https://tradingeconomics.com/united-states/jobless-claims
General
October Jobs Report
Posted by: Chris Cavaghan
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Bank of Canada holds rate
Posted by: Chris Cavaghan
https://us7.campaign-archive.com/?e=f7fc7209d6&u=e22472ccf910e7bde7d3d0632&id=52bc172bed
Home Sales Dipped Once Again Last Month In The Wake of Two Consecutive BoC Rate Hikes
Posted by: Chris Cavaghan
@DrSherryCooper https://dominionlending.ca/economic-insights/canadian-home-sales-dipped-in-august-following-boc-rate-hikes
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July Job Numbers Hint No More Rate Hikes
Posted by: Chris Cavaghan
https://dominionlending.ca/economic-insights/weaker-than-expected-jobs-report-portends-no-rate-hike-by-boc
Controlling Inflation
Posted by: Chris Cavaghan
https://www.theglobeandmail.com/business/article-bank-of-canada-interest-rates-consumer-spending/
Inflation Down
Posted by: Chris Cavaghan
https://dominionlending.ca/economic-insights/cpi-inflation-falls-to-2-8-inside-the-bocs-target-range
weakening housing markets pose a risk for the canadian economy
Posted by: Chris Cavaghan
On April 18, Canada’s national banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), released its second Annual Risk Outlook (ARO), outlining what it believes are the most significant headwinds facing the Canadian financial system – and what the regulator plans on doing about it.
According to the report, the severe downturn in real estate prices and demand following their significant rise during the pandemic was the most pressing issue. OSFI acknowledges that the housing market changed significantly over the past year, and house prices fell substantially in 2022. The regulator is preparing for the possibility that the housing market will experience continued weakness throughout 2023.
The report also highlights how the Bank of Canada’s rate hiking cycle has impacted borrowers’ ability to pay down mortgage debt, with the central bank increasing its benchmark cost of borrowing eight times between March 2022 and January 2023, bringing its Overnight Lending Rate from a pandemic low of 0.25% to 4.5% today.
Mortgage holders may be unable to afford continued increases in monthly payments or may experience a significant payment shock at the time of their mortgage renewal, leading to higher default probabilities. Given the considerable impact of real estate-secured lending (RESL) activities in the Canadian financial system, a housing market downturn remains a critical risk.
OSFI also highlights the dangers posed by more borrowers hitting their trigger rates; according to a National Bank study, eight in ten variable fixed-payment borrowers who took their mortgages out between 2020-2022 are impacted. Lenders have addressed this by extending the amortization period for affected borrowers, but OSFI says this is just a temporary solution.
Borrowers and lenders alike will need to pay the price in due course, as OSFI points out. The growth in highly leveraged borrowers increases the risk of weaker credit performance, potentially leading to more borrower defaults, a disorderly market reaction, and broader economic uncertainty and volatility.
These recent comments strengthen expectations that stricter mortgage rules could be in the cards before the year ends. Back in January, OSFI announced it was considering making tweaks to its Guideline B-20, which outlines borrowing and risk requirements for banks underwriting residential mortgages and qualification rules for borrowers, including the mortgage stress test.
OSFI may increase borrowers’ debt servicing ratio requirements, making it more challenging for those with larger debt loads to qualify for a mortgage. It is also considering limiting how many of these higher-leveraged borrowers banks can have in their portfolios, potentially leading to fewer borrowers making the cut at A-lenders and turning to the B-side and alternative mortgage market.
Finally, OSFI may change the threshold criteria for the mortgage stress test. Currently, borrowers must prove they can carry their mortgage at a rate of 5.25%, or 2% above the one they’ll receive from their lender, whichever is higher. However, following last year’s rapid rate increases, the 5.25% threshold has become obsolete, with all current market rates above 3.25%.
OSFI wrapped up consultations on these potential changes late last week and will release a report on its recommendations. Borrowers should keep an eye out for changes in the months to come.
Canadian Home Prices
Posted by: Chris Cavaghan
Home prices continued to decline across the country in July, according to Canadian Real Estate Association data released Wednesday.
The Ottawa-based group said the average price of a home sold last month was $353,147, a decline of 2% from a year earlier. The year-over-year decline in June was 0.8%.
“Prices are off their recent peaks in Greater Vancouver and Greater Toronto, but remain above year-ago levels in most markets,” the group said in a release.
Activity was up from the previous month in Kingston, Ont., Chilliwack, B.C., and Calgary, offset by fewer sales in Toronto, Newfoundland and Labrador, and Edmonton. Actual sales across the country were up 3.3% overall from a year ago.
Much of the decline in the national average can be blamed on Vancouver’s volatile market.
The city’s average sale price dropped more than 12% to $667,462 from $761,763 last year.
A senior economist at Royal Bank of Canada said the city’s lack of affordable homes is pulling down the market.
“We still believe that Vancouver is probably the most stressed market right now because of extremely poor affordability,” said RBC economist Robert Hogue.
“Plot the resale figures over the last year or so and you see a fairly significant decline in resales, so I think that this does the fit the definition of correction,” he said.
But a B.C. real estate economist said speculation of a market correction in Vancouver is unwarrwanted, as the economy continues to heal.
“Typically to see a price correction you need to see a macroeconomic shock — recession, very high unemployment, for example — or you need to see interest rates go up very dramatically in a short period of time. Both of those we don’t see on the horizon,” said Cameron Muir, the British Columbia Real Estate Association’s chief economist.
He said one-third of the market is first-time buyers, of which the market has no shortage.
“As long as we have first-time buyers that can get into the market to buy the homes from the people who are moving up, moving over, moving down, then the market should remain healthy,” Mr. Muir said.
Meanwhile, Toronto experienced a cooling, with prices increasing at a slower rate of 3.9% year over year, which BMO economist Douglas Porter called a “just-right” pace in a note Wednesday.
Mr. Hogue said the market across Canada is moderating and low resale numbers in the past three months were a result of compensation for a strong winter market and do not necessarily spell an impending pronounced correction.
“We believe that much of this easing was payback for a stronger-than-expected start to the year when warmer than usual weather this past winter and mortgage rate promotions by financial institutions provided a temporary boost to activity,” he said.
The Canadian Real Estate Association said tighter mortgage and lending regulations seemed to have cooled Canada’s national housing market, even in the bigger markets.
“Recent changes to mortgage regulations were widely expected to temper sales and prices in Greater Toronto and Greater Vancouver, and the data released today confirms that,” said Wayne Moen, president of the association, in a statement.
Finance Minister Jim Flaherty said Wednesday it may be too early to determine the extent of the impact of mortgage insurance reform, but that market moderation is a good thing.
“We want to avoid, obviously, the kind of thing that happened in the U.S. market, the Irish market and other markets in the Western economies with respect to their housing. So we want to have moderation,” he told The Canadian Press
http://business.financialpost.com/2012/08/15/canadian-home-prices-falling-steadily/