Residential Mortgage Commentary - BoC: Prepare for higher for longer
Nov 14, 2023
There has been a little relief for mortgage shoppers in recent days. Fixed-rates have come down slightly, led by declining yields for government bonds. Variable-rate mortgages appear to be maintaining their discounts and most market watchers believe the Bank of Canada has reached the top of this r...
An interesting difference of opinion has developed between the economists and the people who deal in the bond markets. The economists do not expect to see any rate cuts by the Bank of Canada until the middle of next year. But the markets see things changing sooner. And there may be benefits for m...
Canada’s federal banking regulator is expressing concerns about a deterioration in credit quality. In an update to its Annual Risk Outlook, the Office of the Superintendent of Financial Institutions singles out variable-rate, fixed payment mortgages as a key concern.
As the name suggests these mo...
Bank of Canada holds its interest rate steady, publishes updated economic forecasts
October 25, 2023 |
Today, the Bank of Canada announced that it would maintain its overnight policy interest rate at 5.00%, stating that there is “growing evidence” that past interest rate increases are dampening economic activity and relieving price pressures.
This decision provides some comfort to borrowers who hav...
Residential Mortgage Commentary - Interest rate uncertainty stifles home construction
October 25, 2023 |
Government efforts to get more homes built are, finally, meeting with some limited success but economic and market conditions suggest it is going to be a long, uphill climb.
Since the middle of September Ottawa has been able to trumpet several deals through the Housing Accelerator Fund that, it sa...
The Canadian Real Estate Association reports home sales in Canada continue to decline, dipping 1.9% in September compared to August. This is an on-going trend that started in May. Year-over-year, September sales were 1.9% higher than in 2022.
The number of new listings saw one of biggest increas...
An interesting new survey suggests a growing number of Canadians may be getting ready to move back into the housing market.
The newly launched survey by Dye and Durham indicates one in ten are looking to sell their primary residence and move into a new one within the next 12 months; double the num...
The on-again, off-again expectations of another interest rate increase by the Bank of Canada appear to be on again.
The latest inflation figures from Statistics Canada put the Consumer Price Index, or headline inflation, at 4.0%. That is the second consecutive monthly increase, up from 3.3% in Ju...
The Canadian Real Estate Association reports home sales in Canada slipped again in August, dropping 4.1% compared to July. This continues a trend that started in May. On a year-over-year basis, though, August sales were 5.3% higher with 38,345 properties changing hands.
The number of new listing...
Under the heading no news is good news, the Bank of Canada decided today to keep its benchmark (overnight) interest rate steady at 5.00%, putting at least a temporary hold on a policy that resulted in 10 increases stretching back to March 2022.
At the Bank’s last meeting in July, it raised the rat...
New research by one of the big banks shows fixed rate mortgages are back on top as the preferred way to finance a home purchase. The data shows 95% of borrowers went for a fixed rate in June.
Some market watchers see that as counterintuitive, working on the premiss that interest rates are at or n...
Home sales in Canada slipped slightly in July compared to June. The Canadian Real Estate Association is calling that a sign that the market is stabilizing.
"Following a brief surge of activity in April, housing markets have settled down in recent months, with price growth now also moderating,” sa...
New reports on a number of the key components that feed into the Bank of Canada’s interest rate decisions are out this week. The one that will be getting the most attention is the inflation reading for July.
It is expected there will be a small up-tick in the Consumer Price Index – or headline in...
Canada’s unemployment rate moved slightly higher in July. Statistics Canada reports 6,400 jobs were lost and the jobless rate ticked up from 5.4% to 5.5%. Analysts had expected an increase of about 21,000 jobs.
It is the third straight monthly increase in the unemployment rate and many market wa...
One of the closely watched components in the Bank of Canada’s interest rate setting process missed growth expectations, but was still up on a month-over-month basis.
The country’s Gross Domestic Product rose by 0.3% in May, less than the 0.4% that had been forecast, but up from 0.1% in April. (A...
Housing starts in Canada bounced back in June, reversing a string of declines dating back to November of last year.
Canada Mortgage and Housing Corporation reports the seasonally adjusted annual rate of housing starts totalled 281,373 units in June, up from 200,018 in May.
The increase was led b...
Canada's financial regulator is telling the country's big banks to put aside more money to cover potential losses. The Office of the Superintendent of Financial Institutions says vulnerabilities in the financial system remain elevated, and have actually increased in some cases.
OSFI will increase...
The residential real estate surge that started in April carried through May. The latest numbers from the Canadian Real Estate Association show both sales and prices continued to rise.
May saw a 5.1% increase in sales compared to April. (April recorded an 11.3% increase over March.) And May sale...
Predictions of a resumption of interest rate increases by the Bank of Canada have come true … except it happened a month earlier than most forecasters expected. It was a surprise move that now has the experts speculating about another hike in July.
At its June setting, last week, the BoC bumped u...
Today, the Bank of Canada increased its overnight interest rate to 4.75% (+0.25% from April) because of higher-than-expected growth in Canada’s economy in the first quarter and the view that monetary policy was not yet restrictive enough to bring inflation down to target.
Leading up to today’s a...
The latest Financial System Review by the Bank of Canada sheds light on important aspects of the country's financial landscape, and while there are concerns about household debt, it's essential to approach the situation with a constructive mindset.
The Bank recognizes the potential for increased f...
In recent times, there has been a lot of uncertainty, and this has caused some notable changes in the attitudes of people who are looking to buy homes or get mortgages. Two recent reports have highlighted that rising interest rates and affordability are the main factors contributing to these changes...
Early reports from real estate boards across the country suggest spring is bringing renewed life to Canada’s housing market. Activity, on both the buying and selling sides, was up in several major centres in April, compared to March.
House hunters appear to be encouraged by the Bank of Canada’s p...
The latest measure of Canada’s economy suggests that the widely anticipated slowdown is arriving.
Statistics Canada reports that Gross Domestic Product (GDP) grew by a mere 0.1% in February, down from 0.6% in January. GDP is the total value of all goods and services produced by the economy.
Tha...
Canada’s federal banking regulator has released its second, Annual Risk Outlook. The Office of the Superintendent of Financial Institutions (OSFI) is looking at whether to extend its mortgage guidelines, with an eye to reducing risk.
OSFI has identified, what it considers, nine “significant risks...
The spring real estate market is not exactly busting out all over, but there are some green shoots as far as realtors are concerned. Both prices and sales were up modestly across the country in March, according to the Canadian Real Estate Association.
CREA reports the national average home price...
Today, the Bank of Canada held its policy interest rate at 4.50%, a welcome outcome for borrowers after almost a year of constant increases, and a timely confidence-builder for the real estate industry as it enters the spring market.
The Bank also issued its latest Monetary Report with updated ris...
The Canadian economy seems to be ganging-up on the Bank of Canada as it tries to wrestle inflation back to 2.0%.
The latest employment numbers, once again, came in well above expectations. Statistics Canada reports 35,000 jobs were created in March, nearly triple what had been forecast. As a res...
The latest numbers from Statistics Canada show the country’s economy continues to chug along despite very deliberate efforts to slow it down.
Gross Domestic Product (GDP), which measures the total value of all goods and services produced by the economy, rose by 0.5% in January. Early indications...
Another welcome drop in the rate of inflation arrived in February. The annualized rate slowed to 5.2% from 5.9% in January.
The decline is better than expected. However, Statistics Canada points out the drop sounds more dramatic than it actually is, because it is being compared to February of l...
The Bank of Canada has stepped to the sidelines bringing an end to a 12-month string of interest rate increases that pushed its trend-setting Policy Rate from 0.25% to 4.50%. The question now is: How long will the Bank stay on the sidelines?
Right now, there are plenty of market watchers who expe...
The Bank of Canada appears ready to step to the sidelines at its next interest rate setting, on Wednesday. The central bank says it wants to pause its current round of rate hikes and let the effects soak in across the economy. There have been eight increases over the last year, pushing the trend-s...
The current wave of economic uncertainty does not seem to be drowning Canadians’ optimism about the housing market.
The annual Canadian Real Estate Industry Trends Report from Re/Max suggests nearly one-third (32%) of Canadian home buyers and sellers have a positive sense that the market could bec...
Residential Market Commentary - Declines continue. Is the bottom in sight?
Home sales in Canada resumed their downward trajectory in January, reversing a modest up-tick in December.
The latest figures from the Canadian Real Estate Association show that the number of properties changing hands las...
The Bank of Canada’s trend-setting policy rate is fixed until March, and the Bank’s leadership is proclaiming a “conditional pause” in the rate-hiking cycle. That has led to a growing notion that interest rate cuts are coming. Some forecasts say the Bank could pivot from raising, to lowering, by t...
Today, the Bank of Canada increased its overnight benchmark interest rate 25 basis point to 4.50% from 4.25% in December. This is the eighth time since March 2022 that the Bank has tightened money supply to address inflation.
While the headline increase will certainly make news, it is the Bank’s a...
The Economic Club of Canada is our country’s most respected platform for non-partisan dialogue among the world’s most notable thought leaders. Its annual outlook breakfast is its signature event. This year, the breakfast featured four of the country’s top chief economists responding to a series of q...
The Bank of Canada has a target rate for inflation, which is the rate at which the prices of goods and services are expected to increase over time. The target rate is 2%. However, the latest data shows that the inflation rate, measured by the Consumer Price Index (CPI), was 6.3% in December, which i...
Residential Mortgage Commentary - Inflation & interest rates: lead characters for 2023
January 9, 2023 |
A lot of the recent talk in financial and real estate circles has been centering on the possibility of a pause in the Bank of Canada’s aggressive interest rate increases. Some speculate that could happen at the next rate setting, later this month.
The Bank raised rates seven times last year in an...
The colder weather has arrived and there is a definite chill in Canada’s real estate market. The latest figures from the Canadian Real Estate Association show sales, prices and new listing were all lower in November.
Sales slipped 3.3% between October and November and dropped 38.9% from a year ea...
With inflation running at generational highs and interest rates on the rise many debt-strapped Canadians are struggling to reorganize their finances.
A recent survey sponsored by FP Canada (an organization that represents and promotes professional financial planners) suggests “unconscious spending...
The news on the economy, inflation and the future of interest rates has been mixed over the past week or so. Most of the recent analysis has centered on employment.
Market watchers were surprised by the latest job numbers which shot up by 108,000 in October. The unemployment rate did not move ho...
High inflation and increasing interest rates have a lot of Canadians keeping a close watch on their finances and for many, housing is a key concern.
The latest consumer survey by the credit monitoring service Equifax suggests that just 50% of Canadians are comfortable with their personal economic...
The Policy Rate rose by one-half of a percentage point (or 50 basis-points) to 3.75%. The majority of market watchers had predicted a 75 basis-point bump. The smaller than expected increase appears to be an indication the BoC is nearing the end of this rate-hiking cycle. But it is not done yet.
"...
Today, the Bank of Canada increased its overnight benchmark interest rate 50 basis point to 3.75% from 3.25% in September. This is the sixth time this year that the Bank has tightened money supply to quell inflation, so far with limited results.
Some economists had assumed the increase this time...
Another interest rate increase by the Bank of Canada is all but a done deal. Even though inflation, as measured by the Consumer Price Index (CPI), fell slightly to 6.9% in September, it remains well above the Bank’s 2.0% target.
Price relief at the gas pumps gets the credit for the decline but s...
Since interest rates started climbing back in March there has been a lot said about declining home prices in Canada. Broadly speaking, market watchers have been forecasting a 20% to 25% drop – from the February peak – in the average price by the end of this year.
Those are dramatic numbers, but t...
Residential Mortgage Commentary - Home ownership on hold Uncertainty begets hesitancy and that is painfully true in the housing market right now. Two of Canada’s big realtors are out with surveys that suggest the desire for home ownership remains strong, but it will a dream deferred for many buyers...
Inflation and rising interest rates are having a very real affect on Canadian spending habits and housing affordability according to a pair of new reports.
The latest survey by the Angus Reid Institute suggests that nearly 90% of Canadians are “tightening their belts” as a result of rising costs,...
Home sales in Canada declined for a sixth straight month in August according to the latest report from the Canadian Real Estate Association. Compared to July the number of properties changing hands dipped by a modest 1.0%, the smallest drop so far. Year-over-year, sales are down 24.7%.
Home pric...
As expected the Bank of Canada has raised its trend setting interest rate. It jumped by another, outsized, three-quarters of a percentage point to 3.25%. This has triggered a series of knock-on effects in the lending and mortgage markets.
The move puts the BoC’s policy rate above its self-declar...
Today, the Bank of Canada increased its overnight benchmark interest rate 75 basis point to 3.25% from 2.50% in July. This is the fifth time this year that the Bank has tightened money supply to combat inflation. While the latest increase was comparatively smaller than the move made in July (100 bas...
Residential Mortgage Commentary - When will the BoC pause interest increases?
September 7, 2022 |
September has arrived and the central bankers are back from their summer vacations. With that they will resume setting interest rates and fighting inflation.
The Bank of Canada, the U.S. Federal Reserve and the European Central Bank are all making rate announcements this month. Market watchers ar...
Aug 17, 2022
Sales are slowing, prices are falling, interest rates are rising and affordability is getting worse in the Canadian housing market.
The Bank of Canada’s latest Housing Affordability Index (HAI), for the first quarter of this year, shows households now have to dedicate 42.8% of dispo...
Aug 10 2022 The lazy, hazy, crazy days of summer have been hot across much of Canada and consumer sentiment seems to be wilting.
Recent data from the non-profit research foundation, Angus Reid Institute, suggests three-quarters of Canadians feel now is a bad time to make a major purchase. Cars, t...
Residential Mortgage Commentary - Despite challenges, desire to own is still strong
August 3, 2022 |
Aug 3, 2022
The current situation in the Canadian housing market has both buyers and sellers stepping to the sidelines. But underneath all of the recent shuffling there still seems to be a firm, foundational desire to own a home.
The annual affordability survey conducted by RE/MAX suggests risi...
Crystal-ball gazing to predict the economic future can be a murky business. And some of the latest polling of Canadian economists shows just how opaque the view can be. The Globe and Mail surveyed 15 prominent Canadian economists about what, they think, is going to happen.
There is general agree...
Today, the Bank of Canada increased its overnight benchmark interest rate 100 basis points to 2.50% from 1.50% in June – the largest single increase in almost 25 years. This is also the fourth time this year that the Bank has acted to tighten money supply to combat the possibility of an entrenched i...
Another one of the country’s big financial institutions has produced a survey that suggests Canadian homebuyers and homeowners are unclear about what is happening with rising interest rates. Last month it was one of Canada’s major insurance companies. Last week it was one of the big banks.
While...
With inflation and interest rates continuing to rise there are renewed concerns about housing affordability in Canada.
Statistics Canada pegged the inflation rate at 7.7% in May, its highest level in almost 40 years. That set the stage for further speculation that the Bank of Canada would likely...
The outsized interest rate hike by the American central bank, last week, is sending ripples through Canada’s housing market.
The U.S. Federal Reserve took the very rare step of boosting its trend-setting rate by 75 basis points at its June 15th setting. Federal Reserve Chair Jerome Powell also se...
There is a growing sentiment among market watchers that the Bank of Canada’s current fight against inflation is putting home prices in the crosshairs.
In the release of the Bank’s annual Financial System Review, Governor Tiff Macklem mentioned a desire for “moderation” in the housing market severa...
Inflation and consumer confidence are running in opposite directions in Canada.
The April figures from Statistics Canada put the annual inflation rate at 6.8%, up from 6.7% in March and now at its highest level in 31 years. Key drivers of the increase include food and shelter costs. Food rose by...
With interest rates now on the rise, two perennial questions have popped up again: How much? How fast?
Traditionally the Bank of Canada has used 25 basis points, or one-quarter of a percentage point, as the standard increment for any interest rate move up, or down. Occasionally the Bank will mo...
Recent Posts
