RBC warns of mortgage rate increases

RBC sees mortgage rates going up instead of flat or down.

Their forecast is for housing to get less affordable due to rate increases.

The Royal Bank of Canada says the ability of Canadians to keep up with housing costs has been improving of late, but warns that’s about to change.

RBC’s latest housing affordability measure shows home servicing costs relative to incomes dipped slightly in the last three months of 2013 after having risen the previous two quarters.

But the relief will be temporary, the bank says in a new report, because mortgage rates are due to start rising this year.

“RBC anticipates that as longer-term interest rates begin to moderately rise, the costs of owning a home at market value will gradually outpace (growth) household incomes by late-2014, leading to strained affordability in several markets across Canada, much like the trend in Toronto,” RBC chief economist Craig Wright said in the report.

The finding bucks the recent trend, which has seen mortgage rates remain stable or even moving lower, with some brokers offering five-year fixed rates below three per cent.

Read the full article here.

Sort by:   newest | oldest | most voted
Son of Ponzi
Guest
Son of Ponzi

RBC expects long term interests to rise toward the end of 2014.
Interestingly, the Chinese horoscopes for the Year of the Horse are predicting stormy days for RE in Vancouver, starting this fall.
Many mainland speculators and investors will not wait that long to liquidate the RE.
So we could see a strong selloff and price correction as soon as late spring, early summer.

DaMann
Member
DaMann

Talk about Crying Wolf. Been hearing about rising rates for years now. It can’t come soon enough!

kabloona
Member
kabloona
“Canada housing boom expected to cool, crash fears linger: Reuters poll (Reuters) – Canada’s housing market boom will fade out over the next three years and although analysts say prices won’t fall from record highs most are at least somewhat worried about the risk of a crash, a Reuters poll found. http://money.ca.msn.com/investing/news/breaking-news/canada-housing-boom-expected-to-cool-crash-fears-linger-reuters-poll (Reuters) – Canada’s housing market boom will fade out over the next three years and although analysts say prices won’t fall from record highs most are at least somewhat worried about the risk of a crash, a Reuters poll found. In the survey of 16 forecasters, eight said they were “slightly concerned” that after more than a decade of rapid increases in home prices, they may be at risk of a sharp fall. Two respondents from the sample of top property market analysts and senior economists at Canada’s… Read more »
visit website
Guest
visit website

Excellent website. Lots of useful info here. I’m sending it to some buddies ans additionally sharing in delicious. And naturally, thanks to your effort!

Manna from heaven
Guest
Manna from heaven

“The 2012 medium net worth among family units has risen 44.5 per cent since 2005 to $243,800.”

Man on street: Canada rules, we’re doing great!

However

“Those family units have also accumulated more debt, a total of $1.3-trillion in 2012, of which about $1-trillion is mortgage debt, up 41.6 per cent from 2005.”

Man on street: I’m confused.

http://news.nationalpost.com/2014/02/25/canadian-families-are-getting-wealthier-statistics-canada-study-says-as-net-worth-rises-sharply-since-2005/

Son of Ponzi
Guest
Son of Ponzi

Most of the increase in net worth is due to in increase in property values, which represents paper gains, which can evaporate in the event of a downturn.
That’s why real professional advisers never include paper gains in their net worth calculations.

Manna from heaven
Guest
Manna from heaven

Further

“A quarter of families have lines of credit. Total debt in lines of credit swelled to $144.9-billion compared with $77.5-billion in 2005. Car loans also ballooned. Loans on vehicles have more than doubled since 1999.”

http://www.theglobeandmail.com/report-on-business/economy/canadian-families-worth-more-but-owe-more-too-statscan/article17078187/

Son of Ponzi
Guest
Son of Ponzi

With so many empty homes and condos, stats relating family status and wealth are becoming rather meaningless.

hoy-poloz
Guest
hoy-poloz

YVR – if you doubt that HAM are buying almost all the higher end homes, then I suggest you go to an open house in West Van or Van West and see who jumps out of their black Mercedes SUVs. I think your doubts will be erased.

Jojo
Guest
Jojo
Happy Renter
Guest
Happy Renter

Wall Centre False Creek strata fees going up 27%

Hehehehe

mls watch
Guest
mls watch

@9
YVR lives in Switzerland. He left a while ago.

Son of Ponzi
Guest
Son of Ponzi

#11
Of course, that’s the trick.
Lure you with low maintenance fees, and as soon as you move in, gotcha.
Oldest trick up Bob Rennie’s sleeve.

Babcook
Guest
Babcook

So where is the upper limit to the debt that we accumulate? they keep giving the credit to everybody with pulse.

Happy Renter
Guest
Happy Renter

@ # 13

Yup, funny why is Bobs BF on the strata council?? For example a 500sq ft condo here will now cost just over $300 in strata fees, and they have lots to do around here in terms of security upgrades, this place always being broken into. Definitely one of the worst new builds i have ever seen, terrible in so many ways. But hey if Ms Wang or Mr Lee wants to subsidize my home i’m down with that!

Babcook
Guest
Babcook

#14
a guy that i know. wage $17/hr. new car loan on 30k for shiny new Sonata. it took all 5 minutes to get approved. and this is on the top of all other loans and the mortgages that he has. I admit, i don’t get this.

happytime
Guest
happytime

How is renter life treating little bear today? Looks like crash never gonna happen again and bear still live in smelly basement paying landlord bills. Better luck next time bear.

paulb
Member

New Listings 256
Price Changes 72
Sold Listings 138
TI:14395

http://www.paulboenisch.com

mac
Member
mac

Canada House leaking. I may have got the lot wrong. If not Canada House then Shoreline or the other on right along the water. Will get it confirmed.

Softy
Guest
Softy

Sales are red hot. Nothing stops this market. Look what new builds are asking now in East Vancouver:

http://www.ecorealtyinc.ca/listing?id=260723529

That’s $1.8M for a 2500 SF house on a 3600SF lot.

mac
Member
mac

Where are our 400+ listings? Looks like HAM not panicked. Or maybe even HAM not a factor –just stating the possibility.

Softy
Guest
Softy

Prices will keep rising until rates rise.

mac
Member
mac

Softy,

Hate to break it to you I can’t find one condo whose price has risen lately. And have friend with SFH on Westside one block from water. 100s of HAMs viewing, sometimes brought in by the bus load and no bid 18 months. Price has only declined.

Son of Ponzi
Guest
Son of Ponzi

Be patient folks.
Remember adding a new listing takes much more time than removing a sold one, which is just click of the mouse.

Heard Herd selling
Guest
Heard Herd selling

Lotsa calls in at the office, people want tolist aASAP, the agent’s are trying to get them to hold back to let the explosion of listings come in at a steady pace, some have gone to other agencies wanting to list NOW

wpDiscuz