Friday Mortgage Round Up: September 7th, 2012

Friday Mortgage RoundupTo kick off the week, we witnessed the 16th consecutive hold on the Bank of Canada‘s interest rate. The Bank of Canada announced on Wednesday that there will be no changes made to the overnight lending rate which will stay steady at 1 per cent, also meaning variable mortgage rates will  stay put for now.  At this point, it has been two years since a change was last made, and economists are not anticipating another until mid to late 2013.  Until global conditions improve (and optimism returns), the Canadian economy will continue to take progressive steps in the current rate environment.

SOLD!  ING Direct is Now a Scotiabank Asset

Late last week Scotiabank announced their purchase of ING Direct.  This purchase should push them into 3rd position for total mortgage market share as a runner up to RBC and TD.  If you’re an ING Direct customer, this business move shouldn’t change a whole lot for you in the short term (next 18 months) as ING will continue to operate as a separate company, under the same name and branding. Scotiabank has gone on record that until then, all product lines and pricing are to remain the same – right down to existing client passwords.

If your mortgage is held at ING you should have the option to renew into an ING product at maturity – or so rumour has it.  But even that seems to be a bit of a tossup.

We’ve seen this before with Scotia’s past acquisitions, where the bank has stated that these companies will remain as operational, standalone companies.  For example, with Maple Trust – Scotia’s last acquisition – the doors were closed after a year and a half and Scotia products were put on the table.  But is ING Direct comparable to past acquisitions?  That’s debatable.

ING Direct has been very well branded and positioned in the mortgage industry (and has a very loyal client base attracted by their alternative product line) so there is no telling whether Scotia will continue to market the reputable ING brand or attempt to transform the ING client into a Scotia customer.

CAAMP Stats: July 2012 Market

CAAMP released their latest stats for July 2012 and reported on new housing starts.  Ontario housing starts increased 2.2 per cent in July vs. June 2012; however year over year this has slipped by 0.9 per cent.  Alberta experienced the exact opposite, decreasing 7.1 per cent month over month, but jumping up 30.1 per cent since last July.  In BC, starts were down both monthly and annually by a whopping 28.6 per cent and 13.3 per cent respectfully.

TREB: Toronto Real Estate Board

Toronto Real Estate Board released their monthly resale market figures for August and reported both sales and new listings have dropped since August 2011.  Stricter lending guidelines and higher home prices are likely playing a big role in these declines.  The average price in August was $479,095 which has increased by nearly 6.5 per cent over the last year.

Sales: 416 Toronto sales were down over 19.5 per cent in August while 905 GTA sales were down by 7.9 per cent largely driven by a sharp drop in condo sales.

Prices: 416 Toronto prices were up 7.3 per cent while 905 GTA prices were comparably up 6.1 per cent both fueled by an average price increase in the detached listings.

New Listings: 416 Toronto listings were down 11.1 per cent as new listings in the 905 GTA area were down only 5.5 per cent.

REBGV: Real Estate Board of Greater Vancouver

Vancouver Real Estate Board released their monthly statistical report for August and found that home sale activity and prices have both dropped month over month and year over year.  Homes sales were below long-term averages in Vancouver during the month of August while the average price dropped to $609,500.

Sales:  Residential property sales were notably lower in August after having dropped 30.7 per cent year over year and 21.4 per cent since July.

Prices:  Prices have not changed significantly over the last year.  Year over year they have only fallen 0.5 per cent and 1.1 per cent since July.

New Listings:  New listings have decreased by 13.7 per cent since August 2011 and 15.8 per cent since July

The sales to listings ratio is a great indication of when the market is in favour of buyers.  Any time this ratio goes south of 25 per cent, you’re in the clear as a buyer.  For Vancouver, their sales / listings ratio sat at 19 per cent in March and has only dropped since then to 9 per cent – Vancouver is considered a  buyer’s market! Who would have thought!? Week in Review

Bond yields have held mortgage rates quite steady.  All but one rate from our best mortgage rates page were left unchanged; the only variance was to the 10 year fixed rate which dropped 5 basis points.

Neck and neck in the most searched rates are the 5 year rates.  49.4 per cent of visitors searched for the best 5 year fixed rate while 49.2 per cent were looking for a 5 year variable rate.  Barely worth mentioning in a far off 3rd place is the 1 year fixed rate with 0.5 per cent of visitors hunting down a short term deal.

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