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Hot August for home sales

Canada’s housing market has yet to take its summer vacation.  August numbers from the Canadian Real Estate Association show sales rose 33.5% compared to a year ago and were up more than 6% from July’s record setting pace. Nearly 59,000 properties changed hands last month, making it the busiest August ever. Prices took a hike in August as well.  The national average rose 18.5% year-over-year to $586,000.  As usual, Toronto and Vancouver had an outsized influence on the number.  When those two markets are factored out the national average price drops to $464,000, up 18% year-over-year. CREA’s Home Price Index, which compensates for anomalies like Vancouver and Toronto, posted a 9.4% y-o-y increase. The sales-to-new-listings ratio improved slightly in August, easing to 69% from more [...]

By |2020-09-24T17:14:52+00:00September 24th, 2020|Uncategorized|Comments Off on Hot August for home sales

Debt ratio dips, but not for everyone

One of the biggest vulnerabilities in the Canadian economy got a bit smaller in the second quarter. Statistics Canada reports that the amount of debt-to-household-income dipped to 158.2%, from 175.4% in the first quarter.  So, for the peak months of the COVID-19 shutdown, Canadian households owed $1.58 for every dollar of disposable (i.e., after tax) income.  Under normal circumstances that would be good news.  But the StatsCan report also shows that the actual, total amount of debt did not change very much. Overall, credit market debt totaled $2.33 trillion at the end of Q2, with $1.55 trillion in mortgage debt and $779 billion in consumer credit and non-mortgage loans. On the other side of the ratio, incomes did increase slightly but that was chiefly because [...]

By |2020-09-15T15:09:47+00:00September 15th, 2020|Uncategorized|Comments Off on Debt ratio dips, but not for everyone

Debt and delinquencies up, but under control

A strong rebound in the housing market has helped push Canadian consumer debt to nearly $2-trillion. Credit monitoring firm Equifax says consumer debt rose 2.8% in the second quarter, compared to the same period in 2019.  Equifax says slower mortgage paydowns, refinancing, deferrals, better sales and high prices have propped-up mortgage debt levels. At the same time consumer, non-mortgage, debt has dropped.  Not surprisingly, consumers reduced their use of credit cards, lines of credit and auto loans during the economic slowdown caused by the coronavirus pandemic. Also, not surprisingly, the use of credit support mechanisms, like mortgage deferrals, have been wide spread during the pandemic.  Equifax says more than three million consumers are using, or have used, some form of payment accommodation since February. Consumers [...]

By |2020-09-11T16:19:00+00:00September 11th, 2020|Uncategorized|Comments Off on Debt and delinquencies up, but under control

Bank of Canada maintains commitment to current level of policy rate, continues program of quantitative easing

The Bank of Canada today maintained its target for the overnight rate at the effective lower bound of ¼ percent. The Bank Rate is correspondingly ½ percent and the deposit rate is ¼ percent. The Bank is also continuing its quantitative easing (QE) program, with large-scale asset purchases of at least $5 billion per week of Government of Canada bonds. Both the global and Canadian economies are evolving broadly in line with the scenario in the July Monetary Policy Report (MPR), with activity bouncing back as countries lift containment measures. The Bank continues to expect this strong reopening phase to be followed by a protracted and uneven recuperation phase, which will be heavily reliant on policy support. The pace of the recovery remains highly dependent on the path of the [...]

By |2020-09-10T14:53:24+00:00September 10th, 2020|Uncategorized|Comments Off on Bank of Canada maintains commitment to current level of policy rate, continues program of quantitative easing

A Big Fall, But a Bounce off the Bottom

The Canadian economy took a record setting hit in the second quarter. Gross Domestic Product for April, May and June shrank by nearly 40%, on an annualized basis. The plunge was not a surprise for analysts. Forecasts had Q2 being the worst for the pandemic lockdown economy, and the projections were for an even bigger decline. Taking a look at the actual numbers (not the annualized extrapolation) softens the blow a bit. The second quarter saw GDP contract by 11.5%. Statistics Canada had forecast a 12% contraction. StatsCan is calling for a return to growth in the third quarter, and we saw some signs of that in June. Compared to May, June GDP recovered by 6.5% – the biggest monthly bounce-back on record. The trend [...]

By |2020-09-01T15:05:18+00:00September 1st, 2020|Uncategorized|Comments Off on A Big Fall, But a Bounce off the Bottom

Just delayed, not dormant

Canada's real estate market made a remarkable recovery in July and there are expectations it will continue for another couple of months. Back in the spring real estate was heading into one of the tightest markets in the past 20 years.  Then the coronavirus pandemic was declared, governments imposed lockdowns and the economy ground to a halt, hobbling home sales.  April saw some of the lowest numbers ever recorded.  But it roared back to life in July. "Things may have gone quiet for a few months, but ultimately the market we’re seeing right now is mostly the same one we were heading into back in March," says Shaun Cathcart, CREA's Senior Economist. July sales shot up more than 30% compared to a year ago and [...]

By |2020-09-01T15:02:43+00:00September 1st, 2020|Uncategorized|Comments Off on Just delayed, not dormant

Feds seem split on mortgage policy

Buyers, brokers and lenders can be forgiven if they see the federal government’s attitude toward mortgages heading in two different directions at once.  The federal housing agency is calling for one thing while the Bank of Canada appears to be clearing the way for the opposite. Earlier this month the CEO of Canada Mortgage and Housing Corporation, Evan Siddall, sent a letter to banks, mortgage lenders and private mortgage insurers calling on them to tighten their requirements for borrowers.  He asked lenders to stop offering higher-risk mortgages to over-leveraged first-time buyers in the name of Canada’s future economic health and for the sake of CMHC itself. “We are approaching a level of minimum market share that we require to be able to protect the mortgage [...]

By |2020-08-18T15:02:49+00:00August 18th, 2020|Uncategorized|Comments Off on Feds seem split on mortgage policy

Homeowners are shaking off COVID concerns

Mortgage Professionals Canada has launched a series of new surveys designed to gauge the sentiment of Canadians toward home ownership during the COVID-19 pandemic. The survey will be run four times over 24 weeks.  It examines four main aspects of home ownership and home buying sentiment in Canada: -       How Covid-19 has affected employment and incomes -       Impacts on expectations about buying homes -       Attitudes and expectations on topics related to housing markets and mortgages -       Opinions about the mortgage deferral program. The first results were released last week.  They suggest that more than half of current home owners (57%) do not feel that their employment situation has been severely impacted by COVID-19.  Many others expect any changes or impacts will be short-term.  The report [...]

By |2020-08-12T20:19:29+00:00August 12th, 2020|Uncategorized|Comments Off on Homeowners are shaking off COVID concerns

Market commentary: Improving, but fragile

Canadians appear to be feeling pretty good about their personal finances as we head into the sixth month of disruptions and restrictions caused by the coronavirus. A recent poll by the Angus Reid Institute suggests 80% of Canadians rank their financial situation as “good” or “great”.  Back in April that number was 73%. However, on the other side, a significant group of about 20% call their circumstances “bad” or “terrible”.  That number climbs to 30% among those who are receiving Employment Insurance or CERB payments. The pollsters describe the overall situation as “improving but fragile”. The caution among consumers becomes clear when their buying intentions are analyzed.  Regardless of how they feel about their finances, 56% do not see the next 12 months as a [...]

By |2020-08-06T17:33:01+00:00August 6th, 2020|Uncategorized|Comments Off on Market commentary: Improving, but fragile

Good news: Inflation Rises

In a sign that the economic tide is turning, Canada’s inflation rate moved higher in June.  Statistics Canada puts the annual inflation rate at 0.7% for the month.  That is more than double the 0.3% rate forecast by economists, and it is a significant reversal of the 0.4% drop in inflation in May and the 0.2% decline in April. Most of the increase came through higher prices for cars, clothing, energy and food. While runaway price increases are bad, moderate, reliable inflation is good.  It encourages spending and keeps money flowing through the economy.  Deflation – particularly if it persists – is bad because consumers tend to stop spending, knowing that they will be able to make their purchases later for less.  That keeps money [...]

By |2020-07-29T17:49:36+00:00July 29th, 2020|Uncategorized|Comments Off on Good news: Inflation Rises
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