Weekly Digest

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August 1st, 2024

Partner Trip for 2025

April (Spring) 2025, our annual realtor trip will be held in Nashville, Tennessee.

Qualifying is easy. Send $1,500,000 in total closed mortgage business to automatically qualify.

To date, we have 3 realtors who have already qualified.

Fall Out From Last Week’s B.O.C Announcement

Markets are implying another 175 basis points of rate cuts. This would be 7 x 0.25% drops to the overnight rate. Markets project this will occur over the next 26 months.

On the fixed rate side, they have less room to fall. This is because fixed rates are priced in with the anticipation the cuts are coming. We will continue to see softening, but it will be at a gradual pace.

Current odds of an additional rate drop on September 4th is 53%. All forecasts lead to an Overnight Rate of 4% by the end of the year. This would be 2 cuts of 0.25% in the final 3 meetings and bring the Prime lending rate down to 6.20%.

U.S Fed

The Federal Reserve maintained the federal funds rate at a 23-year high for the 8th consecutive meeting in July. This was in line with expectations. Policy makers noted that there has been some further progress toward the 2% inflation goal although it remains somewhat elevated.

Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have moderated, and the unemployment rate has moved up but remains lower than Canada.

During the regular press conference, Chair Powell said a September cut could be on the table if inflation moves down in line with expectations.

Canadian GDP (May)

The 0.2% month over month rise in GDP in May was stronger than the preliminary estimate of a 0.1% gain.

The larger-than-expected rise in GDP in May suggests that the economy performed a little better than we anticipated last quarter. The preliminary estimate of only a small rise in June is somewhat disappointing given the potential boost from the completion of the Trans Mountain pipeline expansion.

Condo Cancellations

According to Urbanation, 76 new condo projects that were projected to launch have now been put on hold. This is an estimate of about 24,000 units.

Investors have pulled back on the condo market due to cash flow concerns. Those looking to purchase a principal residence can likely find cheaper resale pricing with the flooding of recent inventory.

The condo market is taking a big hit this year, and new construction is leading the charge.

Cash Flow Challenges on Condos

Toronto condo listings continue to climb. It’s a perfect storm of:

• Plummeting condo sales

• Record condo resale listings

• Increasing rental listings (event though demand is up, listings are up 25% compared to Q2 of last year)

• According to a new report from Urbanation-CIBC, 81% of mortgaged investors are cash flow negative.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.89%

• 3 year fixed, 30 yr amortization – 5.09%

• 2 year fixed, 30 yr amortization – 6.00%

• 5 year variable, 30 yr amortization – Prime – 0.90% = 5.80%

• 5 year fixed, 25 yr amortization – 4.79%

• 3 year fixed, 25 yr amortization – 4.99%

• 2 year fixed, 25 yr amortization – 5.95%

• 5 year variable, 25 yr amortization – Prime – 0.95% = 5.75%

INSURED

• 5 year fixed, 25 yr amortization – 4.49%

• 4 year fixed, 25 yr amortization – 4.54%

• 3 year fixed, 25 yr amortization – 4.64%

• 5 year variable, 25 yr amortization – Prime – .95% = 5.75%

Fast Facts

• $73,000,000 – The amount of money the provincial government is granting the City of Toronto in order to shave a year off the Gardiner Expressway Rehabilitation.

• $1.5 billion USD – What France spent to clean up the River Seine to make it swimmable for the Olympic triathlon event.

• 200,000 – Bees stolen from a Québec honey producer last week. Thefts of hives have been rising across the province, leading many beekeepers to spend more on surveillance.

• $134,000,000 – What the Ontario government will spend on five police helicopters to help patrol Ottawa and the GTA for auto thefts, car jackings, street racing, and impaired driving.