Canadian Funding Corp. Reviews CMHC Statistics

The Honourable Jim Flaherty, Minister of Finance, today announced a number of measured steps to support the long-term stability of Canada’s housing market and continue to encourage home ownership for Canadians.

“Canada’s housing market is healthy, stable and supported by our country’s solid economic fundamentals,” said Minister Flaherty. “However, a key lesson of the global financial crisis is that early policy action can help prevent negative trends from developing.”

The Government will therefore adjust the rules for government-backed insured mortgages as follows:

• Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.
• Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.
• Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.

With a gradually strengthening job market and still favourable financing conditions, the housing market situation in the Sherbrooke census
metropolitan area (CMA) will be somewhat different this year1. After having stagnated in 2009, existing home sales registered through the Multiple Listing Service (MLS)® will rise by 4 per cent next year. Housing starts, for their part, will fall by 14 per cent in 2010. This decline will result from the level of housing activity in 2009, and not from the deterioration of economic conditions.

Employment to increase slightly in 2010 In 2009, the Sherbrooke area was spared by the slowdown in economic activity that affected all industrialized countries. During the first six months of the year, the average number of jobs2 in the area declined by 2 per cent, with losses registered in both part-time and full-time employment. However, the situation improved somewhat from July to September, as the number of jobs rose by 1.5 per cent. While this rise was entirely attributable to the gains recorded in part-time employment, full-time job losses are moderating more and more, suggesting that increases could occur shortly. Thanks to this renewed economic activity, the Sherbrooke CMA will end the year with 83,000 jobs, or the same level as in 2008.

Housing starts: After a slow start in 2009, housing starts will become stronger by the end of 2009 and average 141,900 units. In 2010, starts will increase to approximately 164,900 units.  The strong pace of resales reflects, in part, activity that was delayed in the previous two quarters of 2009 and is likely not to be sustained. MLS® resales will be about 441,300 units for 2009, up from 433,990 units in 2008.