Mortgage Renewal Made Easier for Uninsured Borrowers, and Toronto Ranks Fifth in the World for Housing Bubble Risk

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.

Less Stress for Uninsured Borrowers

Uninsured buyers who had to jump through hoops to qualify for a mortgage under Canada’s stress test requirements won’t need to limber up when it comes time for renewal. This week the Office of the Superintendent of Financial Institutions (OSFI) announced that it would end a policy that required borrowers to meet stress test criteria again when renewing their mortgage with another institution, starting on November 21. OSFI says the change is intended to balance the scales between insured and uninsured mortgage holders by enabling the uninsured to shop around for a better deal at renewal with fewer barriers.

Big City’s Big Push for Rental Stock  

Housing construction may be slowing to a crawl in Canada’s major cities, but purpose-built rental development is speeding ahead. According to the Canada Mortgage and Housing Corporation, rental construction was up 4% in the first half of the year, across the country’s six largest cities, accounting for 72% of new homes on the market. Montreal saw a 106% increase in rental construction alone, while Calgary reached a new record for housing starts. Edmonton also reached its second highest level of housing starts on record. Toronto, however, experienced a 40% drop in rental starts compared to 2023’s multi-decade high.

Wishing You a “Decent” 2025

After years of high inflation, high interest rates, and a struggling economy, a “decent” year sounds pretty spectacular. Fortunately, Deloitte Canada says that’s exactly what’s in the forecast for 2025. In its recent projections, the accounting and consulting firm predicts interest rates will hit 3.75% before the end of this year and dip below 2.75% by mid-year next year, down from the current 4.25% level. Deloitte also predicts some moderate economic growth and softer labour market conditions, but little risk of a recession despite higher borrowing costs. Overall Deloitte says the Canadian economy is poised to have a “decent year.”

Bursting Toronto’s Bubble 

Toronto’s housing market may be deflating but there’s still a lot of air left in this bubble. According to the UBS Global Real Estate Index, the city ranks fifth for housing bubble risk, after Miami, Tokyo, Zurich and Los Angeles. Despite a roughly 10% decline since last year, the report suggests home prices remain dangerously high compared to incomes and rent, elevating the risk of a housing market collapse. Like hurricanes in New Orleans and earthquakes in San Francisco, however, the city is warned of a housing bubble so frequently that it’s almost become part of its charm.

50-50 Odds for a 50-Basis-Point Cut 

Canada’s next interest rate announcement is looking like a coin toss. According to economists, there’s nearly equal odds of the Bank of Canada opting for a 0.25% and 0.5% rate cut in its next policy decision on October 23. While the war against inflation appears to have been won — with prices growing by just 2% in August — higher than expected GDP growth has economists on the fence. Whatever the bank decides, however, most agree that interest rates will continue their downward march through the year and into 2025. The only question that remains is the pace.  

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