Potential homebuyers hold off on purchases, the Home of the Week: Canadian real estate news for December 1

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Here are The Globe and Mail’s top housing and real estate stories this week, with the lowest mortgage rates available in Canada today, commentary from our mortgage expert and one home worth a look.

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Banks seeing decline in borrowers adding unpaid interest to their mortgage balances

Lenders are seeing outstanding loans grow as borrowers’ monthly payments don’t cover the total amount of interest. These mortgages – that increase in size instead of reducing in size – are known as “negative amortization.” Three of Canada’s major banks offer mortgages that allow their borrowers to go into negative amortization – a product that the federal bank regulator is now calling “dangerous,” writes Rachelle Younglai. The billions of dollars that quickly accumulated in negative amortizations has been a clear sign of the stress borrowers are facing when they are required to increase their monthly payments to get back on track with paying down their mortgages.

Potential Canadian homebuyers stand pat, expecting prices to slide further

TD economist Rishi Sondhi is now forecasting that the average national home price will drop 10 per cent through the early part of next year from the third quarter of 2023, leading potential buyers throughout the market to hold off in case prices have farther to fall, writes Carolyn Ireland. New listings have recently flooded the market in Ontario, which Mr. Sondhi says appears to be due to some condo investors in Toronto and Hamilton exiting the market. The climb in condo units for sale in those and other cities suggests that over-leveraged investors are choosing not to hold on to their properties.

This week’s lowest available mortgage rates

Tens of thousands of Canadians are camping out for real estate discounts, waiting for the housing market to slap big red “On Sale” signs on front lawns this winter, or pull the trigger on buying their first home, writes Robert McLister in his weekly column. But consider this: If average mortgage rates fell merely one percentage point, all it would take to cancel out that nationwide affordability improvement would be a $63,000 bounce in the $656,625 price of an average home. That kind of gain can happen in two months, as it did last spring.

Ontario real estate law gets an update with open bidding option

The new rules, which took effect Friday, include improvements to broker and brokerage disclosures, and ways to avoid conflicts on multiple representation. But the biggest change is the option for sellers to use an open bidding process, which gives the seller the choice to disclose submitted bid prices to potential buyers, something they were previously banned from doing. Provincial and federal politicians have advocated for open bidding, saying it could help bring down skyrocketing home prices. However, some experts say there’s little research on how blind bidding affects prices, and a move to open bidding could lead to negative effects for sellers.

Home of the week: Gordon Pinsent’s Toronto condo still bears his mark

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130 Carlton St., Penthouse 8, Toronto

This three-bedroom penthouse was formerly owned by the late Canadian actor Gordon Pinsent, and his impact on the space can still be felt – one of his original paintings is included in the sale, for starters. The open-concept space includes a dining and living area with a vaulted ceiling that soars to nearly 16 feet, and a modernized kitchen with stainless-steel appliances. A spiral staircase leads to the second-floor loft, which is open to the living room below. Doors open to a terrace with 1,086 square feet of outdoor space. The loft was used as Mr. Pinsent’s office and studio, which his daughter says inspired much of his creativity.