Wahi’s Weekly Roundup of Top Real Estate Stories

Interest rates, housing sales, the FHSA, and more.

By  Jared Lindzon | 2 minute read

Every Friday, Wahi brings you the most important real estate stories from the past week.

Inflation Just Dropped: Will Interest Rates Follow?   

The Bank of Canada’s decision to maintain interest rates at the current 4.5% was validated just a few days later when Statistics Canada announced the smallest uptick in inflation in over a year and a half. Consumer prices increased by just 4.3% in March, down from 5.2% in February, representing the smallest year-over-year escalation in prices since August 2021. StatsCan data credits declining energy prices for the slowdown but warns rising mortgage costs are threatening household finances. Tuesday’s announcement could ultimately inspire the bank to lower interest rates later this year, though some experts say that’s wishful thinking.

A Perfect Storm Hits the Spring Market

Between the interest rate hike pause, declining prices and a serious lack of inventory, experts are warning that the spring market has already sprung, and it’s shaping up to be a messy season. Sales were up in March for the second consecutive month — the first consecutive increase in a year. Meanwhile, new home construction dropped 11% in February, and the number of new listings dropped by 5.8%, representing a 20-year low. Homes are still listed 13.7% less than last year — 16.4% in Ontario, but that could soon change. Put together, experts suggest it may be the start of a market recovery.

First Home Savings Account Finally Launches for Real This Time    

When the First Home Savings Account (FHSA) launched on April 1, it landed like a tree in a desolate forest, with none of the major banks around to offer it. While the Big 5 remain on the sidelines, number six — National Bank —  swooped in to become the first major financial institution to offer the new tax-free savings account. FHSA works similarly to RRSP or TFSA accounts, allowing Canadians over 18 who haven’t owned a home in the last four years to make a tax-deductible contribution of $8,000 a year — up to $40,000 — and invest those savings tax-free.

Longer Mortgages Could Pose Longer-Term Risks      

Rising interest rates have caused a lot of Canadians to up their amortization period to help keep costs down, but some experts are worried about the long-term effects. BMO reports a third of its residential mortgages now stretch over 30 years, while more than a quarter of those held by TD extend past 35. Tolga Yalkin — an assistant superintendent at the Office of the Superintendent of Financial Institutions (OSFI) — recently warned that the growing number of Canadians upping their mortgage term to 30 or 35 years could threaten the long-term financial stability of borrowers, and the banking system itself.