This week’s top stories: Canadian real estate’s 40-year tailwind has passed and banks brace for big drops


It’s time for your cheat sheet on this week’s top stories.

Canadian real estate

Canadian real estate’s nearly 40-year tailwind from lower rates is reversing: BMO

The low interest tailwind that has driven Canadian real estate for the past 40 years is coming to an end. The Bank of Canada estimates that recent buyers will renew their mortgages around the 4.5% level in 2025/2026. This means a 24% to 45% increase in payments for those borrowers who had benefited from the stimulus rates. BMO notes that this only happened once – in the 90s.

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Real estate prices in Canada are falling. How bad do banks think it can get?

Real estate prices in Canada are doing the unthinkable: they have started to fall. Now what? We look at the adverse market scenarios of the big six banks. In the worst case, banks see prices fall by up to 30% in the event of a tumble.

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Record link between Canadian household debt and income, deeper economic downturn this time

Canadians are contracting astronomical debts, far exceeding their income. The debt-to-income ratio of Canadian households has reached 180%. This means that for every dollar households earn in disposable income, they owe $1.80. As this ratio increases, repayments divert funds from future expenses. This tends to strain the economy, diverting funds from future consumption.

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Canadian Federal Anti-Money Laundering Resources Unreliable: British Columbia Public Inquiry

The long-awaited results of the BC Money Laundering Inquiry are in. The main conclusion seems to be that federal money laundering resources are unreliable. Ultimately, they suggest the province establish its own anti-money laundering resources.

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Canadian mortgage lending nears $2 trillion, growth still astronomical but slowing

Canadian mortgage debt has reached a new all-time high, but the growth rate is slowing. Households now owe nearly $2 trillion in mortgage debt, up 10.3% ($185.5 billion) from a year ago. If it wasn’t entirely clear how big the number has become, it’s larger than the GDP of all but 15 countries.

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Canadian Real Estate Investor Outlook 2022 | Mortgage issuance in Canada fell ahead of rate hikes

Canadian mortgages were falling before interest rates started to rise. What does that mean? We asked Toronto real estate broker Daniel Foch and mortgage agent Nick Hill to break it down. They give up a certain perspective of the market as observed by their clientele of investors.

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Canadian real estate sees inventories rise as sales tumble and market breaks even

Canadian real estate inventory is growing rapidly as sales fall. The combination helped relieve pressure on prices, which actually fell. After only a few weeks of higher interest rates, not only has speculative demand dropped, but sellers are motivated to sell their additional property.

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Real Estate in Toronto

Greater Toronto real estate has seen selling prices drop to as low as $190,000 in some areas

Real estate prices in the Greater Toronto Area are falling – and sharply in some areas. TRREB reported a median sale price of $1,050,000 in May, down -4.4% ($48,000) from the previous month. Most regions across the board saw prices fall, with one even seeing the median sale price fall by $190,000. After such a huge climb, it’s hard to see many owners sweating.

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