Lenders bullish on housing as rates fall to 100-year lows

December 8, 2020

With home sales setting record highs and interest rates at historic lows, Canadian lenders are bullish on the home building market going into 2021, a national survey shows.
Canada’s Finance Minister Chrystia Freeland confirmed via virtual Zoom meeting with the Greater Vancouver Board of Trade December 2 that lending rates are a major reason for the confidence.
When questioned by the moderator on Ottawa’s largesse during the pandemic, the finance minister said, “One of the reasons we can afford to do this is because interest rates are so low right now. It is at a 100-year low. You heard me right.”
Lenders have apparently tuned in.
On December 4, 2020, HSBC Canada underscored this when it launched the lowest mortgage rate in Canadian history: 0.99 per cent.
“This is a milestone rate, akin to landmark rates like BMO’s 2.99 per cent 5-year fixed in 2012 and Meridian Credit Union’s 1.49 per cent fixed in 2015,” according to RateSpy.
HSBC’s variable rate offer is for buyers with insured high-ratio mortgages, with a discount equivalent to prime minus 1.46 per cent.
Home builders and developers should also find lenders are more welcoming in the months ahead.
In the 2020 Canadian Real Estate Lenders’ Report released December 1 by CBRE Limited, 57 per cent of lenders said they would increase or maintain lending to the residential condominium construction market, while 23 per cent planned to increase lending for single-family home building and 14 per cent planned to maintain their current spending for single-family home building. As well,  60 per cent of lenders said they wanted to increase financing for multi-family rental housing in 2021.