Canada’s inflation rate drops again
Canada’s inflation rate fell to 3.1% in October, still above the Bank of Canada’s target rate but down notably from its September reading of 3.8%. That slowdown was caused mainly by plummeting gas prices, with the cost of fuel at the pump falling by 7.8% compared with the same time last year. When gas price fluctuations were taken out of the equation, the consumer price index (CPI) grew by 3.6% last month, Statistics Canada said, down slightly from 3.7% in September. Unsurprisingly, skyrocketing mortgage interest and rent costs continue to contribute strongly to year-over-year price growth, while grocery prices also …
Canadian lending growth slows amid economic uncertainty
The conservative lending outlook of large Canadian financial institutions was a chief factor behind sluggish growth in the national debt market in 2023’s third quarter, with the pace of year-over-year loan issuance slowing compared with the prior year. Accounting firm BDO Canada’s newly released debt market report for Q3 showed that year-to-date loan issuance totalled $1.36 trillion by the third quarter – but a 5% increase in loan issuance was down significantly over 2022 levels. Canadian banks have taken an increasingly cautious approach to a turbulent economic climate, particularly over the past several months, according to Shilpa Mishra (pictured top), …
How severe could the upcoming mortgage renewal shock be?
Canada will see nearly $1 trillion in mortgage renewals due by 2026, which could impel a massive increase in average monthly mortgage payments, according to Dylan Smith, senior economist at think-tank Rosenberg Research & Associates. In turn, the increases could lead to what Smith described as a “demand shock” that would place significant stress “on the housing market in particular and the economy in general.” “Given that the vast majority of fixed-rate mortgages and fixed-payment, variable-rate mortgages had locked in low interest rates before or in the early stages of the 2022/23 hiking cycle as consumers shifted away from fully …
Has the recent home listings surge eased Canada’s housing supply crisis?
While Canada’s new residential resale listings have increased for the six straight months up to September 2023, their levels have only returned to their long-term average, according to TD economist Rishi Sondhi. “New resale listings have certainly increased, [but] they haven’t gone up so much as they’ve returned to a kind of normalcy,” Sondhi said. “The Bank of Canada has since paused its hiking campaign, but the elevated interest rate backdrop has hit home sales in Ontario hard.” Crucially, the current pace of housing construction is struggling to keep up with Canada’s inflation-fuelled population growth. “When you look at how housing …
Interest rates, inflation weighing down on consumer spending: RBC
Elevated policy rates and tight financial conditions continue to hamper consumer spending in developed economies like Canada, according to a new analysis by RBC Economics. “Evidence is mounting that economic activity is softening and that inflation will continue to slow,” RBC said. “Central banks are willing to step in again to bring inflation under control.” At this point, however, additional hikes are looking much less likely, “particularly in Canada where key indicators like per-capita GDP, and the unemployment rate are already tracking closely to early stages of historical recessions,” RBC stressed. A major element that will determine the Bank of Canada’s …
BoC to begin rate cuts by 2024’s second quarter, market players say
Canadian market players are anticipating that the central bank will begin cutting its benchmark policy rate on April 2024, according to a new survey by the Bank of Canada. The much-expected retreat from the rate’s 22-year high of 5% will start a month later than previous consensus forecasts, the BoC said. The median projection of the poll of 27 financial market players pegged interest rates declining to 4% in Q4 2024. The median inflation projection pegged a drop to 2.2% by the end of 2024, coupled with a 1.2% annual increase in the gross domestic product. In its recently released preliminary …
How can mortgage brokers prepare for the upcoming renewal wave?
The coming six to 24 months are set to mark an important point in the mortgage journey of scores of borrowers across Canada, with renewals arriving at a time of significantly higher interest rates than the years immediately before and during the pandemic. Mortgage professionals gearing up for that impending flurry can maximize their opportunities in the market, according to nesto principal broker and co-founder Chase Belair (pictured top), by ensuring their renewal process is comprehensive and optimized ahead of what’s sure to be a busy period for brokers. He told Canadian Mortgage Professional that clear communication with clients and a …
Canada’s unemployment rate rises again
Canada’s unemployment rate ticked higher in October, rising to 5.7% as the national economy continued to cool. New figures released by Statistics Canada showed that the labour market added 18,000 jobs last month in a clear sign that the Bank of Canada’s efforts to tap the brakes on economic growth are having an impact. The October jobs figures mean that the national unemployment rate has now increased four times in the past six months, with last month’s rate up from 5.5% in September. Employment fell in wholesale and retail trade and manufacturing last month, while construction and information and culture …
Expected wave of mortgage renewals contributed to latest rate hold: Bank of Canada
The large number of mortgages coming up for renewal at higher rates is one reason why the Bank of Canada decided to leave its target rate unchanged at 5.00% last month. Bank of Canada Governor Tiff Macklem made the comment Wednesday while testifying before the Standing Senate Committee on Banking, Commerce and the Economy. “One of the important reasons why we held our policy rate at 5% is that we know that those renewals are coming…we know that there’s more to come from what we’ve already done,” Macklem said. “Is there a risk that it bites more than we think? Yes, …
Why education is critical in Canada’s private mortgage space
The recent introduction of new educational and regulatory requirements for Ontario’s private mortgage brokers is a welcome development that should herald more changes in this direction, according to Joe White, president and owner of the Real Estate and Mortgage Institute of Canada. Especially when compared to the relatively scattered regulatory landscape of decades past, “over time, things have gotten much better,” White told CMPTV. “The environment, the regulators, they have done a very good job at protecting consumers.” At the same time, “there’s a lot more that needs to be done, a lot more education,” White stressed. “Is there a …
