Home Capital: Canadians still want to have their own home

According to the CEO of Home Capital Group Inc., Canada’s real estate market has so far managed to stay alive despite the coronavirus pandemic. However, the lender still points to a significant uncertainty caused by COVID-19.

Home Capital reported its net income for the three months ended June 30 of $34.1 million. Meanwhile, it was $27.7 million in Q1 and $31.9 million a year ago.

“Such results show that Canadians still want to own homes, and even a global health crisis couldn’t change it,” – noted Yousry Bissada, Home Capital’s CEO.

The profit growth appeared as key real estate markets for Home Capital started showing certain signs of rebound after a strong decline earlier this year.

Home Capital says mortgage originations reached almost $1.5 billion in Q2. It’s less than $1.6 billion seen during the first quarter of this year, but more than $1.28 billion reported a year ago.

At the same time, Home Capital admitted the outlook for the real estate market isn’t certain. The Toronto Regional Real Estate Board noted that July would normally show weaker activity, but growing demand from the spring, signs of an economic recovery and less travel have led sales to a record level.

“The global pandemic has put uncertainty on forecasts concerning the national economy, employment conditions, interest rates, housing activity and household debt-service levels,” – Home Capital noted.

According to Bissada, Home Capital’s mortgage growth also followed reducing its risk appetite.

In order to provide necessary help to their clients facing issues caused by the pandemic, Home Capital offered mortgage-payment deferrals of up to two months, while Canada’s big banks offered six months. In the end, residential mortgage and other loan deferrals were at 2,698 loans with a balance of about $1.3 billion at the end of July. Meanwhile, April showed 9,903 loans totalling approximately $3.93 billion.

Bissada said he doesn’t have a “crystal ball” to make forecasts on home prices, but he noted they are ready for a drop.

 

 

 

 

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