Jing Pan, author at Profit Confidential and a research analyst/editor with Lombardi Financial, speculated that the hike might make significant waves across the sector. Currently, Canadian real estate prices, especially in high-volume areas such as Toronto and Vancouver, are among the steepest they have been historically.
“Could this rise in RBC mortgage rates disrupt Canada’s housing market and mark the beginning of the end for the Canada real estate bubble?” Pan wrote in a Profit Confidential column.
RBC will add 0.1 per cent to the borrowing costs of two- to five-year term fixed-rate mortgages, bringing the special offer rate to 3.04 per cent. In addition, five-year variable rate loans would see a 0.15 per cent increase.
Pan cited the finance ministry’s soon-to-be-implemented policy of the CMHC requiring homebuyers to shell out 10 per cent in down payment (for any loan valued at more than $500,000) as added evidence that the government is focused on taking pressure off the surging real estate market.
“We want to make sure we create an environment that protects the people buying homes so they have sufficient equity in their home,” Finance Minister Bill Morneau said, as quoted by Pan.
Pan admits, however, that stronger and more concrete steps would be needed to stifle the continuous rise in property prices.
“With real estate momentum going strong into 2016, it might take more effort to cool down Canada’s housing market bubble,” Pan concluded.
MBN
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