Northern Ontario’s booming mining industry is in many cases hampering business for mortgage brokers, forced to focus on refis as a scarcity of houses and startling price gains reduce the number of new purchases.
“Because of the rising price of gold we have a lot of people are coming to work here. Many are taking up apartments and hotel rooms because there are not enough houses for sale,” according to Tammy Spencer, a broker at The Family Group Mortgages in Timmins.
She said the average price of a detached bungalow in the city was around $135,000 - $140,000 some four years ago. Today the same homes sell for much more. That isn’t a good thing for brokers dependent on home sales.
“You can’t get any home for below $200,000 that doesn’t require some form of renovation,” Spencer said, now concentrating on refis. “Before, the ratio was 50/50. Nowadays 80 per cent of our business is made up of refinancing and purchases account for only 20 per cent.”
According to a recent report from the Municipal Property Assessment Corporation, the average home price in Ontario has risen 17 per cent over the last four years. The price of homes in northern cities like Timmins jumped by as much 29 per cent for the same period, the MPAC report said.
Spencer said the shortage is being fuelled by the booming mining industry that is bringing a lot of workers and their families to Timmins.
The rising home prices, plus tighter mortgage rules are shutting out a lot of first time buyers in Sudbury, according to Tim Grace, a broker with Mortgage Intelligence.
“The average price of homes has been holding at the $250,000 to $260,000 level,” said Grace.
The high prices and new mortgage rules have reduced the purchasing power of buyers by as much as 10 per cent.”
The situation in Sudbury, however, is very different from Timmins, according to Steve Doni, mortgage broker at the Family Group.
“The market is hot. We’re doing really well,” Doni told MortgageBrokerNews.ca. “It’s not like in Timmins where people can’t find homes. I see a lot of homes for sale here.”