Mortgage Blog - Canadian Economy

Canada Sees a Drop in Inflation in June

July 29, 2010 by Dania Spillett

Inflation dropped in June as the prices of gasoline, clothing and footwear all declined from where they were last year at this time. However, I wouldn’t be surprised if inflation actually increases slightly during the coming months due to the newly implemented HST in Ontario and British Columbia.

Canada’s core inflation rate also dropped from 1.8% to 1.7% in June 2010. Some speculators are worried that Canada may actually be slipping into a deflationary period but, it seems as though the Bank of Canada’s Governor Mark Carney plans to battle this slowing inflation by gradually ...

Global Summit in Question

June 24, 2010 by Dania Spillett

With the G8 and G20 summits just around the corner there has been much debate about whether these international meetings are necessary and whether the cost of hosting the meetings has gotten to an unreasonable level. Personally I believe that the summits are valuable on a global scale but as one news article states, it needs to be a “constant and regular gathering tuned to a world with unprecedented changes and currents underway.” Because of the constantly changing and revolving nature of the world and its economies, countries need a way to tie themselves together in a collaborative fashion. PricewaterhouseCoopers ...

Dip In Inflation Won't Stop Rate Hikes...But It's For Your Own Good, Dear...

June 23, 2010 by First Foundation

The latest Statistics Canada report, released Tuesday, shows April retail figures coming in lower than those posted in March. Canada’s annual inflation rate dropped to 1.4 per cent in May from 1.8 per cent in April, mainly due to falling gas and clothing prices. The cost of a new golf shirt and a pair of flip flops should continue to drop, just like the cost of the gas that will get us to Walmart to buy them. And we’ll be glad of that because the money we save on buying our board shorts and ball caps ...

The Wealth Destroying Effects of Inflation

June 10, 2010 by Dania Spillett

Maxime Bernier wrote a guest column for the Financial Post on Tuesday which comments on the interference of the central bank in the Canadian economy. He suggests that the Bank of Canada’s move to increase interest rates is more about controlling money supply rather than leaving the market free to run its natural course. In a true free market, of a more capitalist society, the interest rate would not be changed by monetary policy, rather it would “be determined by the demand for credit and supply of savings.”

Bernier also brings to our attention that the central banks are ...

Canada Wins in Bank Tax Debate

June 7, 2010 by Dania Spillett

The question of whether or not to implement a global bank tax was up for debate between the G20 finance ministers this weekend. Jim Flaherty, Canada’s Finance Minister, strongly represented the opposing side as he spoke out against the bank tax. In the opinion of many Canadians, Canada should not be subjected to an additional tax just because other countries’ governments suffered bank failures. If an agreement was not made and a global bank tax was implemented, Canadians would be punished even after our banks managed to stay afloat during the financial crisis and recession. Ultimately, the G20 members ...

Housing Collapse Not Likely

May 27, 2010 by Dania Spillett

With all the instability in the market due to the European financial crisis, many people are worried that Canada will also experience a hit to the economy and that the housing market might also feel the effects. However, Mario Toneguzzi’s article in the Calgary Herald suggests that this housing collapse is not likely to occur.

The Canadian Real Estate Association (CREA) noted that “the relationship between average price and income has recently been cited as portending a U.S.-style correction in Canadian home prices, however, such warnings ignore the longer-term relationship between prices and income, and disregard typical ...

Canadian Economic Position

May 25, 2010 by Dania Spillett

Greg Quinn wrote an article in the Bloomburg Businessweek discussing how Canada and other resource rich countries are currently being favored by global recovery amidst the European sovereignty-crisis. The fact that Canada has experienced the fastest growth in a decade supports this theory which in turn, has helped its currency appreciate, specifically against the US dollar and the Euro.

The European sovereignty-debt crisis has actually lessened the urgency for Canadian policy makers to increase interest rates and Bank of Canada Governor Mark Carney doesn’t sense any hurry to start tightening the monetary policy. As Sibonney and Kwan wrote in ...

Canadian Personal Debt Load

May 12, 2010 by Dania Spillett

The European crisis and rising Canadian interest rates have remained a central focus in the news and many have taken the chance to reflect on the consequences of the high debt to income ratios in Canadian households. CBC News released an article yesterday which states that Canadians actually have the worst debt to income ratio among 20 advanced countries in the Organization for Economic Co-operation and Development.

A large number of consumers decided to take advantage of the rock bottom interest rates which were offered during the recession in order to stimulate the economy. However, the problem is that people ...

Housing Bubble and Mortgage Policy Controversy

February 12, 2010 by Gordon McCallum

The last week or so has seen a huge increase in the number of articles being written about mortgage policies in Canada. Everyone seems to have an opinion on everything from government policy, CMHC policy (these are not necessarily the same thing), bank lending policies, whether we’re in a housing bubble, not in a housing bubble, or on the verge of a housing bubble, and whether or not we’re headed for US-style mortgage and housing meltdown.

So? Any thoughts?

I’ll try to present as many of the better arguments below, but first, I thought I’d give ...

No Undue Risk - Part Two

January 14, 2010 by Gordon McCallum

In a follow-up to yesterday’s report from CAAMP showing that consumers in Canada are not taking undue mortgage risk, there’s a very interesting article with quotes all around from bank presidents, economists, et al furthering the suggestion that Canada can avoid a US-style mortgage meltdown.

You can read the Toronto Star mortgage article here

What do you think?

Some of the more interesting quotes from the article include:

Will Dunning: “The degree of risk from rising mortgage rates appears to be small and manageable.”

“The reality is that in the past, interest rates have played only a minor ...

Canadian Home Owners Not Taking 'Undue Risk'

January 13, 2010 by Gordon McCallum

The Canadian Association of Accredited Mortgage Professionals has released the results from a survey showing that Canadians are making good, responsible financial decisions when it comes to their mortgage borrowing.

This Financial Post article goes into some more detail, and basically backs up the findings we’ve had too.

I did a quick report on our system and over the past three years the average loan-to-value ratio (LTV) for our clients was about 65.5%. Not bad – especially considering how many mortgages for first-time buyers we do. Those usually involve lower down-payments and higher LTVs.

Keep it up Canada! Let ...

Canadian Housing Market Improving

August 26, 2009 by Gordon McCallum

Great news according to the Financial Post. Many top economists are pointing to recent data that shows house prices improving in Canada and the United States.

Not only are housing prices going up in these markets, but the rate of change for price changes is also increasing, which is an indicator of more activity in the market.

It’s great to hear these economists using terminology like “turned the corner” and “the worst is behind us”. The question I have is, will it last if mortgage interest rates go up? I feel like the majority of demand for homes is ...

Paint the Town White - Canadian Economy Recovering

July 26, 2009 by Gordon McCallum

After some very bleak reports in the media surrounding the world’s economic crisis, it seems that Canadian markets are finally beginning to show a bit of color. And that color is white.

Although, we consider unemployment rates, GDP and trade statistics to be common indicators of a country’s economic health, economists also track the sales of certain goods to help them understand how the economy is faring. Evidently, one of these goods is titanium dioxide, the substance that creates white paint with which manufacturers use to paint all our durable goods such as: houses, airplanes, washing machines and ...

Canadian Housing to Rebound in 2010

May 19, 2009 by Gordon McCallum

CMHC is predicting a rebound in the Canadian housing market next year, according to the Financial Post.

The article is specific to new home construction, so it doesn’t tell the whole story…but the more people buy existing homes, the more new homes will be needed, so they are related.

This isn’t terribly surprising, but it is good news. Out here in Edmonton, Alberta, it seems as thought we’ve already rebounded. According to the Edmonton Real Estate blog the number of sales last month are well ahead of 2008 numbers.

New home starts will likely be stronger ...

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