Canadian Households To Get "Short Break" From Rising Debt Costs


Canadian households should start to see a lower trend for the debt service ratio in 2020 according to a new report from TD Economics.
Economists have been looking back over 2019 and made predictions for the new year and note that interest rates were the biggest surprise of the past year.
Rates had been rising in 2018 but reversed in 2019. Also, the yield on 5-year bonds fell by almost a full percentage point from their late 2018 peak, with mortgage rates following the lead.
While the lower mortgage rates helped boost home-ownership, TD’s report notes that most households haven’t felt much relief from their debt servicing costs with a debt service ratio (DSR) of 15% in the third quarter, the highest level on record, compared to 14.7% a year earlier.
However, 2020 is expected to see the DSR decline amid lower rates which will start to reach homeowners, while unsecured debt should also see lower rates if the Bank of Canada makes an expected cut.
This won’t of course impact every household with only a few refinancing mortgages or other loans in any given year, but the forecast calls for an average $300 saving per household, relief that was not expected a year ago.
Rising rates
But the report also warns that the relief to debt servicing costs is likely to be short-lived.
Assuming an escape from global recession, there is likely to be a rise in bond yields during 2020 and 2021, which could mean DSR moving higher once again in 2021.
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New Report Details Significant Price Growth In Key Recreational Property Markets


Royal LePage’s Winter Recreational Property Report, released on November 28, discovered widespread disparity in the year-over-year price variation experienced by Canada’s most popular winter recreational property markets.
In comparing median price growth between October 1 and September 30 in 2018 and 2019, the report found that the most consistent price growth occurred in the eastern half of Canada, with properties in Ontario and Quebec generally outperforming their western counterparts.
Unsurprisingly, expensive properties in Whistler, British Columbia, and Canmore, Alberta, suffered at the hands of each province’s decreased demand for high-ticket homes. The median price of single-family homes in Whistler dropped 13.8 percent in a year; those in Canmore lost only 2 percent of their value. Property values in Kimberley, B.C., decreased by 16.8 per cent.
It wasn’t, however, all bad news in B.C. Detached properties in Invermere saw their prices increase 10.4%, while those of condo properties in all three B.C. destinations increased by a minimum of five percent.
Prices for single-family homes in Collingwood and Blue Mountain, Ontario’s two winter hotspots, grew by 8.3 and 4.0 percent, respectively. Detached properties in Collingwood, where the median price is $525,000, remain far less expensive than those in Blue Mountain, which has a median price of $780,000, but condos are, on average, about $15,000 cheaper in Blue Mountain.
Rick Crouch of Royal LePage Locations North predicts sales in the region will be brisk this winter, as the early snowfall experienced by Blue Mountain and nearby Horseshoe inspire more people to buy.
Of the dozen communities studied in Quebec, six experienced positive price growth in the single-family segment of the market. Of those that did not, only small communities such as Sutton and Cantley saw prices decrease by more than 2.2 percent.    
Some of the biggest gains were witnessed in Mont-Tremblant, where median prices increased by as much as 37.3 percent for detached properties and 37.8 percent for condos.
“Inventory is very low in Mont-Tremblant. When a new property enters the market, buyers line up and offers flood in,” said Paul Dalbec, manager at Mont-Tremblant Real Estate, in a comment included in the report.
Home values shot up by 12.5 percent in both Orford (east of Montreal) and Stoneham-et-Tewkesbury (north of Quebec City), as well, with condo prices in the latter rising by an impressive 18.8 percent. 
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