TD Economics brought to you by Dina Ignjatovic, Economist
Data Release: Housing starts kick off the year on strong footing
- Canadian housing starts kicked off the year on a strong note, with homebuilders breaking ground on 207k units (annualized) in January. This extends December's sharp gain, and pushes the 6-month moving average up just shy of the 200k unit mark.
- The strength in January stemmed from the multi-family sector, which was up 4.2% following a 14% gain in December. Meanwhile, single family construction was down 4.6% on the month, reversing some of December's gains.
- Regionally, Ontario remained the key driver of growth, with starts up by a whopping 25% in January. Homebuilding in the Atlantic Provinces was also up during the month while the remaining regions recorded declines. B.C. experienced the largest pullback, as home starts slid 33% from the month prior.
Key Implications
- Overall, housing starts have been hovering around the 200k mark annualized (on a trend basis) for the last six quarters, or just slightly above the current rate of household formation. However, homebuilding construction should begin to slow over the course of the year, consistent with a cooling in overall housing market activity.
- Still, the recent strength in multi-unit projects could have further room to run given the surge in building permit approvals seen over the second half of last year. This could be partly offset by single-family construction, which is already at relatively lofty levels.
- The regional story will continue to reverberate across the housing markets, with central Canada leading the way, while B.C. and the oil-rich provinces lagging behind.
Pre-payment Privileges ….. speed up your mortgage pay-down!
March 1 2016 Posted by Jennifer Gaudet
Pre-payment Privileges
speed up your mortgage pay-down!
The prepayment privileges that come with your mortgage are there for a reason – they help you pay off your mortgage faster and reduce your interest costs. Prepayment privileges differ from lender to lender (up to 15%, 20% + 20%, double up, lump sum). Take the 20 + 20 privilege; it allows an annual mortgage payment increase of up to 20% of the current payment. The second 20 allows a yearly lump sum payment of up to 20% of the original principal.
Example: $200,000 mortgage amortized for 25 years at 3.5%.
Put a $2,000 lump sum each year on your principal and you’ll pay off your mortgage in 20 years and save $21,726 in interest.
Or increase your monthly payment by $200 and you’ll pay off your mortgage in 19 years and save $23,937 in interest. If you can do both, all the better; you’ll save more and pay your mortgage off faster than you ever thought possible!
Where can you find pre-payment money? How about your tax refund or bonuses from work? If your income increases, consider increasing your mortgage payment. Pretend your income didn’t increase and maintain your usual lifestyle.
We are experts at providing the advice, education and resources that homeowners need. Let us help you build a plan to take advantage of your lender’s prepayment privileges!
Jennifer Gaudet
Associate Mortgage Broker - Military Mortgage Specialist
- 902-824-2906
- jennifer@jennifergaudet.ca
- Licence # 2024-3000814
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