Here are The Globe and Mail’s top housing and real estate stories this week, with the lowest mortgage rates available in Canada today, commentary from our mortgage expert and one home worth a look.
As Canadians fall behind on credit cards, are mortgages next?
The strain of large debt loads and high interest rates is obvious in credit cards and vehicle loans: delinquency rates for both are now higher than they were before the pandemic. While they are still relatively low – less than 1 per cent – the trajectory has economists worried that mortgages, a lagging indicator, could be next.
Mortgage delinquencies remain at record lows thanks to the extraordinary steps lenders have taken to shield borrowers from the pain of higher rates, such as allowing homeowners to add unpaid interest to a loan’s principal or stop paying down the principal altogether. But both measures extend the amortization period of a mortgage, creating risks down the road.
The kick-the-can approach is coming under increased pressure. This week, Canada’s banking regulator called on financial institutions to tackle mortgage extensions “before levels of borrower stress become unmanageable.”
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Wildfires across Canada are expected to contribute to higher home insurance prices across the country, as extreme weather events continue to hit insurers. The insurance industry has seen natural-disaster claims more than quadruple since 2008.
DBRS Morningstar analyst Marcos Alvarez said in a research note the increase in this year’s extreme weather and natural catastrophe losses – along with high inflation – will push home insurance prices higher everywhere.
“No single event will impact the price of insurance premiums, but insurers track the ongoing trends over time, including when wildfire events happen,” Craig Stewart, vice-president of climate change and federal issues at IBC said in an interview. “As an insurer prices risk, we have seen in recent years that Canada is a riskier place to insure.”
In the last eight days, mortgage rates are up in every term tracked, writes Robert McLister, except the 10-year fixed, which no one wants anyway.
With at least 20 bps of increases in almost every instance, that means new borrowers are paying at least $11 more per month, per $100,000 borrowed, than they did at the beginning of last week.
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Driving the uptrend is the market reaction to our inflation-preoccupied central banks. Aside from the Bank of Canada’s last 25 bps rate hike on June 7, it and the U.S. Federal Reserve have signalled that more hikes may be en route. Bond yields, which usually drive fixed mortgage rates, have run higher as a result.
Rates are as of June 15, 2023, from providers that advertise rates online and lend in at least nine provinces. Insured rates apply to those buying with less than a 20 per cent down payment, or those switching a pre-existing insured mortgage to a new lender. Uninsured rates apply to refinances and purchases over $1-million and may include applicable lender rate premiums. For providers whose rates vary by province, their highest rate is shown.
“We wanted this to be a little bit tree house and a little bit cabin in the woods,” architect Rick Galezowski says about the third floor of the house he and his wife designed five years ago in Toronto’s Little Portugal neighbourhood. The house is crisp and architectural yet soothing and soft: no easy feat, especially with a relatively tight budget. While numbers from five years ago don’t have much relevance today, the construction cost was budgeted at $500,000 and “it ballooned to about 550,” Mr. Galezowski says with a laugh.
662 Harvest Rd, Hamilton
Sitting 300 feet back from the main road you’d be forgiven for thinking this Hamilton home was an industrial building with its dark exterior and deceptively simple rectilinear profile. A blank brick wall of the garage (the door for which is on the side closest to the main entrance) practically shouts “nothing to see here.” But step inside, and you’ll find a house that is filled with elements that play off each other: The wide-plank oak floors have a warm nutty stain that transition to slightly darker walnut cabinets under the countertops in the kitchen.
The house, which sits on 82 by 482 foot lot, features four bedrooms, and glassed-in combination gym/yoga studio in the basement. Head outside for a patio eating space and barbecue area, along with a new heated pool.
What do you think is the asking price for this house?
a. The asking price is $2.9-million.