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BLOG / NEWS Updates
Positive News for First-Time Homebuyers…
We welcome the Conservative Governments announcement today proposing to increase the RRSP Home Buyers Plan (HBP) withdrawal up to $35,000 from the current $25,000 for first-time homebuyers. If implemented, a couple buying a home together would have access to an extra $20,000 of their RRSPs to help with their down payment and other expenses relating to their home purchase. Borrowers are considered first-timers if, in the past four years, they have not lived in a home that they or their current spouse/common-law partner owned. (See Conditions.) As you may be aware, CAAMP regularly visits both federal and provincial government officials. This announcement is in line with the kind of recommendations that CAAMP makes during meetings with officials in the Ministry of Finance Office and the Prime Ministers Office. The government respects our industry-leading research and sees your association as a positive resource. Our latest research report released in June A Profile of Home Buying in Canada prepared by CAAMP Chief Economist Will Dunning shows withdrawals from RRSPs (including via the HBP) accounted for 10% of down payment funds for first-time buyers. If put into action, this proposed HBP withdrawal increase would go a long way in helping first-time homebuyers across Canada. Todays announcement follows Stephen Harpers first big-ticket promise of his campaign: another tax break for home renovations made earlier this month. Taxpayers would be able to claim up to 15% of the cost of permanent substantial renovations to homes, condos and cottages. The tax credit would apply to renovation costs between $1,000 and $5,000, allowing a taxpayer to get back up to $600 per year. We look forward to more positive housing-related announcements from other campaigns leading up to the fall election.
Canadian Income Survey, 2016
Canadian families and unattached individuals had a median after-tax income of $57,000 in 2016. Median after-tax income increased from 2011 to 2014, but held steady in 2015 and 2016. The slower growth in 2015 and 2016 was associated with the resource price slowdown, which began in the second half of 2014. After-tax income is comprised of income from market sources and government transfers. Market income includes employment income, retirement income and income from investments, while government transfers include benefits to seniors, child benefits, Employment Insurance benefits, social assistance and other benefits. While growth in overall median after-tax income slowed in 2015 and 2016, there was also a significant increase in government transfer income. Median income from government transfers rose from $5,800 in 2014 to $7,400 in 2016. About half of this rise was due to increased child benefits, which became a larger source of income for families with children. In 2014, the median child benefit received by couple families with children were $2,500. This rose to $3,400 in 2015, and to $4,000 in 2016. For a lone-parent family, the median benefits rose from $5,100 in 2014 to $5,800 in 2015, and then to $6,400 in 2016.
Bank of Canada maintains overnight rate target at 1 1/4 per cent
The Bank of Canada today maintained its target for the overnight rate at 1 1/4 per cent. The Bank Rate is correspondingly 1 1/2 per cent and the deposit rate is 1 per cent. Global growth remains solid and broad-based. In the United States, new government spending and previously-announced tax cuts are anticipated to boost growth in 2018 and 2019. However, trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks. In Canada, the national accounts data show that the economy grew by 3 per cent in 2017, bringing the level of real GDP in line with the projection in the Banks January MonetaryPolicy Report (MPR). In the fourth quarter, GDP growth was slower than expected, largely due to higher imports, while exports made only a partial recovery from their third-quarter decline. The gain in imports mainly reflected stronger business investment, which adds to the economys capacity. Strong housing data in late 2017, and softer data at the beginning of this year, indicate some pulling forward of demand ahead of new mortgage guidelines and other policy measures. It will take some time to fully assess the impact of these, as well as recently announced provincial measures, on housing demand and prices. More broadly, the Bank continues to monitor the economys sensitivity to higher interest rates. Notably, household credit growth has decelerated for three consecutive months. The implications of the recent federal budget for the outlook for growth and inflation will be incorporated in the Banks April projection. Inflation is running close to the 2 per cent target and the Banks core measures of inflation have edged up, consistent with an economy operating near capacity. Wage growth has firmed, but remains lower than would be typical in an economy with no labour market slack. Inflation is fluctuating because of temporary factors related to gasoline, electricity, and minimum wages. In this context, Governing Council maintained the target for the overnight rate at 1 1/4 per cent. While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target. Governing Council will remain cautious in considering future policy adjustments, guided by incoming data in assessing the economys sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.