Daily Market Update

Banking regulator warns of high prices and low mortgage rates…. Basement apartment permits scheme is painfully slow…. Why we should embrace social housing in our neighbourhoods…. And can our man in the UK prevent the bubble bursting?

 

Banking regulator warns of high prices and low cost mortgages

For the average person, it would seem the only option for affordability; prices are high so mortgage rates have to be low. However, for the greater economy this raises the warning signs. The Office of the Superintendent of Financial Institutions’ deputy superintendant has told a housing conference that lenders are more exposed now than they were a decade ago; just a few years before the crisis hit. Mark Zelmer said that although household credit was down, indebtedness is near record levels and it’s unlikely that incomes will rise significantly. Banks, although mostly in good shape at the moment, could be at risk as 60 per cent of their lending is in real estate. Mr Zelner says banks need to ensure they are lending wisely and be aware of the potential of a downturn in the market. Read the full story.

 

Basement apartments stay underground

Those renting basement apartments may have been reassured when the city of Mississauga announced that they would be introducing mandatory permits for the properties from January this year. It would after all ensure that the homes met with building and fire regulations. Unfortunately, landlords appear to be less keen; probably due to the $1000 fee for the permits; and applications have been slow. In fact slow is an understatement; despite an estimated 3,500 basement apartments in the city, only one permit has been issued. Read the full story.

 

Not in my neighbourhood – why we should embrace social housing

The issue of integrated social housing is often a concern for homeowners; worried of a potential impact on their neighbourhoods, and resale values of their homes. However, a report by the Mental Health Commission of Canada says that those who are housed within the wider community do not usually cause any problems and being accepted by the neighbourhood has a powerful benefit on their transformation from an often chaotic life, perhaps living on the streets, to a stable life within a community. Read the full story.

 

Watching the bubble overseas

Talk of a Canadian housing bubble seems never-ending but in the UK it’s never far from the thoughts of realtors, economists and homeowners.  Canada’s banking export, Mark Carney is under pressure at the Bank of England to do whatever he can to avoid the kind of property crash that would see the UK economy badly fractured. There are, of course differences between our housing market and theirs; construction there is low compared to here; but high prices and low mortgage rates are certainly a huge factor for both countries. This week Mr Carney announced caps on the percentage of mortgages that a lender can issue to those borrowing more than 4.5 times their income. Economists say this measure if too weak. There are already suggestions that this income to mortgage ratio may be adjusted. The Bank of England is keen to avoid an interest rate rise too soon for fear of damaging the wider economy. Read the full story.

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