Increased mortgage rates have varied effects on housing markets.

AuthorKrejlgaard, Chris
PositionConstruction Report

Increased mortgage rates have varied effects on housing markets

Home buyers in some Northern Ontario markets appear to be undeterred by rising interest rates.

Lenders in North Bay and Kenora report an increase in the number of mortgage applications, while their counterparts in Timmins, Sudbury and Thunder Bay report slight to sharp declines in the number of applications. An official with a trust company in Sault Ste. Marie said levels are comparable to 1989 figures.

"The volume hasn't been as high as last year," said Pat Kiley, branch manager for Canada Trust in Thunder Bay. "There are a number of things which caused the drop like fears over the GST (Goods and Services Tax) and the state of the economy.

"Whenever the media announces bad news people get cautious."

While national economic concerns play on the minds of potential home buyers, mortgage rates have steadily increased since the first of the year. According to bank and trust company officials, mortgage rates have increased as much as 1.5 per cent since early January.

Despite the recent construction boom and an influx of workers from southern Ontario, the Bank of Nova Scotia in Sudbury reported a 10-per-cent drop in the number of mortgage applications during the first two-and-a-half months of this year from the total registered during the same period in 1989.

Claire Gauthier, senior mortgage officer for Scotia Bank, said there were slightly more than 40 applications filed by the middle of March.

However, one local realtor said the decrease some banks are experiencing can't be traced soley to mortgage rates, but also to the banks' marketing strategies, the type of services they offer and to their reputations.

"It's a virtual supermarket out there now. All the consumer has to do is pick what he wants off the shelf," said Mark Humphries, senior assistant manager of personal banking for the Royal Bank in Timmins. "It depends on what he wants."

Richard Clement, manager for the Bank of Montreal in Kenora, attributed part of his bank's increase in mortgage activity to the addition of a full-time personal loan officer during the past year.

Across the street from Scotia Bank in Sudbury, Harold Valli, manager of loans and mortgages for Canada Trust, said the level of applications had not changed significantly during recent months and added the trust company's mortgage rates had increased less than a point since Jan. 19.

In Timmins, Humphries pointed to winter's strong hold on the area for the...

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