Mortgage rates to remain low for the first half of 2017 - report
In the wake of its report on the unsustainability of the Canadian housing market, Fitch Ratings predicted that mortgage rates will remain at record-low levels for the first six months of this year.
The credit rating agency’s 2017 Global Housing and Mortgage Outlook, released earlier this week, noted that any possible increases would be minimal at best, and that inflation will remain at a relatively manageable 2 per cent.
“We expect that it will result in fewer loans being made available to marginal borrowers, which could reduce loan growth. That said, we expect loan volumes to remain near historical highs as long as interest rates remain low, employment is stable, borrowers are able to qualify under the stricter mortgage rules, and the desire/demand for home ownership remains high,” Fitch stated in the new report, as quoted by MoneySense.
On the macroeconomic side, Fitch projected continued stability, with Canadian GDP to grow by 1.9 per cent annually for 2017 and 2018.
Last week, Fitch downgraded its outlook of the Canadian housing market to “unsustainable”, placing the country among the ranks of Greece and Singapore as the real estate markets facing the greatest risk of major downturns in the near future.
“Canadian home prices are not supported by underlying fundamentals and the risk of a price fall in over-valued markets has risen,” Fitch warned.
“Despite the continued rise [of home purchase costs], Fitch views current home prices as unsustainable in the long term. There is a heightened risk of a price correction in over-valued markets,” the agency added. “With local and federal governments tightening loan-eligibility requirements and imposing restrictions on certain buying segments, the pace of home-price growth should decelerate.”
Article Courtesy: http://www.mortgagebrokernews.ca/news/mortgage-rates-to-remain-low-for-the-first-half-of-2017--report-221679.aspx - Ephraim Vecina