10.6% to $2,112.

• London, ON 🎓: The 1-bedroom apartments are at $1,878, up by 6.1% from the previous year, with condo rent experiencing a rise of 6.9% to $2,121.

These insights clearly show an overarching increase in rental prices across these cities. Combined that with a plateuing housing sales market, fall in condo prices and huge inventories that we covered previously, existing investors can consider adding to their real estate portfolios while potential investors look to enter the market.

Maple Pulse: Housing & Economic insights 🍁📈

📈 Welcome to this week's Maple Pulse Update 🌟 - your essential digest of the latest trends and updates in the Canadian real estate and mortgage markets! Here’s this week’s roundup:

• Toronto's Luxury Real Estate Shift: A new luxury tax effective in 2024 triggers a flurry of sales in affluent Toronto areas like Rosedale, Forest Hill, and Bridle Path. High-end properties are closing rapidly before year-end to evade the upcoming tax hike, with unusual trends in closing dates and a significant spike in sales of properties valued above $10 million compared to last year. If any of you are working with such buyers who are having difficulties qualifying for a mortgage, then you know who to reach out to. (Hint: Us!)

• Canada's Mortgage Renewal Crisis: Economist warns of severe economic impact from upcoming mortgage renewals, predicting significant rate hikes and a potential crisis without Bank of Canada intervention. The surge in mortgage payments could lead to reduced consumer spending, increased defaults, and a broader economic downturn. (Our take: we’re not very sure about this prediction)

• Canadian Consumer Spending Downturn: Amid rising debt and inflation, Canadian companies like Canadian Tire and Spin Master report significant declines in spending on non-essential items. This trend, exacerbated by high household debt and short mortgage terms, indicates a broader economic slowdown. Luxury brands like Canada Goose also experience sales dips, reflecting a shift in consumer behavior towards essential goods and a cautious outlook on future inflation and interest rates. (Our take: Now this will be good news for Bank of Canada. If this trend continues into the holidays, then yes, BoC can take it as a sign that they can start reversing their rate hikes. We’ll have to wait and see.)

• CMHC’s Fall 2023 Residential Mortgage Industry Report came out last week, and it highlights upcoming pain for mortgage holders: Canada's residential mortgage debt reached $2.14 trillion as of August 2023, growing 3.4% year-over-year. Over 290,000 borrowers faced higher renewal rates in H1 2023, with a notable shift to fixed-rate mortgages. Approximately 2.2 million mortgages are expected to encounter rate shocks in 2024-2025, potentially increasing annual homeowner payments by an estimated $15 billion. Traditional banks witnessed a 44% drop in property purchase mortgages and a 34% decline in refinances in H1 2023, while alternative lenders grew their market share, with a 7.1% increase in assets.

• Toronto Rent Trends: We covered this above in the Real Estate Radar section, but it’s a notable story so wanted to highlight it here. Toronto experienced a slight 0.8% decrease in overall rent prices in October, with a notable 10% increase in bachelor unit rates. Despite this dip, market experts predict a resurgence in rental costs due to ongoing supply-demand imbalances and rising living expenses.

🏠 In Closing: As we chart these dynamic waters in real estate and mortgages, staying ahead is key. 🌐 Got questions or need tailored advice? Reach out to us! Together, we'll navigate these challenges and find your ideal property and mortgage solutions. 💼📊

Mortgage Mastery 🏠💼

🏠Understanding Closing Costs in Ontario: A Comprehensive Guide

📌 Introduction

When purchasing a property in Ontario, it's important to factor in closing costs. These are the additional expenses that buyers must pay on top of the purchase price of the home. This guide provides a detailed breakdown of common closing costs in Ontario to help you budget effectively.

💼 1. Legal Fees

• Description: Legal fees are paid to a lawyer or notary for their services in drafting the title deed, conducting a title search, and facilitating the closing process.

• Typical Range: Legal fees in Ontario typically range from $500 to $1,500, but can vary based on the complexity of the transaction.

🏡 2. Land Transfer Tax

• Description: The land transfer tax is a government levy charged on the transfer of property. In Ontario, the rate varies depending on the property's value.

• Calculation: The tax rate starts at 0.5% for the first $55,000 and increases to 2.5% for amounts above $2 million.

• First-Time Home Buyer Rebate: First-time buyers may be eligible for a rebate of up to $4,000, effectively covering the land transfer tax on properties up to $368,000.

🛡️ 3. Title Insurance

• Description: Title insurance protects against losses due to title defects, liens, or other issues related to property ownership.

• Typical Cost: The cost varies based on the property value and the insurance provider but generally ranges between $250 and $400.

📝 Other Potential Costs

• Home Inspection Fee: Usually ranges from $300 to $500.

• Appraisal Fee: Typically between $300 and $500, required by lenders to determine the property’s value.

• Adjustment Costs: Includes adjustments for prepaid property taxes, utility bills, or condo maintenance fees paid by the seller.

🎯 Conclusion

Understanding these closing costs is crucial for homebuyers in Ontario. They typically represent 1.5% to 4% of the purchase price and should be included in your budget. Planning for these expenses in advance can ensure a smooth home-buying process.

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