By Sharon Singleton, QMI Agency
Canadian sales of existing homes rose 4.5% in January, hitting their highest level since April last year, as buyers rushed to beat tighter mortgage regulations set to come into effect next month, according to Canadian Real Estate Association figures.
Vancouver and Toronto led the growth, with half of all local markets reporting seasonally adjusted gains in the month, CREA said. Sales activity improved over the second half of last year and is now 25% above its low in July, it said.
“We anticipated the recent announcement of tighter mortgage regulations, which will come into effect this March, would pull forward sales activity into the first quarter of 2011, particularly in some of Canada’s more expensive housing markets,” said Gregory Klump, CREA’s chief economist. “The sharp rise in sales activity in Toronto following the announcement provides early evidence confirming this,” said Klump.
CREA warned the government not to take any further action until the longer-term impact of the most recent changes is fully known.
Ottawa announced in January that it would tighten mortgage-lending rules for the second time in a year to stop borrowers taking on more debt than they can afford. The government is reducing the maximum amortisation period on mortgages backed by government insurance to 30 years, from 35 years, which makes monthly payments higher.
The tightening is expected to primarily hit first-time homebuyers, or those with less available for a downpayment.
BMO mortgage expert Laura Parsons said the changes are a good thing.
“People are like deer in the headlights when these things happen, but they need to be properly informed,” she said. “This is a good thing, it saves them money.”
Reducing the amortisation period by five years to 30 years would save about $53,000 in interest payments over the life of the mortgage, she said.
Actual new listings through the MLS System posted their biggest month-over-month increase since 2007 in January, with more than double the listings from the previous month, CREA said.
As sales activity and new supply have risen in tandem, the national market remains balanced, CREA said. The national sale-to-new listings ratio stood at 55.7% in January, little changed from the previous two months.
Parsons said BMO expects the market to remain balanced throughout 2011.
“According to our survey, 61% of homeowners are confident their homes will hold their current values throughout the year,” she said.
The national average price was little changed from the previous three months at $343,675, an increase of 4.5% from January last year, CREA said.
The January year-over-year gain was distorted by a jump in the number of multi-million dollar homes sold in a couple of areas in Greater Vancouver, it said.
————————————————————————————————————–
Contact the Jeffrey Team for more information - 416-388-1960
————————————————————————————————————–
Incoming search terms for the article:
