“The banks are back out there lending in the condo sector,” Chris Milne, vice-president of real estate lending for Scotiabank said at a Toronto real estate conference. “There is a hole that the banks are looking to fill. The regulators were really pounding them a year and a half ago and now it’s quiet.”
According to Milne, Scotiabank has upped the maximum it will loan on a condo project to 75 per cent from 70 per cent because the bank believes there is less risk in the market than previously thought.
This development comes just after it was announced that Toronto hit a decades-old record for unsold condo units this January, even as supply continues skyrocket.
“Most of the completed units are presold, but the increase still lifted the number of unsold units to a 21-year high (1,602),” Sal Guatieri, senior economist for BMO wrote in his latest economic report, released Tuesday. “This will slow the increase in new condo prices (3.7 per cent year over year in Q4). However, as long as demand remains healthy (last year was the third best on record), prices should hold steady.”
10,368 condos were completed in the GTA in January, a record for the region and eight times more than the average over the past decade.
2014 saw certain developments that changed the future of condo development in Canada.
This past June, CMHC announced the official removal of its insurance product for developers who are financing new condo construction, meaning developers had to rely more heavily on lenders to bear the brunt of the financing responsibility.
The slight lull in one of Canada’s largest condo markets may soon come to an end, with the big banks refocusing on lending in that very segment.