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Although the COVID-19 pneumonia epidemic has almost brought the Canadian economy to a standstill, the average house price in the Canadian real estate market has not fallen.
Evan Siddall’s explanation is that the Canadian government’s huge bailout measures are the main reason why Canadian house prices have not fallen. But the government’s bailout measures will end in the next few months, and commercial banks will soon allow homeowners to postpone mortgage payments, which will lead to overburdened homeowners eager to sell their homes. and potential buyers are reluctant to enter the market to buy houses, the result will be a fall in house prices.
The Canadian Mortgage and Housing Corporation forecasts that Canadian house prices could fall by as much as 18% over the next two years.
Although the central banks of Canada, the United States and many other countries around the world are engaged in quantitative easing of money release, the economic contraction brought about by the COVID-19 virus pneumonia has not only offset the inflationary pressure, but also kept interest rates on financial market bonds lower.
As the housing loans provided by commercial banks to home buyers mainly come from bond financing in the financial market, the decline in bond interest rates has also brought about a decline in mortgage interest rates.
The five-year mortgage rate offered by Canada’s major commercial banks has fallen from more than 5.3 per cent at the beginning of the COVID-19 pneumonia epidemic to 4.79 per cent in early August.
The decline in mortgage rates is equivalent to 1.5 per cent more loans for home buyers, according to Ratehub.ca, a website that compares and calculates mortgage rates.
For example, a buyer with an annual salary of C $100000 can get a loan to buy a C $523,410 home at the 4.94% stress test interest rate after paying a 10% down payment; according to the new stress test rate, the buyer can borrow money to buy a C $531, 230 house, a difference of more than C $7, 800.