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.
All things being equal, choose your mortgage with the best prepayment penalty
March 1 2016 Posted by Jennifer Gaudet
All things being equal, choose your mortgage with the best prepayment penalty
It’s impossible to plan on many of the things that will happen in our lives, like a job loss, illness, divorce, a personal matter, or even finding a better mortgage rate. There are many reasons why you may need to one day break your mortgage and renegotiate.
To break your mortgage, you can expect to pay a penalty - the greater of either a) three months’ interest, or b) the interest-rate differential (IRD). With the IRD, your mortgage lender will want you to pay the equivalent of what they will lose by releasing you from your mortgage and lending the money at current rates.
Unfortunately not all lenders calculate the IRD the same way, and the differences can amount to thousands.
To calculate IRD, many of our lenders take the difference between your contract rate and their current rate that most closely matches your remaining term. That calculation can lead to a reasonable payout penalty. However, a significantly higher penalty will result if the lender takes the difference between your contract rate and the posted rate that most closely matches your remaining term minus the discount you got on your original contract. That’s why professional advice is so important; we know which lenders have the most fair prepayment penalties.
If you are looking for a new mortgage, all things being equal like rate and privileges, be sure to take the prepayment penalty into consideration. If your circumstances change and you need to break your mortgage, having a fair prepayment penalty could save you thousands!
We are experts at providing the advice, education and resources that homebuyers and owners need. When it comes to mortgage penalties, it pays to be informed. And we’re here to help!
Jennifer Gaudet
Associate Mortgage Broker - Military Mortgage Specialist
- 902-824-2906
- jennifer@jennifergaudet.ca
- Licence # 2024-3000814
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