Mortgage Market Overview - Nov 21

8/8/2019 Mortgage Market Overview - Nov 21

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Economic Drivers Are

FactorFactor ImpactImpact

Wealth EffectWealth Effect HousingHousing Returning to PositiveReturning to Positive

Wealth EffectWealth Effect StocksStocks Less ScaryLess Scary

Canadian DollarCanadian Dollar Strongly NegativeStrongly Negative

Commodity PricesCommodity PricesPositive for ProducersPositive for ProducersNegative for ConsumersNegative for Consumers


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Enormous Wealth Effect From

$350

$300 ' s

$200 $ 1

, 0 0

$150

1990 1993 1996 1999 2002 2005 2008

Source: CREA


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Volatile Stock Markets15,000

9,000

12,000

d e x

6,000 T S X

I n

3,000

1990 1993 1996 1999 2002 2005 2008

ourc e: a s c s ana a


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High Commodity Prices

2.00

1.75 j u s t e

1.25

.

t i o

n - A

1.00 I n f l a

.

1990 1993 1996 1999 2002 2005 2008

ourc e: a s c s ana a


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Employment Rate Forecast Suggests

6465

y e d

6263

E m p

l

6061

d u l t s

5758

% o

f

1987 1990 1993 1996 1999 2002 2005 2008 2011

ource: a s c s ana a unn ng nc .


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Canadian Resale Rebound550

450 S

A

350 , 0 0 0 s -

250

300 1

200

1988 1991 1994 1997 2000 2003 2006 2009Source: CREA


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Canadian Resale Activity May

550

450 -

S A

350 , 0

0 0 s

200

250

1988 1991 1994 1997 2000 2003 2006 2009 2012

.


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Canadian House Prices

$350

$300 0 s

$200 $ 1

, 0 0

$150

1988 1991 1994 1997 2000 2003 2006 2009

ource :


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Modest Growth Forecast for

$350

$300 s

$200 $ 1

, 0 0

$150

1988 1991 1994 1997 2000 2003 2006 2009 2012

Sour c e: CREA / Will Dunnin g Inc .


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Canadian Housin Starts275 e d

225 A d j u s t

175 o n a l l y -

125 S e a s

1988 1991 1994 1997 2000 2003 2006 2009

Source: CMHC


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Short-Term Bounce Forecast for

275 d

225 d j u s t e

175 n a l l y -

125 S e a s

1988 1991 1994 1997 2000 2003 2006 2009 2012

ource : unn ng nc .


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The State of the

es en a or gage

November 2009


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Rapid Growth of Residential

$1 ,400

$1 ,000$1 ,200

s

A c t u a lFo recas t

$ 6 0 0

$ 8 0 0

$ B i l l i o

$ 0

$ 2 0 0

1 9 9 0 1 9 9 3 1 9 9 6 1 9 9 9 2 0 0 2 2 0 0 5 2 0 0 8 2 0 1 2

So u r c e s : B a nk o f Ca n ad a / Wi l l Du nn i n I nc .


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Arrears Rate Has Increased

1.00%

0.80% t e -

%

0.40%

.

a r s R a

0.20% A r r e

0.00%1990 1994 1998 2002 2006

ourc e: ana an an ers s soc a on


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Consumer Attitudes and Choices


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Variations in Satisfaction

g es or o er ages groups Highest for adjustable/variable rate

mortgages (average of 8.2 out of 10

versus 7.7 for all)


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Most Mortgage Borrowers do

Number of Quotes % of Borrowers

2 28%3 17%

Average 1.91


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Fixed Rate Mortgages Still

Number of Quotes % of Borrowers

Fixed Rate 68%

Adjustable/Variable 27%


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Interest Rates

- . Lowest for variable 3.03%; 5.15% for fixed

or gages nego a e pas mon s - . For renewers: rate fell for 73%, rose for 15%,

. Average change minus 1.12%

ur ng pas mon s scoun s averagebasis points (5-year terms)


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Mortgage Rates Versus

-8

6 t

4 e r C e

2 P Pos ted

D i s c o u n t e d5 Year GoC

02 0 0 7F M A M J J A S O N D'0 8 F M A M J J A S O N D '0 9F M A M J J A S O N

.


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Spread Between Bonds and

4.00

3.00

2.00

1.00

0.00 2007F M A M J J A S O N D'08 F M A M J J A S O N D '09F M A M J J A S O N

.


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Housing Equity in Canada

s ma e a . r on ase on$2.69 trillion in values versus $706

on n mor gages

Average 74% equity 1% of mortgage holders may have

ne ative e uit > 95% have more than 5% equity


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Equity Take-out

o a mor gage o ers oo ouequity

Take-out averages $41,000

Total take-out of $41 billion vs $46 earago)

income


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-

To consolidate or pay down debt $ 17 bn

To renovate my house/condo $ 12 bn

To invest $ 6 bn

Other $ 3 bn


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A i d B i V S


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Attitudes to Buying Very Strong

-

6

5

4

Fall2009

Spring2009

Fall2008

Spring2008

Fall2007

Spring2007

Fall2006


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Will H P i Ri ?


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Will House Prices Rise?

-

A t l a n t i c

Qu e

On t

M a n

A l t a

B C

4 .0 4 .5 5 .0 5 .5 6 .0 6 .5 7 .0

C a n a d a

St g R f P i


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Strong Recovery of Price

-

6

7

5

4

3FallSpringFallSpringFallSpringFall

C E t ti f


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Consumers Expectations for

expec ecreases, expecincreases.

a or y s neu ra

Few expect large increases (or decreases) Consumers expectations seem consistentwith recent market trends


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Final Thoughts

,housing markets are uncertain

,exceed 6%

wo- r s o mor gage ac v y s renewa sand refinances; one-third is new mortgages

qu y a e-ou s gn can


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Mortgage Market Overview - Nov 21

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