CAAMP has just released their Spring Mortgage Report, which sums up what the housing and mortgage market look like for the rest of 2013, and makes predictions of what we can expect continuing into next year. In that report, author Will Dunning, CAAMP’s chief economist, says that while low interest rates will continue to fuel mortgage demand this year, fewer housing starts will impact the industry a bit more negatively next year.
Dunning says in the report that while the market has definitely seen a cooling, things aren’t bound to get that much colder for the remainder of the year. He also states that the amount of growth we’ve already seen this year might surprise those who have been claiming housing as being a drag on the economy’s overall growth.
“Assuming relatively stable resale market activity and stable completions, mortgage activity is unlikely to slow much more this year,” Dunning says. “Total growth for 2013 is likely to be in the range of 4.5 per cent to 5 per cent, which would bring outstanding residential mortgage credit to just over $1.2 trillion by year end.”
That might not be the case next year though, the Association says in their report, saying that housing completions “will gradually decelerate during 2014.” That will result in further lessened demand for mortgages going forward into next year.
Dunning also says that the tighter restrictions on mortgages that were put into place last year have caused a decline in housing starts, and that this is also a trend that’s going to continue.
“CAAMP has argued that government efforts to slow the housing market have long-term negative economic consequences and the data continues to support our assessment,” he says. “Until now, housing has played a major role in the recovery from the 2008/09 recession. That economic driver is disappearing as we see house-related jobs dry up and consumer confidence erode at a time when the national recovery is struggling to pick up steam.”
CAAMP’s’ president, Jim Murphy, agrees and says that this is actually where the biggest concern lies.
“What is cause for concern is that the housing market, an important engine of growth for the Canadian economy, is slowing to such an extent that without any change it could take another five years to recover,” says Murphy.
And while that might not be good news for those looking for a mortgage, there is positive news for those who already hold one.
“Meanwhile,” continues Dunning in the report, “we can expect that continued low interest rates will continue to allow mortgage holders to rapidly repay the principles. By the end of 2014, the growth rate is likely to be in the range of 2.5 to 3 per cent, and outstanding residential mortgage credit would be $1.24 to $1.25 trillion.”
