About two-thirds of first-time buyers say they’ll purchase a home as planned and are unaffected by new mortgage rules brought in by Ottawa a year ago, says a new survey.
The findings come as the banks continue to increase long-term interest rates in the face of rising bond yields but refuse to bump up the posted rate for a five-year, fixed-rate closed mortgage – a key measure in deciding how much a consumer can borrow after the new rules were introduced.
Rates on the five-year mortgage have been rising steadily since the beginning of May in response to bond yields. At one point the Bank of Montreal offered a five-year, fixed-rate closed mortgage for as little as 2.99%, but that’s now up to 3.59%.
Meanwhile the posted rate has stayed at 5.14% at most banks. That posted rate is used by Ottawa to establish what is called the qualifying rate for consumers who require mortgage default insurance. Consumers not locking in for five years or more face the qualifying rate but, since it hasn’t risen, they can borrow as much as ever.
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Canadian housing starts were stronger than expected in June and May figures were revised higher, according to data released yesterday – the latest report to show the property market rebounding from last year’s government-induced slowdown.
The seasonally adjusted annualized rate of housing starts was 199,586 units in June, according to data from the Canadian government’s housing agency. Analysts polled by Reuters had expected 187,000 starts in June.
CMHC also revised May starts higher, to 204,616 from the 200,178 originally reported.
The stronger-than-expected numbers helped boost the Canadian dollar in early trading.
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