First Foundation’s Best Rates To Open the Week:
1 Year 2.64%
2 Year 3.23%
3 Year 3.42%
4 Year 3.49%
5 Year 3.59%
7 Year 4.79%
10 Year 4.99%
ARM / Variable 2.20%
Line of Credit 3.50%
Qualifying Rate 5.39%
Prime Rate 3.00%
Toronto’s main stock index rallied more than 1 percent on Tuesday morning to bounce back above 13,000 points, mostly driven by firmer commodity prices that rose on optimism for a deal to resolve Greece’s debt crisis.
The general feeling is that the Greek Prime Minister, George Papandreau would survive the confidence vote coming this evening, a key step in the process of adverting a debt default.
The positive consensus encouraged investors willingness to take on riskier assets and drove world stocks higher.
At mid morning, Tuesday, the Toronto Stock Exchange was up 145.28 points, or 1.13 percent, at 13,002.98.
Finance Minister Jim Flaherty commented Monday that he is “satisfied” with the moderation in the country’s real estate market however, Bank of Canada Governor Mark Carney is urging borrowers and lenders to be careful in “hot spot” markets such as Vancouver.
The average sale price in Vancouver has gone from $661,745 to a whopping $831,555, a 27% increase from a year ago and more than 11 times the city’s average family income.
In a speech that took place in Vancouver last week, Mr. Carney pointed out that real estate loans now make up more than 40 per cent of Canadian banks’ assets, compared with 30 per cent a decade ago, a situation he called “unprecedented exposure.”
“The central position of housing assets and liabilities on the balance sheets of both households and financial institutions means that any housing excesses could generate important vulnerabilities in the financial system,’’ Mr. Carney said. “Historically low policy rates, even if appropriate to achieve the inflation target, create their own risks.”
Run away markets like Vancouver increase the vulnerability two fold and the worrisome part of the equation in the country’s most expensive city is the general consensus that many of the buyers who are moving the market upward are foreign and cash driven and not necessarily effected by the mortgage measures put in place over the past year.
Although no hard data exists to prove it, industry insiders suggest that Asian wealth is primarily fueling the Vancouver real estate market with all or mostly cash purchases of multi million dollar properties, effectively driving home prices skyward and side stepping Government attempts to control the housing market via more stringent mortgage rules.
However, some experts feel that even foreign investors will eventually lose their taste for over priced property and will eventually pull back, allowing Vancouver to fall back in line with an otherwise stable, national market.