Mortgage Renewals, and a Bonus for First-time Buyers of New Properties

This week’s top real estate stories.

By  Jared Lindzon | 2 minute read

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

Canadians Are Doing Less Haggling at Renewal 

Canadians will spend hours on the phone to save a few bucks on their telecom bills, but less are putting effort into negotiating mortgage rates at renewal. According to a study by Mortgage Professionals Canada, 41% of borrowers accept the rate offered to them by their lender, up from 37% two years ago. Furthermore, while 16% say they haggled aggressively over their renewal rate in 2021, just 8% did so this year, despite most facing higher costs. While some may not be aware that rates are negotiable, others may be afraid of not qualifying in the face of new economic challenges.

Rent Goes Through the Roof  

Another month has gone by, which means it’s time for Rentals.ca to tell us just how high rents have climbed — and last month was another record breaker. Average asking rents surpassed $2,200 for the first time in May, up 9.3% this year. Studio units saw a whopping 15.7% hike to $1,631, one-bedrooms jumped 10.7% to an average of $1,927, while two-bedroom units climbed 12.1% this year, reaching $2,334 per month. Asking rents in Toronto and Vancouver fell again in May, as well as in Etobicoke, Burlington, Guelph, Barrie, Niagara Falls and Windsor, but were up just about everywhere else.

Longer Amortization Periods for First-time Buyers  

The government is throwing first-time homebuyers a bone after recently taking one away. Last week the Canadian Mortgage and Housing Corporation announced that it will allow first-time buyers of newly constructed properties to stretch their amortization period to 30 years, up from the current 25, effective August 1. The longer payment period means buyers can bring down their costs in the short-term, though the savings come with a “premium surcharge” of 20 basis points. The change comes three months after CMHC ended another unpopular incentive for first-time buyers that effectively invited the government to co-own their property.   

Interest Rate Dips, Mortgage Rates Follow  

Last week’s miniature rate cut was quickly followed by an equally fun-sized dip in mortgage costs. The 25-basis point reduction in the former was followed by a nearly identical drop in the latter, with most 5-year fixed rates dropping by about 0.25% last week. The current price point, however, is still about 20 basis points higher than January. Furthermore, while most lenders have dropped their rates, the Big Banks have hardly budged, and experts suggest they may be waiting for more consistently positive economic news. For the meantime, they recommend a 3-year fixed rate for those currently in the market.

A Crisis of Unoccupied Bedrooms  

Canada might not have enough homes, but it does have enough bedrooms to meet demand. According to analysis of census and housing data, there are millions of unoccupied bedrooms coast-to-coast, including nearly 5 million in Ontario and more than 3 million in Quebec. The data compares the latest census figures against housing market data and designates one bedroom for each individual or couple in the country, then breaks down the findings by region. The result is a story of haves and have-nots, with many Canadians owning extra bedrooms and many more unable to afford one of their own.

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