Canadian mortgage growth will be low if not flat for the “foreseeable future,” CIBC CEO Victor Dodig warns.
During a conference on Tuesday, Dodig that as far as he can tell, mortgage growth across the country will be flat or will show single-digit growth for the next little while.
As for it turning negative, Dodig says “… if the housing market goes for a really negative turn driven by other macroeconomic factors. That could happen.”
The statement comes shortly after the Canadian Real Estate Association revealed they are expecting national home sales to fall again this year.
Canadian monthly home sales dropped 2.3 per cent in November. Sales have been down since September. Interest rates and the stress test, which was implemented in early 2018, are supposedly behind the decline.
Though the Bank of Canada is expected to hold the interest rate this month, many suspect rates will go up two times this year. Since the summer of 2017, rates have increased five times.
The stress test, on the other hand, is making it harder for Canadians to even qualify for a mortgage. Currently, nearly 54 per cent of the average Canadian’s household income would be needed to qualify for a mortgage. In Toronto, 75 per cent is needed.
Bharat Masrani, CEO of Toronto-Dominion Bank echoed Dodig’s sentiment with a slightly more optimistic take. Masrani expects minor growth in the mid-single digits for 2019.