{"id":9317,"date":"2018-06-05T15:15:44","date_gmt":"2018-06-05T22:15:44","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=9317"},"modified":"2018-05-29T16:08:08","modified_gmt":"2018-05-29T23:08:08","slug":"how-falling-mortgage-credit-in-the-canadian-housing-market-could-hurt-the-economy","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/06\/how-falling-mortgage-credit-in-the-canadian-housing-market-could-hurt-the-economy\/","title":{"rendered":"How Falling Mortgage Credit in the Canadian Housing Market Could Hurt the Economy"},"content":{"rendered":"

Last week, Canada\u2019s major banks reported that they expected their mortgage applications to be cut by 50% in the second half of 2018. That\u2019s because a new mortgage stress test and a rising interest rate environment are making it increasingly difficult for would-be homebuyers to qualify for a mortgage.<\/p>\n

Now, a recent report from Capital Economics has found that mortgage credit hasn\u2019t been this low since 2001.<\/p>\n

\u201cRising interest rates and the recent tightening of mortgage lending standards are now having a marked impact on mortgage lending, with the three-month-on-three-month annualised growth rate of mortgage credit falling to a 17-year low in April,\u201d reads the report.<\/p>\n

What does that mean for the Canadian economy? The more homeowners are spending on their mortgage payments, the less they\u2019ll be able to put towards consumer spending, which has been a major boon to the economy for years.<\/p>\n

\u201cHigher long-term interest rates will continue to hold back consumption and possibly business investment too,\u201d reads the report.<\/p>\n

After years of historically low interest rates, the Bank of Canada has beens steadily hiking the overnight rate since last spring. It currently sits at 1.25%, and is widely expected to rise again before the end of the year.<\/p>\n

According to a recent note from BMO senior economist Robert Kavcic, rising interest rates (and with them mortgage rates) could take a serious cut out of Canadian homeowners wallets in the next year.<\/p>\n

\u201cIf five-year fixed rates just hold steady at current levels (around 3.3%), those with mortgage coming due in 2019-20 could be looking at a 50-basis point increase,\u201d he writes. \u201cIf rates gradually rise to 4%, the reset impact will top one percentage point (ie. north of $200\/month if you took out a $500,000 mortgage in 2014.)\u201d<\/p>\n

How Falling Mortgage Credit in the Canadian Housing Market Could Hurt the Economy<\/a> by Sarah Niedoba | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"

Last week, Canada\u2019s major banks reported that they expected their mortgage applications to be cut by 50% in the second half of 2018. That\u2019s because a new mortgage stress test … [read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-9317","post","type-post","status-publish","format-standard","hentry","category-mortgage"],"yoast_head":"\nHow Falling Mortgage Credit in the Canadian Housing Market Could Hurt the Economy • Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2018\/06\/how-falling-mortgage-credit-in-the-canadian-housing-market-could-hurt-the-economy\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"How Falling Mortgage Credit in the Canadian Housing Market Could Hurt the Economy • Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Last week, Canada\u2019s major banks reported that they expected their mortgage applications to be cut by 50% in the second half of 2018. 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