Categories for Economic Analysis

Who Repealed the Law of Supply and Demand?

. If you want to pay less mortgage interest, it helps to have a cheaper home. If you want a cheaper home, it helps if there are more homes than people want to buy. Cue the Economics 101 reference. Yet, there are some who’d like us to believe that demand, not supply, is the problem. As if not having enough...

The Striking Rate/Stock Divergence Continues

—The Mortgage Report: Sept. 2— Here’s something that baffles even experienced financial professionals. The U.S. stock market is exploding to all-time highs while bond yields trudge near record lows. It’s a question investors are asking all the time: are stocks signalling a growth recovery that will lift yields higher? The mortgage relevance is clear: if U.S. yields pop, so do...

Did the BoC Just Unleash the Bulls?

—The Mortgage Report: Weekend Edition— It Might as Well Have: On Wednesday, the Bank of Canada threw caution to the wind and changed its playbook. It pledged not to hike rates until “the 2 percent inflation target is sustainably achieved.” The significance of that statement is now sinking in and here’s why. Normally, the Bank of Canada doesn’t wait for...

Rates to Stay Low as Jobs Won’t Recover for a Decade: CBO

—The Mortgage Report: July 3— Long Road Back for Jobs: Avid rate watchers all want to know the same thing: how long will unemployment stay elevated? The answer to that is essential to knowing how long rates could remain in a trough. On Thursday, we got a sobering projection from a reputable source. The non-partisan Congressional Budget Office (CBO) says...

CMHC Bearish on Home Prices, But…

—The Mortgage Report: June 23— Prices Will Fall, Unless They Don’t: “Short-term uncertainty will lead to severe declines in sales activity and in new construction,” CMHC reported Tuesday. “House prices will fall as well and are unlikely to recover over the horizon of this report (through 2022).” But that statement is a tad general. It would be a mistake to...

One of Three Things Must Occur for Record Low Mortgage Rates

The Mortgage Report – May 31 And One of Them’s Bad: If you’re rooting for lower mortgage rates, one of the following must happen: Bond yields must drop to record lows Bond yields steer fixed mortgage rates and are largely a reflection of Canada’s economic (inflation) outlook Rooting for economic pain—so mortgage rates fall—isn’t exactly a patriotic sentiment, so we’d...

Ominous Data From CMHC

The Mortgage Report – May 19 5% Down Payments at Risk? Canada’s housing agency says it must “avoid exposing young people” and “taxpayers” to “amplified losses that result from falling house prices.” CMHC CEO Evan Siddall said today, “Unless we act, a first-time homebuyer purchasing a $300,000 home with a 5% down payment stands to lose over $45,000 on their...

Historically Bad Housing Numbers

Mortgage Report – Weekend Edition Prices Tumble in April: The national average home price in Canada has plunged almost 10% in one month (April). That’s never happened before in CREA data going back to 1980. The next closest month-over-month drop was -7.6% in April 1989. The data was skewed partly by the GTA’s 11.8% nose-dive. Home Inventories Skyrocket: The total...

Stress Test Rate to Drop Next Week

Mortgage Report – May 14 De-Stressing: Call out the marching band, BMO’s posted 5-year rate cut today should ease the government’s mortgage “stress test,” effective next week. As it stands, the minimum stress test rate will likely fall from today’s 5.04% to 4.99%. It’ll mark the first time since January 2018 (when OSFI’s stress test began) that this benchmark rate...

The “News is Getting Better” Edition

Daily Mortgage Report – May 8 Unemployment Surprise: Unemployment is a key determinant of home prices. And while it may seem hard to put a record 2 million lost jobs (StatsCan’s estimate for April) in a positive light, when economists were predicting double that amount, it’s a relief. Canada’s unemployment rate surged to 13%, near the highest in modern data...