Daily Market Update

Oil capitals heading for correction, says TD
TD economists are predicting a fall in house prices of around 10 per cent over the coming year in Canada’s oil capitals of Calgary, Edmonton and St. John’s, Newfoundland. In Alberta’s hot markets, the decline would erase the increases in prices during 2014, while in St. John’s it would be a further blow to a market already struggling. TD’s Derek Burleton and Diana Petramala wrote in their report yesterday that the downturn in the oil industry would affect levels of unemployment, something that is already being felt, and would push house prices lower. The report suggests that Alberta would narrowly avoid recession, but that Newfoundland would fall into negative growth this year. Away from oil-dominated areas the TD report expects moderate growth for the housing markets in Toronto and Vancouver with Ottawa and Montreal flat. Read the full story.
Genworth expecting losses from Alberta mortgages
Canada’s largest private mortgage insurer said it is expecting losses from Alberta this year and is increasing its scrutiny of new applications. Genworth has increased its ratio of ‘claims to premiums’ forecast to 30 per cent (from 20 per cent) on expectation of rising unemployment and house prices falling by three to five per cent. Although house prices have increased in markets such as Calgary and Edmonton, many mortgages have a high loan-to-value ratio which is a concern for the insurer. Genworth is also monitoring Ontario, which is said has a “moderate degree of overvaluation” in single-family homes. Read the full story.
U.S. mortgage rates increase from a 20-month low
The rates that homebuyers south of the border are paying for home loans have increased after hitting a 20-month low. Federal mortgage corporation Freddie Mac reported that the average rate of a 30-year fixed rate mortgage increased to 3.69 per cent last week, from 3.59 per cent a week earlier. The average 15-year deal was now at 2.99 per cent up from 2.92 per cent. The rise results from the strengthening U.S. jobs market which has pushed the yields from 10-year U.S. treasuries higher. The lower mortgage rates have helped the U.S. housing market gain some momentum after a sluggish few years. Read the full story.
Co-operatives offers alternative condo ownership model
It’s not a widely used model but there are a steadily increasing number of condo developments that are run as co-operatives instead of the traditional set-up. Co-ops own the buildings and the residents of individual units are shareholders in the company rather than owners of the units. Unlike a traditional condo development, if a resident wants to sell they have to gain agreement from the board of the co-op. It’s a way of living that won’t suit everyone; as the name suggests it operates through co-operation with all who live in the building, which is why the board also decides who can live there. The developments are usually small so consensus only means agreement of perhaps four or five residents, and the cost of living in a co-op is cheaper than a condo. One downside, though, is that a mortgage isn’t available for co-ops because you’re not buying a piece of the building as such, although other lending options may be available. Read the full story. 

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  • by Ron Graner 2015-02-13 12:59:49 PM

    I recently acted as buyer's agent for a co-ownership (not a co-op, but similar in ownership structure) apartment in a converted 1921 hotel in the beaches area of Toronto. The buyer had to meet the board's executive to be approved and sign a non-smoking in the unit & anti-noise agreement (no loud parties) before being approved. Financing was not available from any of the major banks, but DUCA and Creative Arts Savings and Loan -a bank for performing arts practitioners, offered competitive rates. The buyer, who had been approved by TD Canada Trust for a mortgage to purchase a home at twice the amount, was shocked when he learned they wouldn't approve a mortgage for a co-ownership unit. We had to scramble to find other financing or abandon the purchase.
    Since the new owner smokes, what would happen if, instead of smoking outside, he lit up within the unit and annoyed the neighbours who share common heating ducts? There is nothing in the agreement against cooking odors.
    Since many condos have policies against smoking, how are such restrictions enforced? In my mother's condo dogs are not allowed, but existing pets were grandfathered in. As a result, now all owners can have pets, even new owners, despite the rules. As realtors what are we to make of such regulations?

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