MORTGAGE Blog & ARTICLES
Consumer Confidence Defies The Stats
Based from the latest figures released by CREA, it showed that there was an increase in the house prices again and it was seen in August. This resulted in an estimated 2.1% increase year by year. From this news, many of you might expect that it would also show high consumer confidence in the field of housing market. Unfortunately, it is not. In truth, the weekly indicator of confidence showed that the expectation on continued rising price is declining. At recent, it is already in it lowest point beginning April. This is what Bloomberg Nanos’ published weekly indicator of confidence stated.
In a survey made in July, a record stated that there were 47% of respondents who believed that there will be an increase in house price in the following six months. But just last week, the 47% figure dropped to 38%. 48% of these respondents thought that the price of houses will remain the same in the following six months.
There may be something on the stats being shown. But the good thing is consumers can expect something nice when it comes to the confidence in the economy. It showed higher overall level. Unfortunately, the confidence on personal debt and job security was down.
The Debt Risks
According to Stephen Polozm, the Governor of the Bank of Canada, the risks relating to household imbalances did not ebb which was in contradiction to what was stated in July. That it was evolving in a productive way.
The only thing that did not change over the past years is trend setting interest rate stated by the central bank. It remained 1% for 4 years, which is practiced as a way to keep the debt service costs for households low. From last week’s report on Statistics Canada, it showed that 6.9% of disposable income is made up of interest payments. This figure was used to state the figure during the second quarter. The figure showed that it decreased when compared to the previous quarter’s 7.2%. This figure is viewed as the lowest in records since 1990.
It was also seen that home prices and sales showed unexpected strength, while the lowest mortgage rates recorded in decades stimulated demand. And as for the forecasts about housing starts, monthly surveys showed that it was at the highest at present.
A Stronger Economy to a Low Confidence in Job Security
The level of confidence on debt risks may be presently low, but as what was mentioned, there remained a strong confidence on the state of the economy. From the last survey made, there were 22.3% of respondents who thought that there will be a stronger economy for the coming 6 months. Considering the stats shown last week, there was an increase in the figure, which was from 21.2% to 22.3%.
Unfortunately, the case is not the same as consumer’s confidence on job security. The figure dropped from 70.2% to 68% in just a week span. An increase was also seen on the percentage of people who thought the state of their financial condition got worse. It increased from 25.1% to 27.1%, which when compared to the 2014’s average of 24.7% is still higher.
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