Recessionary warnings from Apple and China, weak U.S. manufacturing data and a plunging stock market accelerated the market rate collapse today. Canada’s 5-year bond yield almost touched 1.75%, where it hasn’t been since 2017. The last time yields fell this fast was March 2015, while the Bank of Canada was in the midst of cutting rates. This is not your...
Market rates are diving again. This morning the 5-year bond yield reached its lowest point since 2017. Investors keep rushing into safe assets (i.e., buying bonds) as the stock and oil markets continue selling off. Oil prices have slid from $75+ in October to under $45 today. That virtually eliminates any chances of a Bank of Canada hike this month....
Few years have altered the mortgage landscape like 2018. Canada experienced what is arguably the biggest mortgage rule change of all time (OSFI’s B-20 and its “stress test”). It was a policy that hammered mortgage growth to almostthree-decade lows, slashing buying power over 20% for uninsured mortgagors and forcing roughly 1 in 7 borrowers to change or abandon their mortgage...
There’s a concerning new trend with variable rates. Discounts are shrinking. In the last few weeks, at least a dozen relevant lenders have shrunk their discounts from prime rate—by anywhere from 5 to 20 bps. This includes discretionary mortgage rates at some banks. How Convenient Wouldn’t you know it? Just as variable rates start attracting more consumer interest, lenders start...
RBC released its quarterly housing affordability report last week. Once again, it overstated mortgage un-affordability relative to prior decades (aspreviously noted). But it did have some points worth pondering. Among them: “Mortgage rates increasedfor a fifth straight quarter and accounted for the entire” drop in [RBC’s] affordability measure, the bank said. With rate-hike expectations dropping like a stone, our sense...
Canada’s 5-year bond yield sank to an 11-month low Wednesday as the Federal Reserve hiked U.S. rates again. But the Fed wasn’t as optimistic on the economy as some had hoped. In turn, it’s now projecting just two rate hikes in 2019, versus the prior estimate of three. On this side of the border, average core inflation dipped to 1.9%...
It’s sort of counterintuitive that making banks safer often costs you more as a borrower, but that’s what may happen in this case. Canada’s banking regulator (OSFI) has raised the minimum capital that banks must maintain…again. And there’s a good chance banks could take it out on mortgage borrowers, eventually. Here’s What Happened Back in June, OSFI created the “Domestic...
Canada’s debt situation appears to be getting better…if you just look at mortgages. But something sinister lurks beneath the surface. And it’s made of plastic. Indebtedness has been outgrowing incomes in this country, despite stringent new mortgage restrictions.Canadians now owe $1.78 in credit market debt for every dollar of household disposable income, just under the record high. And we keep...
And that’s as the government intended. Albeit, the deceleration may be less pronounced than some might expect, given all the recent headlines about this year’s real estate slowdown and mortgage rule tightening. Here are fresh new mortgage stats from CMHC and Equifax (as of second quarter of 2018): Number of active mortgages: 5.98 million This number essentially stayed the same...
For years now, policy-makers have been reining in government backing of the mortgage market, ostensibly to “reduce taxpayer risk.” Meanwhile, the riskiest mortgages in the prime owner-occupied market get the best mortgage rates. A “high-ratio” default insured borrower with only 5% down, for example, can fetch5-year fixed ratesat 3.29% or less. Yet, an uninsured borrower with four times the equity...
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