Here is a summary of the events that shaped the Canadian mortgage market in 2012, as presented to the Real Estate Investment Network by Calum Ross.

1. 2012 YEAR IN REVIEW & WHAT’S NEXT
MORTGAGE MARKET UPDATE
With Calum Ross for REIN
CALUM ROSS MORTGAGE

2. What happened in 2012?
1) Mortgage rate wars and shift from
variable to fixed rates
2) Mortgage regulation changes produced
an effective rise in interest rates
3) Housing market cooled slightly in Q4 in
select segments, and set the stage for
2013
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3. MORTGAGE RATE MOVEMENTS
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4. Mortgage rates: long-term trend
7.00
EFFECTIVE HOUSEHOLD
6.00 INTEREST RATE %*
5.00
4.00
3.00
* Source: Bank of Canada. The effective interest rate for households is a weighted-average of various mortgage
and consumer credit interest rates. The weights are derived from residential mortgage and consumer credit
data, adjusted for additional information provided by financial institutions.
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5. Mortgage rates: short-term trend
2012 MORTGAGE RATE 1) Bank of
HISTORY* Canada did
6.00% not move the
5.00% 5-year
Qualifying
target rate
4.00% Mortgage
Rate
3.00%
Prime Rate 2) Fixed
2.00%
posted rates
stayed flat
* Source: Bank of Canada
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6. Behind the data * Source: CAAMP
• The Prime Rate flat-lined , but
variable mortgage rates actually rose
• The spread between variable and fixed
rates shrunk, and the fixed mortgage
became more attractive
• Discounted 5-year fixed mortgage rates
hovered near 2.99% throughout 2012
Variable rate Jan. = 2.10% *% New fixed rates = 79%
Variable rate Dec. = 2.70% Existing fixed rates = 65%
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7. MORTGAGE RULE CHANGES
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8. Timeline of tightening
PRE-JUL 2008 APR 2010 JAN 2011 JUN 2012
100% Qualifying 30yr 25yr
financing Rate amortization amortization
40yr 90% refinance 85% refinance 80% refinance
amortization LTV LTV LTV
5% down 20% down No insured No insured
rentals rentals HELOCs $1M+
January 2013 CALUM ROSS MORTGAGE 8

9. New mortgage rules brought to life
*CBC Infographic
PLUS, buying a home over $1M?
CMHC -> Need 20%
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10. GTA HOUSING MARKET
via CMHC Housing Outlook and CMHC Data
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11. Rental vacancy rate remains low
Vacancy rate was
RENTAL VACANCY RATES 1.7% in Oct. 2012
Lower vacancy rate
expected in 2013 at
1.5%
High-rise vacancy
rates lower at
1.2%„„
Demand for new
units matched
increase in supply
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12. Housing starts slowing
Housing starts forecasted to drop in 2013
after a spike in 2012, especially in high-rise
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13. Average home prices levelling
Average prices continue to climb but are
forecasted to stagnate in 2013
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14. GTA condo market insights
1) The opportunities for short-term pre-
construction condo investing “flips”
winded down, but long-term investors
will remain active buyers at pre-
construction
2) Affordability shifts and changing
demographics are supporting growth
in condo lifestyle
3) Plus, other interesting tidbits…
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15. New high-rise carrying costs to pass rents
Harder to find cash-flow positive high-rise
units in the future
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16. WHAT DOES IT ALL MEAN?
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17. 2013: The year ahead
• Interest rates to remain low and steady
• Mortgage lending environment unlikely
to change in Q1 or Q2 of 2013
• More lenders to enter the market to
accommodate real estate investors and
harder-to-place mortgages
**Real Estate Investments to remain cash
flow positive and ‘bankable’!!
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