Canadian property prices may fall after mortgage war
Wednesday 7th of March 2012
2012 could be the time to buy a Property In Canada. Recent comments from many senior figures at Canada’s main banks have indicated that they anticipate falls to prices of properties in the country, leading to reduced price homes for overseas investors.
This is particularly likely now a short-term ‘mortgage war’ between major banks has subsided. Keep reading to learn more about the prospects for Property In Canada in 2012.
Mortgage price war subsides and experts believe house prices could now fall
A recent price war between major Canadian banks has now subsided, bringing some much needed stability to the sector. Until recently, banks were offering mortgages at historically low rates of 2.99 per cent for four and five year fixed deals.
The Globe and Mail reported that this war was ‘an indicator of just how cutthroat the lending market has become of late.’
In a recent interview, HSBC Bank Canada chief executive officer Lindsay Gordon said: “It was a very interesting quarter in that you had some of the banks professing concern [about the mortgage market] and then basically the next day offering incredibly competitive, low rates.”
Concerns were raised by several senior banking figures in January about the Canadian Property market. The CEOs of several Canadian banks, including Royal Bank of Canada, Canadian Imperial Bank of Commerce and Bank of Montreal spoke only a couple of months ago about the prospect of falling Canadian housing prices, particularly condo markets in Vancouver and Toronto.
However, the banks then slashed mortgage rates to borrowers in a short-lived price war.
Mr Gordon added: “It suddenly got very aggressive, but then I think the banks in general have throttled back a little bit on the aggressive pricing.”
While low rates may help the housing market, they also present problems for banks. Diane Kazarian, PwC’s Canadian financial services leader, said in a statement: “2012 may see slowing growth in consumer credit markets and continued pressure on margins as banks battle for market share.”