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TORONTO, ONTARIO--(Marketwire - Aug. 9, 2012) - Following a busy Spring season, the Canadian housing market has cooled off and should continue to moderate, as condominiums led construction activity in recent years, according to Robert Kavcic, Economist, BMO Capital Markets.

Canadian housing starts totaled 208,500 annualized units in July, down 6.1 per cent from June. Year-to-date, starts have now averaged almost 216,000 units, the highest seven-month total since October 2008.

However, Mr. Kavcic noted that momentum will continue to slow, partly driven by new mortgage rules announced earlier this year by the federal government that reduces amortization from 30 years to 25 years. Starts of urban singles decreased 4 per cent to 64,300 and multi-units decreased 7.6 per cent to 123,000.

"Multi-unit starts are down from extremely high levels in the spring, and the trend to a more sustainable pace shouldn't bother policy makers who were concerned about an overheated market," said Mr. Kavcic. "The trend among builders for more multi-units is in part because of limited available land in cities like Toronto and Vancouver, and better affordability in the condo space."

Regional Housing Starts

Laura Parsons, Mortgage Expert, BMO Bank of Montreal, noted that regardless of the market conditions, Canadian homebuyers need to continue to ensure they are not over-stretching themselves when it comes to financing the purchase of a home.

"Canadians who plan to purchase a home should continue to look at ways to effectively manage their mortgage debt over the long term," said Ms. Parsons. "Stress-test your mortgage against a higher interest rate to be sure you can handle any increases in interest rates down the road and choose a mortgage with a shorter amortization to help pay down your mortgage sooner. These are two options I would strongly recommend for any prospective homeowner."

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly-diversified North American financial services organization. With total assets of $525 billion as at April 30, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.