Your Weekly 411: Canadian Mortgage Rates Dip to 4% After US Rate Cut | Our Real Estate Productivity Crisis | New Mortgage Rules in 2025

The Weekly 411:

Today, we're covering

📉 Canadian Mortgage Rates Dip to 4% Following US Rate Cut

🧑🏽‍🎓 200,000 International Student Work Permits to Expire by 2025

👨🏽‍💻 Canadian Real Estate Fueling Productivity Crisis

🤑 Luxury Real Estate Unaffected by Foreign Buyer Ban

📄 Canada's 2025 Mortgage Rule Changes

🤔 WTF of The Week

Read Time: 4 minutes

📉 Canadian Mortgage Rates Dip to 4% Following US Rate Cut

• Yesterday (Sept 18) the U.S. Federal Reserve cut its interest rate by 50 basis points, a larger cut than expected.

• Canadian bond yields, which inform mortgage rates, have dropped in response to the Fed's decision.

• Some lenders in Canada are now offering five-year fixed mortgage rates below 4%, a significant psychological threshold.

Why it Matters: This move is having ripple effects in Canada, influencing both the Bank of Canada's decisions and Canadian mortgage rates. The Fed's rate cut gives the Bank of Canada more room to lower rates without risking a weaker Canadian dollar. 

🧑🏽‍🎓 200,000 International Student Work Permits to Expire by 2025

• 203,260 post-grad work permit (PSGW) holders will have their permits expire in the next 15 months.

• The number of PGWP holders has more than tripled since 2018, reaching 471,810 by August 2023

• Canada plans to admit 485,000 permanent residents in 2024, 500,000 in 2025, and 500,000 in 2026.

Why This Matters: With many international students facing uncertainty about their future in Canada, there may be a decrease in demand for rental properties, particularly in areas with high student populations. This could lead to vacancies and reduced rental income for investors.

👨🏽‍💻 Canadian Real Estate Fueling Productivity Crisis

• Canada's productivity growth has declined significantly from low levels, averaging only 0.2% yearly since 2019.

• The construction industry has significantly affected national productivity, with productivity growth averaging -2.5% per year from 2019 to 2023.

• The industry's productivity has not grown over the past 40 years, significantly contributing to Canada's productivity crisis.

• Construction now accounts for 12.6% of all labor hours, up from 7% in 1997, indicating an increased reliance on the industry.

Why This Matters: Productivity growth is directly linked to improving living standards. With declining productivity growth, Canadians may face stagnant wages, reduced purchasing power, and decreased access to public services.

🤑 Luxury Real Estate Unaffected by Foreign Buyer Ban

• The foreign buyer ban, extended to 2027, has had little impact on the market.

• Luxury home sales were up Y-O-Y in most significant cities except Toronto, Vancouver, and Halifax in the first eight months of 2024.

• Divided by Winnipeg, Edmonton, and Calgary, the Prairies saw the most significant gains in luxury home sales.

• Luxury homes are taking longer to sell, but prices are increasing in some areas.

Why This Matters: The ban's lack of impact raises questions about the effectiveness of this policy tool in addressing housing market issues. Affordability remains a concern.

💸 Brampton Fines Slumlords $83,500

• The city's residential rental licensing program has inspected over 4,700 rental units and issued more than 600 penalties, resulting in fines of over $83,500.

• The city estimates that there are 16,000 unregistered rental units in Brampton, and the program aims to hold both tenants and landlords responsible for property standards and safety concerns

• Some landlords have protested the new rules, citing additional costs and claiming they already comply with the city's regulations.

Why This Matters: The city's residential rental licensing program ensures safety and accountability in rental units, promoting residents' better quality of life. The program protects tenants from potential harm by enforcing property standards and holds landlords responsible for maintaining their properties.

📝 Canada's 2025 Mortgage Rule Changes

• New mortgage rules to improve affordability for first-time buyers will take effect on December 15, 2024.

• The changes include: 

  • Increasing the maximum insured mortgage amount from $1 million to $1.5 million

  • Extending maximum amortization periods from 25 to 30 years for some mortgages

Why This Matters: The changes come with trade-offs: lower monthly payments but higher total interest over the life of the mortgage.

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🤔 WTF of The Week

Additional listings are expected to hit the market as more than 15 condo projects across the GTA are approaching occupancy between Q4 2024 - Q1 2025.