Dean Garrett

Canadas federal Finance Minister tabled Budget 2024 on April 16th. Gross new spending measures were substantially higher than signalled ahead of budget day, with equally substantial taxation measures partially offsetting the net impact. The budget adds a near-term boost to growth with major new spending, but it introduces another twist as it gives with one hand while taking with the other. While net new spending amounts to 0.4% f GDP over the next two years, gross outlays to Canadians adds up to a much more substantial $22.5 bn (0.7%), while syphoning off $9.5 bn from drivers of growth. This is additive to the $44 bn incremental spending provinces have announced in recent weeks. The budget clearly makes the Bank of Canadas job more difficult. The soft inflation print released into the budget risks fanning complacency around the risk of a resurgence in inflationary pressure particularly with a housing market rebound waiting in the wings (and more potential buyers on the margin after this budget). New spending is hardly focused. A gross $56.8 bn is spread widely across a range of priorities. The new Housing Plan reflects just 1/6th of new outlays. Others were channeled aheadmilitary spending, AI investments, and pharmacarewhile new pledges were tabled towards Aboriginal investments, community spending, and a new disability benefit among others. New tax measures will yield a $21.9 bn offsetnotably a big increase to the capital gains inclusion rate from one-half to two-thirds for individuals and corporations later this Spring. The net cost of new measures in this budget lands at $34.8 bn over the planning horizon. Near-term economic momentum has provided additional offsets ($29.1 bn), leaving the fiscal path broadly similar to the Fall Update. The FY24 deficit comes in on the mark at $40 bn (1.4% of GDP) and is expected to descend softly to $20 bn (0.6%) by FY29. Debt remains largely on a similar path of modest declines as a share of GDP over the horizon. The fiscal plan could have delivered on critical priorities including the Housing Plan, along with AI and Indigenous spending, while still adhering to its fiscal anchors without resorting to substantial new taxation measures that will dampen confidence and introduce further distortions to Canadas competitive landscape. It wont likely trigger an election, but it is clearly a warm-up lap as Canadians brace for the polls within the next 1218 months. The taps are unlikely to be turned off any time soon. Source: https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.fiscal-policy.fiscal-pulse.federal.federal-budget-analysis-.canadian-federal--2024-25-budget--april-16--2024-.html

The Bank of Canada held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. The Bank expects the global economy to continue growing at a rate of about 3%, with inflation in most advanced economies easing gradually. The US economy has again proven stronger than anticipated, buoyed by resilient consumption and robust business and government spending. US GDP growth is expected to slow in the second half of this year, but remain stronger than forecast in January. The euro area is projected to gradually recover from current weak growth. Global oil prices have moved up, averaging about $5 higher than assumed in the January Monetary Policy Report (MPR). Since January, bond yields have increased but, with narrower corporate credit spreads and sharply higher equity markets, overall financial conditions have eased. The Bank has revised up its forecast for global GDP growth to 2% in 2024 and about 3% in 2025 and 2026. Inflation continues to slow across most advanced economies, although progress will likely be bumpy. Inflation rates are projected to reach central bank targets in 2025. In Canada, economic growth stalled in the second half of last year and the economy moved into excess supply. A broad range of indicators suggest that labour market conditions continue to ease. Employment has been growing more slowly than the working-age population and the unemployment rate has risen gradually, reaching 6.1% in March. There are some recent signs that wage pressures are moderating. Source:https://www.bankofcanada.ca/2024/04/fad-press-release-2024-04-10

Consumers believe inflation has slowed, but their expectations for inflation in the near term have barely changed. Consumers link their perceptions of slowing inflation with their own experiences of price changes for frequently purchased items, such as food and gas. Expectations for long-term inflation have increased, though they remain below their historical average. Relative to last quarter, consumers now think that factors contributing to high inflationparticularly high government spending and elevated home prices and rent costswill take longer to resolve. Canadians continue to feel the negative impacts of high inflation and high interest rates on their budgets, and nearly two-thirds are cutting or postponing spending in response. Although weak, consumer sentiment improved this quarter, with people expecting lower interest rates. As a result, consumers are less pessimistic about the future of the economy and their financial situation, and fewer think they will need to further cut or postpone spending. Improved sentiment is also evident in perceptions of the labour market, which have stabilized after easing over recent quarters. Workers continue to feel positive about the labour market and, with inflation expected to be high, they continue to anticipate stronger-than-average wage growth. Source: https://www.bankofcanada.ca/2024/04/canadian-survey-of-consumer-expectations-first-quarter-of-2024

Central bankers took the stage this week, but it was Canadian economic data that stole the show. A significant improvement in inflation for February and a weak reading on retail sales increased expectations for an earlier cut by the Bank of Canada (BoC). Adding to this was the release of the BoCs March deliberations that confirmed the Bank is preparing to cut rates later this year. While the exact timing of the first rate cut is still uncertain, market pricing has rallied around June/July, matching expectations on timing for other major central banks. The inflation reading this week showed a meaningful deceleration, with the headline measure remaining within the BoC 1% to 3% target band. But the big surprise was the heavy discounting on items like clothing, cell phone /internet plans, and food. For the latter, that was the first contraction in three years (seasonally adjusted)! As Deputy Governor Toni Gravelle said at a speech later in the week, this was very encouraging. What was even more promising was the progress on the BoCs preferred inflation metrics. While these have remained stubbornly high over the last few months, they too have started to ease and now sit just above the 3% band. These metrics are starting to follow other measures of inflation lower, including the Banks old preferred inflation measure, CPIX. This index excludes the eight most volatile inflation items such as mortgage interest costs. Importantly, this measure has now reached the BoCs 2% target. Source: TD Economics https://economics.td.com/ca-weekly-bottom-line

Canadian home prices as measured by the seasonally adjusted Aggregate Composite MLS Home Price Index (HPI) were flat on a month-over-month basis in February 2024, ending a streak of five declines that began last fall, according to the latest data from the Canadian Real Estate Association (CREA). The fact that prices were unchanged from January to February was noteworthy given they had dropped 1.3% from December to January. Considering how stable the seasonally adjusted MLS HPI tends to be, shifts this abrupt are exceedingly rare. There have only been three other times in the last 20 years that have shared a sudden improvement or increase in the month-over-month percentage change from one month to the next of this size; all at various points in the last four years when demand was coming off the sidelines. Its looking like February may end up being the last relatively uneventful month of the year as far as the 2024 housing story goes, said Shaun Cathcart, CREAs Senior Economist. With so much demand having piled up on the sidelines, the story will likely be less about the exact timing of interest rate cuts and more about how many homes come up for sale this year. Home sales activity recorded over Canadian MLS Systems dipped 3.1% between January and February 2024, giving back some of the cumulative 12.7% increase in activity recorded in December 2023 and January 2024. That said, the general trend has been somewhat higher levels of activity over the last three months compared to a quiet fall market in 2023. Source: https://stats.crea.ca/en-CA/

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. Global economic growth slowed in the fourth quarter. US GDP growth also slowed but remained surprisingly robust and broad-based, with solid contributions from consumption and exports. Euro area economic growth was flat at the end of the year after contracting in the third quarter. Inflation in the United States and the euro area continued to ease. Bond yields have increased since January while corporate credit spreads have narrowed. Equity markets have risen sharply. Global oil prices are slightly higher than what was assumed in the January Monetary Policy Report (MPR). In Canada, the economy grew in the fourth quarter by more than expected, although the pace remained weak and below potential. Real GDP expanded by 1% after contracting 0.5% in the third quarter. Consumption was up a modest 1%, and final domestic demand contracted with a large decline in business investment. A strong increase in exports boosted growth. Employment continues to grow more slowly than the population, and there are now some signs that wage pressures may be easing. Overall, the data point to an economy in modest excess supply. Source: https://www.bankofcanada.ca/2024/03/fad-press-release-2024-03-06/

The deadline for submitting new or updated applications for the First-Time Home Buyer Incentive is March 21, 2024, at midnight ET. No new approvals will be granted after March 31, 2024. Initially designed to alleviate the burden of monthly mortgage payments for first-time buyers, the program involved the government acquiring partial ownership of a property. Under the program, the government provided a loan of up to 10 percent of the purchase price, which could be put towards a larger down payment, thereby reducing monthly payments. However, homeowners were required to repay the incentive after 25 years or upon selling the property, with the repayment amount adjusted to reflect changes in the propertys value. Source:https://www.cmhc-schl.gc.ca/consumers/home-buying/first-time-home-buyer-incentive

From National Bank of Canada The fourth quarter of 2023 witnessed a second consecutive deterioration for housing affordability in Canada. The degradation was widespread with every single market experiencing an increase in their mortgage payment as a percentage of income (MPPI) due to both higher interest rates and rising home prices. This worsening has practically eliminated recent improvements in affordability and our index at the national level is almost back to its worst affordability since the 1980s. That said, the headline index dissimulates a more worrisome picture. Indeed, the condo sub-index has reached its highest level of unaffordability in at least two decades. In other words, it would take nearly half of pre-tax median household income to service the median condo mortgage. With the condo market typically being the entry point for first-time homebuyers it leaves the latter with few options. While homeownership is becoming untenable, the rental market offers little respite. Our rental affordability index has never been worse. It would take nearly one third of pre-tax household income to pay for the average rent of a two-bedroom condo. The outlook for the coming year is fraught with challenges. While mortgage interest rates are showing signs of waning in the face of expected rate cuts by the central bank, housing demand remains supported by unprecedented population growth. As a result, we expect some upside to prices in 2024. On the rental side, in a recently released report by the CMHC, Canada`s rental market vacancy stumbled to a record low of 1.5% which leaves little room for an improvement in rents. Supply for any segment of the market isn`t expected to pick up anytime soon as building permits in many Canadian cities has plummeted at the end of 2023. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Following a weak second half of 2023, home sales over the last two months are showing signs of recovery, according to the latest data from the Canadian Real Estate Association (CREA). Home sales activity recorded over Canadian MLS Systems rose 3.7% between December 2023 and January 2024, building on the 7.9% month-over-month increase recorded the month prior. While activity is now back on par with 2023s relatively stronger months recorded over the spring and summer, it begins 2024 about 9% below the 10-year average. Sales are up, market conditions have tightened quite a bit, and there has been anecdotal evidence of renewed competition among buyers; however, in areas where sales have shot up most over the last two months, prices are still trending lower. Taken together, these trends suggest a market that is starting to turn a corner but is still working through the weakness of the last two years, said Shaun Cathcart, CREAs Senior Economist. https://stats.crea.ca/en-CA/

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. Global economic growth continues to slow, with inflation easing gradually across most economies. While growth in the United States has been stronger than expected, it is anticipated to slow in 2024, with weakening consumer spending and business investment. In the euro area, the economy looks to be in a mild contraction. In China, low consumer confidence and policy uncertainty will likely restrain activity. Meanwhile, oil prices are about $10 per barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have eased, largely reversing the tightening that occurred last autumn. The Bank now forecasts global GDP growth of 2% in 2024 and 2% in 2025, following 2023s 3% pace. With softer growth this year, inflation rates in most advanced economies are expected to come down slowly, reaching central bank targets in 2025. In Canada, the economy has stalled since the middle of 2023 and growth will likely remain close to zero through the first quarter of 2024. Consumers have pulled back their spending in response to higher prices and interest rates, and business investment has contracted. With weak growth, supply has caught up with demand and the economy now looks to be operating in modest excess supply. Labour market conditions have eased, with job vacancies returning to near pre-pandemic levels and new jobs being created at a slower rate than population growth. However, wages are still rising around 4% to 5%. Source: https://www.bankofcanada.ca/2024/01/fad-press-release-2024-01-24/

Income inequality increased in the third quarter as the gap in the share of disposable income between households in the two highest income quintiles (top 40% of the income distribution) and two lowest income quintiles (bottom 40% of the income distribution) reached 44.9%, up 0.5 percentage points from the third quarter of 2022. The lowest income householdsthose in the bottom 20% of the income distributionwere the only income group to reduce their average disposable income in the third quarter of 2023 relative to the same quarter of 2022 (-1.2%). Gains in average wages and salaries for the lowest income households (+3.0%) were more than offset by reductions in net investment income (-43.4%). While higher interest rates can lead to increased borrowing costs for households, they can also lead to higher yields on saving and investment accounts. The lowest income households are more likely to have a limited capacity to take advantage of these higher returns, as on average they have fewer resources available for saving and investment. Higher interest rates weighed on average disposable income for the lowest income households in the third quarter. Along with a doubling of the Bank of Canadas policy interest rate from 2.5% in July 2022 to 5.0% as of July 2023, net investment income declined for the lowest income households in the third quarter of 2023 relative to a year earlier. The lowest income earners reduced their net investment income as increased interest payments, more than half of which was due to consumer credit, outweighed gains in investment earnings. Source: https://www150.statcan.gc.ca/n1/daily-quotidien/240122/dq240122a-eng.htm?HPA=1

Home sales activity recorded over Canadian MLS Systems rose 8.7% between November and December 2023, putting it on par with some of last years relatively stronger months recorded over the spring and summer. The actual (not seasonally adjusted) number of transactions came in 3.7% above December 2022, the largest year-over-year gain since August. On an annual basis, home sales totalled 443,511 units in 2023, a decline of 11.1% from 2022. It was technically the lowest annual level for national sales activity since 2008; although it was very close to levels recorded in each of the five years following the 2008 financial crisis, as well as the first year the uninsured stress test was implemented in 2018. While December did offer up a bit of a surprise in sales numbers to cap the year, the real test of the markets resilience will be in the spring, said Larry Cerqua, Chair of CREA. There are only a couple of months left until that gets underway. If youre looking to buy or sell a property in the 2024, youll want a game plan, so contact a REALTOR in your area today, continued Cerqua. Was the December bounce in home sales the start of the expected recovery in Canadian housing markets? Probably not just yet, said Shaun Cathcart, CREAs Senior Economist. It was more likely just some of the sellers and buyers that were holding onto unrealistic pricing expectations last fall finally coming together to get deals done before the end of the year. Were still forecasting a recovery in housing demand in 2024, but well have to wait a few more months to get a sense of what that ultimately looks like. Source: https://www.crea.ca/media-hub/news/canadian-home-sales-see-unexpected-surge-to-close-out-2023/

Higher borrowing costs are leaving a permanent mark on the Canadian families who by the end of 2024 would have to budget for a roughly 30% increase in their monthly mortgage payments, on average. On aggregate, mortgage payments growth is forecast to slow next year, remain relatively flat in 2025 but pick up again in 2026, even if Canadian economy falls into a mild recession in 2024. Elevated mortgage payments will create an enduring drag on consumption and broader economic growth. Despite this, a relatively more resilient job market and largely unspent excess deposits should provide enough support for an average Canadian family to manage an increased debt servicing cost. https://economics.td.com/ca-mortgage-tides-canada-households

Summary On a seasonally adjusted basis, home sales dropped 5.6% from September to October, a fourth monthly contraction in a row and the sharpest slowdown in sales since June 2022. On the supply side, new listings decreased 2.3% in October, a first decline in seven months. Active listing increased by 4.6%, a fourth monthly gain in a row. As a result the number of months of inventory (active-listings to sales) increased from 3.7 in September to 4.1 in October and is now roughly back in line with its pre-pandemic level. The market conditions loosened during the month but remained tighter than its historical average in 7 provinces, while market conditions were balanced in B.C. and Manitoba, and looser than average in Ontario. Housing starts rose 4.0K in October to a 4-month high of 274.7K (seasonally adjusted and annualized), a result comfortably above the median economist forecast calling for a 255.0K print. Urban starts advanced 6.1K (to 257.4K) on gains in both the multi-family (+2.1K to 209.9K) and the single-family segment (+4.0K to 47.5K). Starts decreased in Toronto (-13.9K to 44.6K), Montreal (-13.6K to 18.2K), and Calgary (-9.0K to 34.8K), while they increased in Vancouver (+9.0K to 34.8K). The Teranet-National Bank Composite National House Price Index decreased by 0.4% in October after seasonal adjustment. seven of the 11 markets in the composite index were still up during the month: Montreal (+3.7%), Halifax (+1.1%), Winnipeg (+1.0%), Quebec City (+0.9%), Calgary (+0.6%), Victoria (+0.3%) and Hamilton (+0.2%). Conversely, prices were down in Toronto (-1.6%), Edmonton (-1.2%), Vancouver (-1.1%) and Ottawa-Gatineau (-1.1%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

The Bank of Canada today held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. The global economy continues to slow and inflation has eased further. In the United States, growth has been stronger than expected, led by robust consumer spending, but is likely to weaken in the months ahead as past policy rate increases work their way through the economy. Growth in the euro area has weakened and, combined with lower energy prices, this has reduced inflationary pressures. Oil prices are about $10-per-barrel lower than was assumed in the October Monetary Policy Report (MPR). Financial conditions have also eased, with long-term interest rates unwinding some of the sharp increases seen earlier in the autumn. The US dollar has weakened against most currencies, including Canadas. In Canada, economic growth stalled through the middle quarters of 2023. Real GDP contracted at a rate of 1.1% in the third quarter, following growth of 1.4% in the second quarter. Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year. Exports and inventory adjustment subtracted from GDP growth in the third quarter, while government spending and new home construction provided a boost. The labour market continues to ease: job creation has been slower than labour force growth, job vacancies have declined further, and the unemployment rate has risen modestly. Even so, wages are still rising by 4-5%. Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand.

From National Bank of Canada The third quarter of 2023 witnessed a considerable deterioration for housing affordability in Canada. This degradation follows three consecutive quarters of improvements and deletes nearly two thirds of the progress that had been made so far. The worsening was widespread with every single market experiencing an increase in their mortgage payment as a percentage of income (MPPI). At the national level the deterioration stemmed from a surge in home prices of 4.6%, the largest in 6 quarters and partially erasing the decline over the last year. A rebound in home prices during a period of rising interest rates could initially appear perplexing. That said, a chronic lack of supply in the resale market compounded by record population growth has allowed prices to rise. Also contributing to lessening affordability, mortgage interest rates rose 32 basis points in the quarter, more than eliminating the two prior declines. While still rising income was a partial offset in the third quarter, it did little to assuage the situation. Looking ahead, we see a moribund outlook for affordability. At the very least, a further worsening is in the cards for the last quarter of the year. Mortgage interest rates have steadily trended up in October on the back of rising longer-term interest rates. If interest rates hold at their current level, it would only take a home price increase of 2% in the fourth quarter to surpass the worst level of affordability in a generation. The outlook remains particularly challenging for first-time homebuyers. HIGHLIGHTS: Canadian housing affordability posted a worsening in Q323 following three consecutive improvements. The mortgage payment on a representative home as a percentage of income (MPPI) rose 4.0 points, more than erasing the previous pullback of 1.6-points in Q223. Seasonally adjusted home prices increased 4.6% in Q323 from Q223; the benchmark mortgage rate (5-year term) surged 32 bps, while median household income rose 1.2%. Affordability deteriorated in all of the ten markets covered in Q3. On a sliding scale of markets from worst deterioration to least: Vancouver, Toronto, Victoria, Hamilton, Calgary, Montreal, Quebec, Ottawa-Gatineau, Winnipeg, and Edmonton. Countrywide, affordability worsened 2.5 pp in the condo portion vs. a 4.5 pp degradation in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Summary On a seasonally adjusted basis, home sales decreased 1.9% from August to September, a third monthly contraction in a row following the renewed monetary tightening cycle of the Bank of Canada and the surge in long-term interest rates. On the supply side, new listings jumped 6.3% in September, a sixth consecutive monthly increase. Overall, active listing increased by 3.7%, a third monthly gain in a row. As a result the number of months of inventory (active-listings to sales) increased from 3.5 in August to 3.7 in September. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio loosened during the month but remained tighter than its historical average in every province except Ontario, which now indicated a slightly less tight market than the average. Housing starts rose 20.1K in September to a 3-month high of 270.5K (seasonally adjusted and annualized), a result comfortably above the median economist forecast calling for a 240.0K print. At the provincial level, total starts went up in Ontario (+19.3K to 103.6K), Alberta (+8.7K to a seven-and-a-half-year high of 49.1K) and Nova Scotia (+5.1K to 8.1K). Alternatively, declines were recorded in British Columbia (-8.6K to a 7-month low of 40.5K) and Saskatchewan (-2.7K to 3.4K). The Teranet-National Bank Composite National House Price Index rose 0.7% in September after seasonal adjustment. All 11 markets in the composite index were up during the month: Halifax (+1.9%), Ottawa-Gatineau (+1.7%), Victoria (+1.7%), Vancouver (+1.1%) and Calgary (+0. 9%) posted stronger-than-average growth, while Winnipeg (+0.7%) matched the composite index, and Montreal (+0.1%), Hamilton (+0.1%), Edmonton (+0.2%), Toronto (+0.5%) and Quebec City (+0.5%) saw less vigorous increases. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

The Bank of Canada yesterday held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is continuing its policy of quantitative tightening. The global economy is slowing and growth is forecast to moderate further as past increases in policy rates and the recent surge in global bond yields weigh on demand. The Bank projects global GDP growth of 2.9% this year, 2.3% in 2024 and 2.6% in 2025. While this global growth outlook is little changed from the July Monetary Policy Report (MPR), the composition has shifted, with the US economy proving stronger and economic activity in China weaker than expected. Growth in the euro area has slowed further. Inflation has been easing in most economies, as supply bottlenecks resolve and weaker demand relieves price pressures. However, with underlying inflation persisting, central banks continue to be vigilant. Oil prices are higher than was assumed in July, and the war in Israel and Gaza is a new source of geopolitical uncertainty. In Canada, there is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures. Consumption has been subdued, with softer demand for housing, durable goods and many services. Weaker demand and higher borrowing costs are weighing on business investment. The surge in Canadas population is easing labour market pressures in some sectors while adding to housing demand and consumption. In the labour market, recent job gains have been below labour force growth and job vacancies have continued to ease. However, the labour market remains on the tight side and wage pressures persist. Overall, a range of indicators suggest that supply and demand in the economy are now approaching balance. After averaging 1% over the past year, economic growth is expected to continue to be weak for the next year before increasing in late 2024 and through 2025. The near-term weakness in growth reflects both the broadening impact of past increases in interest rates and slower foreign demand. The subsequent pickup is driven by household spending as well as stronger exports and business investment in response to improving foreign demand. Spending by governments contributes materially to growth over the forecast horizon. Overall, the Bank expects the Canadian economy to grow by 1.2% this year, 0.9% in 2024 and 2.5% in 2025. CPI inflation has been volatile in recent months2.8% in June, 4.0% in August, and 3.8% in September. Higher interest rates are moderating inflation in many goods that people buy on credit, and this is spreading to services. Food inflation is easing from very high rates. However, in addition to elevated mortgage interest costs, inflation in rent and other housing costs remains high. Near-term inflation expectations and corporate pricing behaviour are normalizing only gradually, and wages are still growing around 4% to 5%. The Banks preferred measures of core inflation show little downward momentum. In the Banks October projection, CPI inflation is expected to average about 3% through the middle of next year before gradually easing to 2% in 2025. Inflation returns to target about the same time as in the July projection, but the near-term path is higher because of energy prices and ongoing persistence in core inflation. With clearer signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate at 5% and to continue to normalize the Banks balance sheet. However, Governing Council is concerned that progress towards price stability is slow and inflationary risks have increased, and is prepared to raise the policy rate further if needed. Governing Council wants to see downward momentum in core inflation, and continues to be focused on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians. Information note The next scheduled date for announcing the overnight rate target is December 6, 2023. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR on January 24, 2024. https://www.bankofcanada.ca/2023/10/fad-press-release-2023-10-25/

Today, the Bank of Canada announced that it would maintain its overnight policy interest rate at 5.00%, stating that there is growing evidence that past interest rate increases dampen economic activity and relieve price pressures. This decision comforts borrowers whose mortgage costs have risen steadily since March of 2022. As for real relief in the form of rate cuts the Bank demurred, noting that its preferred measures of core inflation show little downward momentum. Consequently, the Bank said it is holding this policy rate and continuing its current policy of quantitative tightening. We capture the Banks observations and latest economic forecasts in the summary below. Inflation facts and outlook In Canada, inflation measured by the Consumer Price Index (CPI) has been volatile in recent months: 2.8% in June, 4.0% in August, and 3.8% in September. Higher interest rates are moderating inflation in many goods that people buy on credit, and this is spreading to services. Food inflation is easing from very high rates; however, in addition to elevated mortgage interest costs, inflation in rent and other housing costs remains high. Near-term inflation expectations and corporate pricing behaviour are normalizing only gradually, and wages are still growing around 4% to 5% The Banks preferred measures of core inflation show little downward momentum. Canadian housing and economic performance There is growing evidence that past interest rate increases are dampening economic activity and relieving price pressures. Consumption has been subdued, with softer demand for housing, durable goods and many services. Weaker demand and higher borrowing costs are weighing on business investment. A surge in Canadas population is easing labour market pressures in some sectors while adding to housing demand and consumption. In the labour market, recent job gains have been below labour force growth, and job vacancies have continued to ease; however, the labour market remains on the right side, and wage pressures persist. Overall, a range of indicators suggest that supply and demand in the economy are now approaching balance. Global economic performance and outlook The global economy is slowing, and growth is forecast to moderate further as past increases in policy interest rates and the recent surge in global bond yields weigh on demand. The Bank projects global GDP growth of 2.9% this year, 2.3% in 2024 and 2.6% in 2025. While this outlook is little changed from the Banks July Monetary Policy Report, the composition has shifted, with the US economy proving stronger and economic activity in China weaker than expected Growth in the Euro area has slowed further. Inflation has been easing in most economies, as supply bottlenecks resolve and weaker demand relieves price pressures, but underlying inflation is persisting, meaning central banks must continue to be vigilant. Oil prices are higher than the BoC assumed in July, and the war in Israel and Gaza is a new source of geopolitical uncertainty. Summary and Outlook The BoC noted that after averaging 1% over the past year, economic growth is expected to remain weak for the next year before increasing in late 2024 and through 2025. Near-term weakness in growth reflects both the broadening impact of past increases in interest rates and slower foreign demand. The subsequent economic pickup will be driven by household spending, stronger exports, and business investment in response to improving foreign demand. Spending by governments contributes materially to growth over the forecast horizon. The Bank expects the Canadian economy to grow by 1.2% this year, 0.9% in 2024 and 2.5% in 2025. In the Banks October projection, CPI inflation is expected to average about 3.5% through the middle of next year before gradually easing to 2% in 2025. Inflation is expected to return to the Banks target about the same time policymakers forecast in their July 2023 projection, but the near-term path is higher because of energy prices and ongoing persistence in core inflation. As for what to expect going forward, the Bank had this to say about interest rates: With clearer signs that monetary policy is moderating spending and relieving price pressures, Governing Council decided to hold the policy rate at 5% and continue normalizing the Banks balance sheet. However, the Governing Council is concerned that progress towards price stability is slow and inflationary risks have increased, and is prepared to raise the policy rate further if needed. The message is, therefore, clear: the Bank wants to see downward momentum in core inflation before it changes tack and continues to be focused on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour. Once again, the Bank ended its communique with a familiar phrase: it remains resolute in its commitment to restoring price stability for Canadians. Whats next? The Banks final (scheduled) interest rate announcement of 2023 takes place on December 6th, and we will follow immediately after with our next executive summary.

HIGHLIGHTS Total housing starts across the countrys 6 largest census metropolitan areas (CMAs) increased slightly in the first half of 2023. Significant changes were observed for individual dwelling types and CMAs. Notable strength in apartment starts offset declines in all other dwelling types (single-detached, semi-detached and row homes). Apartment starts were concentrated in Toronto and Vancouver. This led to strong growth in total starts in those CMAs, offsetting lower starts in other CMAs, particularly Montral. As a result, in Toronto and Vancouver, housing starts in the first half of 2023 were well above levels observed over the past 5 years. In most other large centres, meanwhile, they were below these levels. Montral tends to build more small and low-rise apartment structures than Toronto and Vancouver. Because of their smaller size, these structures take less time to plan and build. The decline in housing starts in Montral was, therefore, more reflective of the recent deterioration in financial conditions. Elevated rates of apartment construction are not likely to be sustainable due to various challenges facing developers. These challenges include higher construction costs and higher interest rates. Significant increases in construction productivity are critical to addressing the countrys affordability and housing supply crisis over the longer term. The level of new construction activity remains too low. cmhc-schl.gc.ca

With renewed activity in the residential real estate market in recent months, the seasonally adjusted Teranet-National Bank composite index rose by 1.6% from July to August, the fourth consecutive monthly increase. As a result, the composite index is now just 2.1% below its all-time peak of April 2022, following a record cumulative decline of 8.6% over one year. The widespread nature of Augusts rise is also noteworthy, as this is the first time since March 2021 that monthly increases have been observed in all the CMAs included in the composite index. However, there is reason to believe that this strength is likely to be short-lived, given the slowdown observed in the resale market over the last two months in connection with the renewal of the Bank of Canadas monetary tightening cycle. Although price declines are expected in the coming months due to the growing impact of interest rates and the less favourable economic context, property price decreases should remain limited thanks to the support of historical demographic growth and the persistent lack of housing supply. HIGHLIGHTS: The Teranet National Bank Composite National House Price IndexTM rose by 1.6% in August after seasonal adjustment. After seasonal adjustment, all 11 markets in the composite index were up during the month: Calgary (+3.5%), Vancouver (+2.8%) and Hamilton (+2.4%) reported stronger-than-average growth, while growth Halifax (+1.4%), Quebec City (+1.3%), Toronto (+1.2%), Ottawa-Gatineau (+1.1%), Edmonton (+1.1%), Winnipeg (+0.7%), Montreal (+0.7%) and Victoria (+0.2%) were less vigorous. From August 2022 to August 2023, the composite index rose by 1.1%, the first annual increase in nine months. Growth was seen in Calgary (+6.2%), Halifax (+5.1%), Quebec City (+3.6%), Vancouver (+2.7%) and Toronto (+1.4%), while prices were still down in Edmonton (-0.3%), Victoria (-1.5%), Montreal (-1.7%), Hamilton (-1.7%), Ottawa-Gatineau (-2.3%) and Winnipeg (-3.6%) https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

Summary On a seasonally adjusted basis, home sales decreased 4.1% from July to August, a second monthly contraction in a row following the renewed monetary tightening cycle of the Bank of Canada. On the supply side, new listings increased 0.8% in August, a fifth consecutive monthly increase. Another sign of a loss of momentum in the real estate market is the proportion of listings cancelled during the month, which continues to rise, a sign that some sellers are discouraged by recent interest rate hikes. Overall, active listing increased by 1.9%, a third monthly gain in a row. As a result the number of months of inventory (active-listings to sales) increased from 3.2 in July to 3.4 in August. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in every province. Housing starts in Canada decreased slightly in August (-2.4K to 252.8K, seasonally adjusted and annualized), beating consensus expectations calling for a 250K print. Decreases in housing starts were seen in Ontario (-14.9K to 84.6K), Manitoba (-3.2K to 6.8K), and Nova Scotia (-2.5 to 3.2K). Meanwhile, increases were registered in Quebec (+14.8K to 53.1K), New Brunswick (+2.1 to 7.1K), Alberta (+1.1K to 39.6K), and Saskatchewan (+0.2K to 5.5), while starts in Newfoundland (1.1K), P.E.I. (1.2K), and B.C. (50.7K) remained unchanged. The Teranet-National Bank Composite National House Price Index rose by 1.6% in August after seasonal adjustment. All 11 markets in the composite index were up during the month: Calgary (+3.5%), Vancouver (+2.8%) and Hamilton (+2. 4%) reported stronger-than-average growth, while Halifax (+1.4%), Quebec City (+1.3%), Toronto (+1.2%), Ottawa-Gatineau (+1.1%), Edmonton (+1.1%), Winnipeg (+0.7%), Montreal (+0.7%) and Victoria (+0.2%) were less vigorous. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From CMHC Key Highlights To restore affordability, we maintain our 2022 projection that Canada will need 3.5 million more units on top of whats already being built. Weve adjusted our 2030 projection for how many housing units there will be in Canada in 2030 based on current rates of new construction. Our most recent projection is 18.2 million units, down from our 2022 estimate of 18.6 million. This is largely due to the shortfall in housing construction. About 60% of the 3.5 million housing unit gap is in Ontario and British Columbia. This is because housing supply hasnt kept up with demand over the past 20 years in some of the largest urban centres. Additional supply will also be needed in Quebec. Once considered affordable, the province has become less affordable over the last few years. More supply need is also projected for Alberta due to strong economic growth. Other provinces remain affordable to households with an average level of disposable income. However, challenges remain for low-income households in accessing housing that is affordable across Canada. In addition to our baseline scenario of 3.5 million additional units being needed to restore affordability by 2030, we offer 2 alternate scenarios: a high-population- growth scenario and a low-economic-growth scenario. We provide regional highlights for areas across the country. https://assets.cmhc-schl.gc.ca/

The Bank of Canada on Wednesday held its target for the overnight rate at 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening. Inflation in advanced economies has continued to come down, but with measures of core inflation still elevated, major central banks remain focused on restoring price stability. Global growth slowed in the second quarter of 2023, largely reflecting a significant deceleration in China. With ongoing weakness in the property sector undermining confidence, growth prospects in China have diminished. In the United States, growth was stronger than expected, led by robust consumer spending. In Europe, strength in the service sector supported growth, offsetting an ongoing contraction in manufacturing. Global bond yields have risen, reflecting higher real interest rates, and international oil prices are higher than was assumed in the July Monetary Policy Report (MPR). The Canadian economy has entered a period of weaker growth, which is needed to relieve price pressures. Economic growth slowed sharply in the second quarter of 2023, with output contracting by 0.2% at an annualized rate. This reflected a marked weakening in consumption growth and a decline in housing activity, as well as the impact of wildfires in many regions of the country. Household credit growth slowed as the impact of higher rates restrained spending among a wider range of borrowers. Final domestic demand grew by 1% in the second quarter, supported by government spending and a boost to business investment. The tightness in the labour market has continued to ease gradually. However, wage growth has remained around 4% to 5%. Recent CPI data indicate that inflationary pressures remain broad-based. After easing to 2.8% in June, CPI inflation moved up to 3.3% in July, averaging close to 3% in line with the Banks projection. With the recent increase in gasoline prices, CPI inflation is expected to be higher in the near term before easing again. Year-over-year and three-month measures of core inflation are now both running at about 3.5%, indicating there has been little recent downward momentum in underlying inflation. The longer high inflation persists, the greater the risk that elevated inflation becomes entrenched, making it more difficult to restore price stability. https://www.bankofcanada.ca/2023/09/fad-press-release-2023-09-06/

Summary On a seasonally adjusted basis, home sales decreased 0.7% from June to July, a first monthly contraction in six months following the renewed monetary tightening cycle of the Bank of Canada. On the supply side, new listings jumped 5.6% in July, a fourth consecutive monthly increase. Another sign of a loss of momentum in the real estate market is the proportion of listings cancelled during the month, which is back on the rise, a sign that some sellers are discouraged by recent interest rate hikes. Overall, active listing increased by 2.5%, the second monthly gain in a row. As a result, the number of months of inventory (active-listings to sales) increased from 3.1 in June to 3.2 in July. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio slightly above historical norm. Housing starts in Canada decreased in July (-28.5 to 255.0K, seasonally adjusted and annualized), beating consensus expectations calling for a 244K print. This decline follows the strongest growth ever recorded the previous month. Decreases in housing starts were seen in Ontario (-21.8K to 99.5K), British Columbia (-15.2K to 50.7K), Nova Scotia (-8.1K to 5.8K) and Saskatchewan (-1.9K to 5.3K). Meanwhile, increases were registered in Alberta (+11.9K to 38.5K), Quebec (+3.1K to 38.0K), Manitoba (+2.1K to 10K), New Brunswick (+0.6K to 5.0K), P.E.I. (+0.6K to 1.2K), while starts in Newfoundland (+0.1K to 1.1K) remained essentially unchanged. The Teranet National Bank Composite National House Price Index rose by 2.4% in July after seasonal adjustment. Eight of the 11 markets in the composite index were up during the month: Halifax (+4.9%), Hamilton (+4.4%), Vancouver (+3.9%), Toronto (+3.5%), Victoria (+1.6%), Winnipeg (+1.3%), Ottawa-Gatineau (+0.6%) and Edmonton (+0.3%). Conversely, prices fell in Quebec City (-1.2%), Montreal (-0.9%) and Calgary (-0.3%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Following the recovery of the residential real estate market in recent months, the Teranet-National Bank composite index jumped by 2.4% from June to July, the fourth consecutive monthly increase, but also the second highest price increase ever recorded in a single month after the one observed in July 2006. After a cumulative decline of 8.6% since peaking in April 2022, recent rises in the composite index have erased a part of this correction, which now stands at just 3.8%. Interestingly, the recent upturn in prices has been greatest in the cities that have seen the biggest corrections. However, only four of the 32 CMAs covered have completely erased their price declines: Saint John, Lethbridge, Quebec City and Trois-Rivires. Prices could continue to rise in the third quarter, supported by strong demographic growth and the lack of supply of properties on the market. That said, the deterioration in affordability with recent interest rate hikes in a less buoyant economic context should represent a headwind for house prices thereafter. HIGHLIGHTS: The Teranet National Bank Composite National House Price IndexTM rose by 2.4% in July after seasonal adjustment. After seasonal adjustment, 8 of the 11 markets in the composite index were up during the month: Halifax (+4.9%), Hamilton (+4.4%), Vancouver (+3.9%), Toronto (+3.5%), Victoria (+1.6%), Winnipeg (+1.3%), Ottawa-Gatineau (+0.6%) and Edmonton (+0.3%). Conversely, prices fell in Quebec City (-1.2%), Montreal (-0.9%) and Calgary (-0.3%). From July 2022 to July 2023, the composite index fell by 1.9%, a smaller contraction than in the previous month. Price increases in Calgary (+3.3%), Halifax (+2.1%) and Quebec City (+1.1%) were more than offset by declines in Edmonton (-0.1%), Vancouver (-0.6%), Toronto (-2.1%), Montreal (-2.6%), Victoria (-2.7%), Winnipeg (-5.2%), Ottawa-Gatineau (-5.4%) and Hamilton (-7.9%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

From National Bank of Canada The second quarter of 2023 saw housing affordability in Canada post a third consecutive improvement. While not as substantial as the previous two betterments, it still marked an advancement for 9 of the 10 markets covered. Taken together, the last three quarters represent a 7.1 percentage point decline for the mortgage payment as a percentage of income (MPPI). While that was a positive development, it pales in light of the 24.6pp worsening in affordability in the two previous years and only brings affordability back to levels last seen a year ago. The MPPI now stands at 59.3%, still way off the average since 2000 of 42.5%. The improvement mostly stemmed from a decrease in home prices. The latter declined 1.2% in the quarter which brings the cumulative decline over the last year to 8.1%. This pullback is the largest observed in a generation but could have bottomed out according to house price index data. The Teranet-National Bank Composite HPI rose 2.2% seasonally adjusted in June, and momentum is expected to continue into the third quarter on the back of strong demographics and a lack of supply in the resale market. Compounding that headwind, after providing marginal respite in Q2 (-3 basis points), mortgage interest rates in July have crept up on the back of further tightening by the Bank of Canada and should be detrimental to affordability in the next report. Moreover, the flip side of restrictive monetary policy is a weakening economic outlook. In such a high interest rate environment, we cannot count on significant wage gains to improve affordability, as we expect the labour market to cool in the second half of the year. HIGHLIGHTS: Canadian housing affordability posted a third consecutive improvement in Q223. The mortgage payment on a representative home as a percentage of income (MPPI) declined 1.6 points, a further pullback following the 3.2-point decrease in Q123. Seasonally adjusted home prices decreased 1.2% in Q223 from Q122; the benchmark mortgage rate (5-year term) edged down 3 bps, while median household income rose 1.2%. Affordability improved in 9 of the ten markets covered in Q2. On a sliding scale of markets from best improvement to deterioration: Toronto, Hamilton, Ottawa-Gatineau, Victoria, Vancouver, Winnipeg, Edmonton, Calgary, Montreal, and Quebec. Countrywide, affordability improved 1.2 pp in the condo portion vs. a 1.8 pp improvement in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity and average home prices via Multiple Listing Service (MLS) Systems of Canadian real estate boards and associations for 2023 and 2024. As expected, national home sales came flying out of the gates in April 2023. Buyers who had been sitting on the fence responded to the twin signals of interest rates looking like they were at a top and property values hitting bottom. With the Bank of Canada unexpectedly ending its pause on rate hikes in June and hiking again in July, a major source of uncertainty has returned to the housing market. That said, even before the resumption of rate hikes, the recent sales rally had already shown signs of losing steam. The biggest month-over-month increase in sales activity was back in April, followed by an increase only half as big in May, then by a small 1.5% gain in June. This was likely because new listings had fallen to a 20-year low, which was reflected in month-over-month price gains in April, May, and June that were only bested by those seen during the COVID-19 pandemic. New listings are now catching up to sales, although this isnt expected to translate into further big gains in activity as some buyers will likely be moving back to the sidelines, as they did in 2022, to wait for additional signals from the Bank of Canada and the data it bases policy on. Looking further out, theres also a growing consensus that rates will not just be higher, but likely for longer well into 2024. As a result, CREA has downgraded its forecast for home sales in 2023 and 2024 compared to its April 2023 outlook, along with the trajectory for prices. Thats not to say either are necessarily expected to return to declines on a month-to-month basis, but rather to stabilize or rise at a slower pace than they have in recent months. https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/quarterly-forecasts/

Following the recovery of the residential housing market in recent months, the Teranet-National Bank composite HPI jumped 2.2% from May to June, marking the third consecutive monthly increase, but also the largest price rise in a single month since November 2006. After a cumulative decline of 8.7% since peaking in April 2022, recent rises in the composite index have erased part of this correction, which now stands at just 6.2%. This rebound is even more impressive given that 81% of cities covered in June saw an increase during the month, the best diffusion of growth since the composite index peaked last year. While prices could continue to be supported by strong demographic growth and the lack of supply of properties on the market, and continue to rise in the third quarter, the Bank of Canadas recent rate hikes and the economic weakness expected in subsequent quarters will represent a headwind for house prices thereafter. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index rose by 2.2% in June after seasonal adjustment. After seasonal adjustment, 9 of the 11 markets in the composite index were up during the month: Toronto (+2.9%), Vancouver (+2.6%), Quebec City (+2.6%), Halifax (+2.3%), Calgary (+2.1%), Victoria (+1.9%), Montreal (+1.4%). Ottawa-Gatineau (+1.0%) and Edmonton (+0.2%). Conversely, prices fell in Winnipeg (-0.2%), while remaining stable in Hamilton. From June 2022 to June 2023, the composite index fell by 5.1%, a smaller contraction than in the previous month. Price growth in Calgary (+6.5%). Quebec City (+5.2%) and Edmonton (+1.3%) was more than offset by declines in Montreal (-3.6%), Victoria (-3.8%), Vancouver (-5.0%). Halifax (-5.6%), Winnipeg (-5.7%). Toronto (-6.7%), Ottawa-Gatineau (-8.4%) and Hamilton (-13.4%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

Summary On a seasonally adjusted basis, home sales increased 1.5% from May to June, a fifth consecutive monthly increase. However, this was a much smaller rise than the 4.6% in May and 11.1% in April, a slowdown that could have been induced by the additional tightening of the Bank of Canada. On the supply side, new listings jumped 5.9% in June, a third consecutive monthly increase. Overall, active listing increased marginally by 1.5% in Canada, keeping the number of months of inventory (active-listings to sales) unchanged at 3.1 in June. This continues to be higher than the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. Housing starts in Canada increased in June (+81.4K to 281.4K, seasonally adjusted and annualized), beating consensus expectations calling for a 220.0K print. This increase more than offset Mays 58.9K decrease and was the sharpest ever. In urban areas, increases in housing starts were seen in Ontario (+50.2K to 116.8K), British Columbia (+24.9K to 63.6K), Quebec (+3.7K to 25.0K) and the Maritimes (+8.9K to 17.6K). Meanwhile, a decrease was registered in the Prairies (-5.5K to 39.2K) on gains in Saskatchewan (+4.6K to 6.7K) which were offset by losses in Alberta (-10.1K to 25.7K) while starts in Manitoba (-0.1K to 6.7K) remained essentially unchanged. The Teranet-National Bank Composite National House Price Index rose by 2.2% in June after seasonal adjustment. Nine of the eleven markets in the composite index were up during the month: Toronto (+2.9%), Vancouver +2.6%), Quebec City (+2.6%), Halifax (+2.3%), Calgary (+2.1%), Victoria (+1.9%), Montreal (+1.4%). Ottawa-Gatineau (+1.0%) and Edmonton (+0.2%). Conversely, prices fell in Winnipeg (- 0.2%), while remaining stable in Hamilton. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

The Bank of Canada increased its target for the overnight rate to 5%, with the Bank Rate at 5% and the deposit rate at 5%. The Bank is also continuing its policy of quantitative tightening. Global inflation is easing, with lower energy prices and a decline in goods price inflation. However, robust demand and tight labour markets are causing persistent inflationary pressures in services. Economic growth has been stronger than expected, especially in the United States, where consumer and business spending has been surprisingly resilient. After a surge in early 2023, Chinas economic growth is softening, with slowing exports and ongoing weakness in its property sector. Growth in the euro area is effectively stalled: while the service sector continues to grow, manufacturing is contracting. Global financial conditions have tightened, with bond yields up in North America and Europe as major central banks signal further interest rate increases may be needed to combat inflation. The Banks July Monetary Policy Report (MPR) projects the global economy will grow by around 2.8% this year and 2.4% in 2024, followed by 2.7% growth in 2025. Canadas economy has been stronger than expected, with more momentum in demand. Consumption growth has been surprisingly strong at 5.8% in the first quarter. While the Bank expects consumer spending to slow in response to the cumulative increase in interest rates, recent retail trade and other data suggest more persistent excess demand in the economy. In addition, the housing market has seen some pickup. New construction and real estate listings are lagging demand, which is adding pressure to prices. In the labour market, there are signs of more availability of workers, but conditions remain tight, and wage growth has been around 4-5%. Strong population growth from immigration is adding both demand and supply to the economy: newcomers are helping to ease the shortage of workers while also boosting consumer spending and adding to demand for housing. https://www.bankofcanada.ca/2023/07/fad-press-release-2023-07-12/

From TD Economics Huge second-quarter upside surprises in both Canadian home sales and average home prices, relative to our March projection, have left their mark on our updated forecast. Our modelling had suggested that sales had undershot levels consistent with underlying fundamentals (such as income and population growth, for example). However, with the recent surge, this gap has effectively been closed. The sharp rise in prices also deteriorated affordability by more than we thought would take place, which is also a negative for go-forward activity. In light of resilient housing and consumer spending data, the Bank of Canada nudged its policy rate higher in June after a 4-month hiatus. By the time July is over, policymakers will have injected an additional 50 bps of tightening relative to our prior expectations. Beyond the direct hit to affordability from a higher policy rate, a more hawkish central bank should chill the psychology of buyers who were previously rushing into the market after the Bank went on pause earlier in the year. Indeed, Bank of Canada signaling appears to be playing a major role in shaping housing market dynamics. Our bond yield forecast has also been materially upgraded. We expect Canadian home sales to decline in the second half of this year, reversing part of their recent strength. Furthermore, we anticipate purchases growing at a slower quarter-on-quarter pace than previously envisioned in 2024. Tight markets amid restrained supply should keep Canadian average price growth positive in the third quarter, but we anticipate prices dropping slightly in Q4. Like sales, weve marked down our quarterly growth profile next year relative to our March forecast. https://economics.td.com/ca-provincial-housing-outlook

After adjusting for seasonal effects, the Teranet-National Bank composite HPI resumed its upward trend (+0.6%) after ten consecutive monthly declines, which saw home prices correct by a total of 8.6%. This turnaround in property prices is due in particular to the rebound in the resale market over the past four months. This recovery is taking place against a backdrop of record demographic growth, which is accentuating the shortage of housing supply on the market. With domestic housing starts falling to their lowest level in three years in May, there is no reason to believe that the shortage of properties on the market will be resolved any time soon. However, the resumption of the monetary tightening cycle by the Bank of Canada in recent weeks and the expected slowdown in economic growth could moderate price growth later this year. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index rose by 0.6% in May after seasonal adjustment. After seasonal adjustment, 8 of the 11 markets in the composite index were up during the month: Toronto (+1.6%). Winnipeg (+1.5%), Victoria (+1.3%), Edmonton (+1.3%), Quebec City (+1.2%), Montreal (+1.0%), Hamilton (+0.5%) and Calgary (+0.1%). Conversely, prices fell during the month in Halifax (-2.6%), Vancouver (-1.2%) and Ottawa-Gatineau (-0.3%). From May 2022 to May 2023, the composite index fell by 7.6%, a smaller contraction than in the previous month. Price growth in Calgary (8.3%). Edmonton (4.9%) and Quebec City (3.1%) was more than offset by declines in Montreal (-3.0%), Winnipeg (-6.8%), Victoria (-8.4%), Halifax (-8.5%), Vancouver (-8.6%), Ottawa-Gatineau (-9.5%), Toronto (-10.3%) and Hamilton (-16.8%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

On a seasonally adjusted basis, home sales increased 5.1% from April to May, a fourth consecutive monthly increase. Sales growth continues to be widespread across the country again this month, with the biggest increases seen in P.E.I. (+22.3%), Saskatchewan (+9.2%) and Alberto (+8.0%). Conversely, Nova Scotia (+0.9%) and Manitoba (+1.0%) saw smaller increases. On the supply side, new listings jumped 6.8% in May, a second consecutive monthly increase. Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 3.3 to 3.1 in May. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical overage in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. Housing starts in Canada decreased in May (-58.9K to 202.5K, seasonally adjusted and annualized), falling short of consensus expectations calling for a 240.0K print. This decline more than offset Aprils 47.8K increase and was the sharpest since December 2021. In urban areas, declines in housing starts were seen in Ontario (-43.1K to 67.7K), British Columbia (-20.1K to 38.2K), Quebec (-6.6K to 22.5K) and the Maritimes (-1.5K to 8.1K). Meanwhile, an increase was registered in the Prairies (+12.6K to 46.0K) on gains in Manitoba (+3.0K to 7.0K) and Alberta (+9.6K to 36.5K) while starts in Saskatchewan (+0.1K to 2.5K) remained essentially unchanged. The Teranet-National Bank Composite National House Price Index rose by 0.6% in May after seasonal adjustment. After seasonal adjustment, 8 of the 11 markets in the composite index were up during the month: Toronto (+1.6%), Winnipeg (+1.5%), Victoria (+1.3%), Edmonton (+1.3%). Quebec City (+1.2%), Montreal (+1.0%), Hamilton (+0.5%) and Calgary (+0.1%). Conversely, prices fell during the month in Halifax (-2.6%). Vancouver (-1.2%) and Ottawa-Gatineau (-0.3%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Recent mortgage market trends High inflation, rapidly rising interest rates and cooling housing markets across Canada have resulted in decelerating mortgage growth in 2022. Mortgage activity by non-bank lenders accelerated up until 2022Q3 and has now reached the pace of mortgage growth in the banking industry. Despite increasing worries around the ability of Canadians to make their mortgage payments on time, mortgages in arrears remained at low levels. Mortgage borrowers are opting for shorter-term fixed rate mortgages, with fixed-rate 5-year mortgages falling to less than 15% of new mortgages, and variable-rate mortgages dropping to less than 20% of new mortgages. Housing finance research at a glance While demand surges, alternative lenders are lending more conservatively as the industry faces shifting investor appetite. Their risk profile remains at relatively low levels. A larger share of alternative loan mortgage borrowers are renewing their loans in this space as it is increasingly difficult to qualify for a conventional loan. Interest rate differences are not a significant source of inequality in the housing finance system. CMHC

The Bank of Canada today increased its target for the overnight rate to 4%, with the Bank Rate at 5% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Globally, consumer price inflation is coming down, largely reflecting lower energy prices compared to a year ago, but underlying inflation remains stubbornly high. While economic growth around the world is softening in the face of higher interest rates, major central banks are signalling that interest rates may have to rise further to restore price stability. In the United States, the economy is slowing, although consumer spending remains surprisingly resilient and the labour market is still tight. Economic growth has essentially stalled in Europe but upward pressure on core prices is persisting. Growth in China is expected to slow after surging in the first quarter. Financial conditions have tightened back to those seen before the bank failures in the United States and Switzerland. Canadas economy was stronger than expected in the first quarter of 2023, with GDP growth of 3.1%. Consumption growth was surprisingly strong and broad-based, even after accounting for the boost from population gains. Demand for services continued to rebound. In addition, spending on interest-sensitive goods increased and, more recently, housing market activity has picked up. The labour market remains tight: higher immigration and participation rates are expanding the supply of workers but new workers have been quickly hired, reflecting continued strong demand for labour. Overall, excess demand in the economy looks to be more persistent than anticipated. CPI inflation ticked up in April to 4.4%, the first increase in 10 months, with prices for a broad range of goods and services coming in higher than expected. Goods price inflation increased, despite lower energy costs. Services price inflation remained elevated, reflecting strong demand and a tight labour market. The Bank continues to expect CPI inflation to ease to around 3% in the summer, as lower energy prices feed through and last years large price gains fall out of the yearly data. However, with three-month measures of core inflation running in the 3-4% range for several months and excess demand persisting, concerns have increased that CPI inflation could get stuck materially above the 2% target. https://www.bankofcanada.ca/2023/06/fad-press-release-2023-06-07/

From National Bank of Canada Housing affordability in Canada in the first quarter of 2023 posted a second consecutive improvement. It marked the largest betterment in affordability in nearly 4 years as all markets covered saw a net amelioration (which was a first since 2020Q3). Nonetheless, the reversal of the worsening which occurred in the last two quarters was tepid compared to the slide that has occurred during the post-pandemic period. Indeed, after having reached its most unaffordable level in over 30 years, the mortgage payment as a percentage of income (MPPI) registered at a still elevated 60.9% in 2023Q1, down 5.4 points from the recent high mark. Feeding into the improvement, home prices declined for a third consecutive quarter. The retracement in home prices has now reached -7.3%, the biggest drawdown in a generation due to the restrictiveness in interest rates. The correction in prices was the sharpest in Vancouver, Hamilton and Toronto which translated into the biggest improvements in affordability during the quarter. Still, mortgage interest rates appear to be tapering out. In this latest report, our 5-year benchmark mortgage rate used to calculate affordability declined by 14bps, which helped contribute to the moderation. In addition, we note that still rising incomes also contributed to the enhancement. Looking ahead, for the second quarter of 2023, we expect a slight easing of pressure on the interest rate side. That said, a stabilization in home prices is likely given the pickup in activity with sales increasing while listings have moderated. However, we have doubts as to whether this price rise will be sustained, given restrictive monetary policy which is contributing to maintaining affordability at a challenging level. HIGHLIGHTS: Canadian housing affordability posted the largest improvement in 15 quarters in Q1`23. The mortgage payment on a representative home as a percentage of income (MPPI) declined 3.2 points, a consecutive pullback following the 2.2-point decrease in Q422. Seasonally adjusted home prices decreased 2.4% in Q123 from Q422; the benchmark mortgage rate (5-year term) fell 14 bps, while median household income rose 1.3%. Affordability improved in all ten markets covered in Q1. On a sliding scale of markets from best improvement to deterioration: Vancouver, Hamilton, Toronto, Victoria, Montreal, Winnipeg, Ottawa-Gatineau, Calgary, Edmonton, and Quebec. This was the first time in 10 quarters that all markets improved. Countrywide, affordability improved 1.8 pp in the condo portion vs. a 3.8 pp improvement in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Summary On a seasonally adjusted basis, home sales increased 11.3% from March to April, a third consecutive monthly increase and the first double-digit gain since the summer of 2020. Unlike the previous month, the increase in sales was spread across all provinces, with New Brunswick (-2.5%) and Newfoundland (-17.0%) being the exceptions. On the supply side, new listings increased by 1.6% during the month, a first increase in three months. Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 3.8 to 3.3 in April. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical overage in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. Housing starts in Canada increased in April (+47.8K to 261.6K, seasonally adjusted and annualized), more than consensus expectations calling for a 220.0K print. This increase more than offset Marchs 27.7K decline and was the sharpest since November 2021. In urban areas, rises in housing starts were seen in Ontario (+35.8K to 110.7K), British Columbia (+9.9K to 58.1K), the Maritimes (+4.0K to 9.8K) and Quebec (+2.3K to 29.4K). Meanwhile, a decline was registered in the Prairies (-2.8K to 33.2K) on losses in Manitoba (-3.5K to 4.0K) and Saskatchewan {-0.3K to 2.4K) while starts in Alberta posted an increase (+1.1K to 26.8K). The Teranet-National Bank Composite National House Price Index remained relatively stable in April with a slight decrease of 0.1% compared with the previous month and after adjusting for seasonal effects. After seasonal adjustment, 5 of the 11 markets in the composite index were down during the month: Edmonton (-2.5%). Ottawa-Gatineau (-2.1%), Vancouver (-0.9%), Hamilton (-0.5%) and Montreal (-0.2%). Conversely, prices increased during the month in Quebec City (+1.2%), Toronto (+0.7%), Winnipeg (+0.5%), Calgary (+0.3%) and Victoria (+0.1%), while they remained stable in Halifax. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From CMHC Key highlights from the 2023 release We expect house prices and supply in Canada to decrease between 2022 2023. Price declines are expected to end sometime in 2023 before increasing for the remainder of the forecast period. Our analysis forecasts a significant drop in housing starts in 2023 and we can see some recovery starting in 2023 to 2024 and onward. Rental affordability is also set to decline due to demand outstripping supply, especially in Vancouver and Toronto. Prairie provinces expect more positive housing market conditions due to interprovincial migration and affordable homeownership. Ontario, British Columbia and Qubec will see significant drops in housing starts compared to other regions. The Atlantic regions economy remains stable and moderate relative to other regions. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-market-outlook/2023/housing-market-outlook-spring-2023-en.pdf?rev=5c29bc91-2310-435f-b2c9-b801866d0ede

Highlights from the April 2023 Housing Supply Report: Growth in residential construction was mixed across Canadas 6 largest census metropolitan areas in 2022. Current new home inventories are at historic lows even though housing starts were strong during the pandemic. Housing starts increased in Toronto, Calgary, Edmonton and Ottawa. Starts were stable in Vancouver and decreased in Montral. New research completed by the University of British Columbia using CMHC data shows that most housing starts were built in low-amenity neighbourhoods. Apartments, however, tend to be in high-amenity areas . As interest rates increased, homebuyer purchasing power dropped. Prices decreased slightly in most markets. Apartment construction both purpose-built rental and condominiums continued to grow. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-supply-report/housing-supply-report-2023-04-en.pdf?rev=5558faea-840d-4a27-a9a3-c49e421abd1a

From National Bank of Canada Even though the resale housing market is showing its first signs of stabilization and the non-seasonally adjusted Teranet-National Bank Index has seen its first monthly increase in ten months, it is still too early to say that the real estate market in Canada is on the rise. In fact, once adjusted for seasonal effects, the composite index contracted by 0.8% during the month, as price growth is generally stronger in the spring with the start of the high season. It should also be noted that, on an annual basis, the index in March fell by 6.9% compared to March 2022 and thus equaled the record contraction recorded during the 2008-2009 financial crisis. With the Bank of Canada expected to keep its policy rate in restrictive territory for much of 2023 and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we anticipate that the price correction that currently stands at 8.8% could continue through the end of 2023 (-5% additional), but this assumes that policy rate hikes are over, and declines begin at the end of the year. Although corrections are observed in all markets covered by the index (except Sherbrooke), the CMAs that have experienced the largest price growth over the past two years are also those that have recorded the sharpest declines to date. Ontario and British Columbia thus appear to be more vulnerable, while the Prairie markets are less so, as affordability problems are less acute. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased 0.8% in March compared with the previous month and after adjusting for seasonal effects, the ninth consecutive monthly decline. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Victoria (-4.5%), Winnipeg (-2.4%), Toronto (-1.9%), Edmonton (-0.9%), Hamilton (-0 .1%) Conversely, prices increased during the month in Halifax (+2.3%), Montreal (+0.5%), Vancouver (+0.3%) and Calgary (+0.1%). From March 2022 to March 2023, the composite index decreased by 6.9%, matching the record annual decline observed during the 2008-2009 financial crisis. Price growth in Calgary (7.6%), Quebec City (4.1%) and Edmonton (2.2%) was more than offset by declines in Montreal (-0.8%), Ottawa-Gatineau (-4.7%), Halifax (-4.9%), Vancouver (-5.0%), Winnipeg (-6.3%), Victoria (-8.7%), Toronto (-12.1%) and Hamilton (-13.5%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

From National Bank of Canada Summary On a seasonally adjusted basis, home sales increased 1.4% from February to March, the first time since February 2022 that they experienced two consecutive monthly increases. Unlike the previous month, the increase in sales was not spread across all provinces. On the supply side, new listings dropped by 5.8% in the month, a seventh decrease in nine months. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that 19% of listings have been withdrawn in the last three months. Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 4.1 to 4.9 in March. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. Housing starts in Canada decreased in March (-27.1K to 213.9K, seasonally adjusted and annualized), which was below consensus expectations calling for a 237.5K print. This drop almost fully erased Februarys 27.9K gain. In urban areas, decreases in housing starts were seen in Ontario (-20.7K to 75.4K), the Prairies (-8.0K to 35.9K), Quebec (-11.8K to 27.0K) and the Maritimes (-0.3K to 6.3K). Starts in BC (+13.6K to 48.0K), meanwhile, increased after reaching their lowest level since March 2022 in February, thanks to a gain in multiples (+14.1K to 43.2K) while single units starts were essentially steady (-0.5K to 4.8K). The Teranet-National Bank Composite National House Price Index decreased 0.8% in March compared with the previous month and after adjusting for seasonal effects, the ninth consecutive monthly decline. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Victoria (-4.5%), Winnipeg (-2.4%), Toronto (-1.9%), Edmonton (-0.9%), Hamilton (-0.1%) Conversely, prices increased during the month in Halifax (+2.3%), Montreal (+0.5%), Vancouver (+0.3%) and Calgary (+0.1%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From National Bank of Canada On a seasonally adjusted basis, home sales increased 1.4% from February to March, the first time since February 2022 that they experienced two consecutive monthly increases. Unlike the previous month, the increase in sales was not spread across all provinces. In fact, this growth is largely explained by a notable jump of 10.0% in sales in B.C. and to a lesser extent by increases in Manitoba (1.2%), Ontario (1.1%) and Quebec (0.8%). Despite signs of stabilization, the level of sales in Canada remains very low on a historical basis and has declined by 39.5% since the start of the monetary tightening. As we expect the Bank of Canada to keep its policy rate at its current restrictive level for most of 2023, the outlook for a recovery in the housing market remains limited. As a result, sales are expected to remain below their historical average in the coming months and it is still too early to interpret recent increases in sales as a rebound in the housing Market. On the supply side, new listings dropped by 5.8% in the month, a seventh decrease in nine months. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that 19% of listings have been withdrawn in the last three months. Overall, supply decreased in Canada as testified by the number of months of inventory (active-listings to sales) decreasing from 4.1 to 4.9 in March. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. As a result, the active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only Manitoba indicating a ratio above average. On a year-over-year basis, home sales were down 34.4% compared to the second-strongest month of March in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in Alberta (-41.3%) and the smallest in Saskatchewan (-20.2%). For the first quarter of 2023, cumulative sales were down 37.0% compared to the same period last year. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-canada.pdf

The Bank of Canada today held its target for the overnight rate at 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Inflation in many countries is easing in the face of lower energy prices, normalizing global supply chains, and tighter monetary policy. At the same time, labour markets remain tight and measures of core inflation in many advanced economies suggest persistent price pressures, especially for services. Global economic growth has been stronger than anticipated. Growth in the United States and Europe has surprised on the upside, but is expected to weaken as tighter monetary policy continues to feed through those economies. In the United States, recent stress in the banking sector has tightened credit conditions further. US growth is expected to slow considerably in the coming months, with particular weakness in sectors that are important for Canadian exports. Meanwhile, activity in Chinas economy has rebounded, particularly in services. Overall, commodity prices are close to their January levels. The Banks April Monetary Policy Report (MPR) projects global growth of 2.6% this year, 2.1% in 2024, and 2.8% in 2025. In Canada, demand is still exceeding supply and the labour market remains tight. Economic growth in the first quarter looks to be stronger than was projected in January, with a bounce in exports and solid consumption growth. While the Banks Business Outlook Survey suggests acute labour shortages are starting to ease, wage growth is still elevated relative to productivity growth. Strong population gains are adding to labour supply and supporting employment growth while also boosting aggregate consumption. Housing market activity remains subdued. https://www.bankofcanada.ca/2023/04/fad-press-release-2023-04-12/?fbclid=IwAR0a-4yHJVIhZA_NbWespXWZn49Q7XwhCTvrCV92O8ATLiiGCG0Rwi0K6Vg

Statistics released by the Canadian Real Estate Association (CREA) show national home sales were up on a month-over-month basis in February 2023. Highlights: National home sales rose 2.3% month-over-month in February. Actual (not seasonally adjusted) monthly activity came in 40% below February 2022. The number of newly listed properties dropped 7.9% month-over-month. The MLS Home Price Index (HPI) edged down 1.1% month-over-month and was down 15.8% year-over-year. The actual (not seasonally adjusted) national average sale price posted an 18.9% year-over-year decline in February. Home sales recorded over Canadian MLS Systems posted a 2.3% increase from January to February 2023. Gains were led by the Greater Toronto Area (GTA) and Greater Vancouver. The actual (not seasonally adjusted) number of transactions in February 2023 came in 40% below an incredibly strong month of February in 2022. The February 2023 sales figure was comparable to what was seen for that month in 2018 and 2019. https://stats.crea.ca/en-CA

Summary On a seasonally adjusted basis, home sales increased 2.3% from January to February, a third monthly gain in five months. The increase was widespread across provinces, with only Manitoba (-7.9%), Nova Scotia (-0.9%), and Alberta (-0.4%) registering decreases. On the supply side, new listings dropped by 7.9% in the month, a sixth decrease in eight months. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that about one in five listings have been withdrawned in the last three months. Overall, supply decreased slightly in Canada as testified by the number of months of inventory (active listings to sales) decreasing from 4.2 to 4.1 in February. This remains up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. The active-listings to sales ratio is still tighter than its historical average in the majority of Canadian provinces, with only B.C. and Manitoba indicating a ratio above average. Housing starts in Canada increased in February (+27.4K to 244.0K, seasonally adjusted and annualized), which was above consensus expectations calling for a 220K print. This jump almost fully erased Januarys 32.4K pullback. In urban areas, increases in housing starts were seen in Ontario (+26.4K to 98.4K), the Prairies (+10.5K to 43.8K), Quebec (+5.1K to 40.4K) and the Maritimes (+0.8K to 5.8K). Starts in BC (-12.8K to 33.7K), meanwhile, declined to their lowest level since March 2022 on a weakness in multiples (-12.3K to 28.4K) while single units starts were essentially steady (-0.5K to 5.3K). The Teranet-National Bank Composite National House Price Index decreased by 0.5% in February compared to the previous month and after seasonal adjustment, the tenth consecutive monthly decrease. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Toronto (-2.7%), Calgary (-2.4%), Halifax (-1.8%), Edmonton (-0.8%), Hamilton (-0.3%), Montreal (-0.3%) and Ottawa-Gatineau (-0.2%). Conversely, prices increased in Vancouver (+3.8%), Victoria (+1.9%) and Quebec City (+0.1%). while they remained stable in Winnipeg. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From National Bank of Canada The Teranet-National Bank Index continued to decline in February so that the cumulative decline in prices since their peak in May 2022 totaled 11.2%, the largest contraction in the index ever recorded. The current decline in prices has even surpassed the 9.2% loss in value that occurred during the 2008 financial crisis. With the Bank of Canada expected to keep its policy rate in restrictive territory well into 2023 and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still anticipate a total correction of about 15% nationally by the end of 2023, but this assumes that policy rate hikes are over and declines begin at year-end. Although corrections are being seen in all markets covered by the index, the CMAs that have seen the largest price growth over the past two years are also those that have seen the largest declines to date. Ontario, British Columbia and the Maritimes thus appear to be more vulnerable, while the Prairie markets are less vulnerable, as affordability issues are less acute. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 0.5% in February compared to the previous month and after seasonal adjustment, the tenth consecutive monthly decrease. After seasonal adjustment, 7 of the 11 markets in the composite index were down during the month: Toronto (-2.7%), Calgary (-2.4%), Halifax (-1.8%). Edmonton (-0.8%), Hamilton (-0.3%), Montreal (-0.3%) and Ottawa-Gatineau (-0.2%). Conversely, prices increased in Vancouver (+3.8%), Victoria (+1.9%) and Quebec City (+0.1%), while they remained stable in Winnipeg. From February 2022 to February 2023, the composite index decreased by 4.7%, the second consecutive month in which the annual change in the index was in negative territory. Price increases in Calgary (8.8%), Quebec (5.0%). Edmonton (1.9%) and Montreal (0.8%) were entirely offset by decreases in Victoria (-1.4%), Ottawa-Gatineau (-2.3%), Winnipeg (-2.7%), Halifax (-3.2%), Vancouver (-3.9%), Toronto (-8.8%), and Hamilton (-14.0%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

For the first time in 9 quarters, housing affordability improved in Canada. Not only was it the largest improvement in over 3 years, but it also ended the longest sequence of declining home affordability since the 1986-89 episode. Still, that is not to say that the median home is now affordable in Canada as the mortgage payment as a percentage of income (MPPI) registered at 64.6%, the second highest level since 1981. Feeding into the refinement, home prices declined for a second consecutive quarter and did so at the fastest pace since 1990. Although our 5-year benchmark mortgage rate used to calculate affordability rose by 17 bps in the fourth quarter, that was more than compensated for by falling prices and still rising incomes. The slight rise in rates nonetheless brought the benchmark rate to its highest level since 2008. Preliminary data for the first quarter of 2023 as well as our outlook for monetary policy in Canada suggest that we may be peaking in terms of mortgage interest rates. The current level for interest rates is restrictive and signals that home price declines are not over yet. Moreover, incoming data for the first quarter of 2023 confirms that prices have weakened while resale market data from CREA indicates that sales have significantly declined with listings concurrently increasing. Given our view for further declines in home price and decreasing mortgage rates, we expect affordability to improve in the coming quarters. HIGHLIGHTS: Canadian housing affordability improved for the first time in 9 quarters in Q422. The mortgage payment on a representative home as a percentage of income (MPPI) declined 2.1 points, a pullback from the 4.0-point increase in Q322. Seasonally adjusted home prices decreased 3.9% in Q422 from Q322; the benchmark mortgage rate (5-year term) rose 17 bps, while median household income rose 1.0%. Affordability improved in 8 of the ten markets covered in Q4. On a sliding scale of markets from best improvement to deterioration: Victoria, Hamilton, Toronto, Vancouver, Ottawa-Gatineau, Montreal, Winnipeg, Quebec, Edmonton, Calgary. This was the first time in 9 quarters that a majority of markets improved. Countrywide, affordability improved 0.6 pp in the condo portion vs. a 2.9 pp improvement in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

The Bank of Canada today held its target for the overnight rate at 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Global economic developments have evolved broadly in line with the outlook in the January Monetary Policy Report (MPR). Global growth continues to slow, and inflation, while still too high, is coming down due primarily to lower energy prices. In the United States and Europe, near-term outlooks for growth and inflation are both somewhat higher than expected in January. In particular, labour markets remain tight, and elevated core inflation is persisting. Growth in China is rebounding in the first quarter. Commodity prices have evolved roughly in line with the Banks expectations, but the strength of Chinas recovery and the impact of Russias war in Ukraine remain key sources of upside risk. Financial conditions have tightened since January, and the US dollar has strengthened. In Canada, economic growth came in flat in the fourth quarter of 2022, lower than the Bank projected. With consumption, government spending and net exports all increasing, the weaker-than-expected GDP was largely because of a sizeable slowdown in inventory investment. Restrictive monetary policy continues to weigh on household spending, and business investment has weakened alongside slowing domestic and foreign demand. The labour market remains very tight. Employment growth has been surprisingly strong, the unemployment rate remains near historic lows, and job vacancies are elevated. Wages continue to grow at 4% to 5%, while productivity has declined in recent quarters. Inflation eased to 5.9% in January, reflecting lower price increases for energy, durable goods and some services. Price increases for food and shelter remain high, causing continued hardship for Canadians. With weak economic growth for the next couple of quarters, pressures in product and labour markets are expected to ease. This should moderate wage growth and also increase competitive pressures, making it more difficult for businesses to pass on higher costs to consumers. https://www.bankofcanada.ca/2023/03/fad-press-release-2023-03-08/?fbclid=IwAR2176FL0YpgrqcA-0CAxpkw1SEwR7InkZY3Pb1NZxGjS9tc70Bw6ARkj-Q

On a seasonally adjusted basis, home sales decreased 3.0% from December to January, a second monthly decline in three months. As a result, sales slipped to their lowest level since August 2010 (excluding the pandemic). As the Bank of Canada raised its policy rate in January and is expected to keep monetary conditions restrictive for most of 2023, the resale market could experience further declines in the months ahead and remain at a level of activity well below its historical overage. Adding to the weakness of the report, the decrease in sales was widespread across provinces, with only Ontario (+0.4%) and PEI (+6.0%) registering increases. On the supply side, new listings were up 3.3% in the month, a first increase in three months and the fastest one since February 2022. Still, we continue to see that there is a high proportion of sellers who are changing their minds, as we estimate that about one in five listings are withdrawn during the month. Despite this, the increase in listings combined to the low level of sales is allowing supply to rise in Canada as testified by the number of months of inventory increasing from 4.1 to 4.3 in January. This is up from the trough of 1.7 reached in the pandemic but remains low on a historical basis. As a result, the active-listing to sales ratio is easing but is still tighter than its historical average in the majority of Canadian provinces, with only B.C. and Manitoba indicating a ratio above average. On a year-over-year basis, home sales were down 39.4% compared to the second-strongest month of January in history last year. Sales were down in every province on a year-over- year basis, with the largest decline observed in B.C. (-49.0%) and the smallest in Newfoundland (-13.5%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-canada.pdf

Statistics released by the Canadian Real Estate Association (CREA) show national home sales were down on a monthover-month basis in January 2023. Highlights: National home sales declined 3% month-over-month in January. Actual (not seasonally adjusted) monthly activity came in 37.1% below January 2022. The number of newly listed properties rose 3.3% month-over-month. The MLS Home Price Index (HPI) declined by 1.9% month-over-month and was down 12.6% year-over-year. The actual (not seasonally adjusted) national average sale price posted an 18.3% decline year-over-year in January. https://stats.crea.ca/en-CA/

Growth in demand outpaced strong growth in supply, pushing the vacancy rate for purpose-built rental apartments down from 3.1% to 1.9%. This was the vacancy rates lowest level since 2001. Rent growth, for its part, reached a new high. Rental demand surged across the country. This was a reflection of higher net migration and the return of students to on-campus learning. Another factor was higher mortgage rates, which drove up already-elevated costs of homeownership. Despite higher overall supply, the share of rental units that are affordable for the lowest-income renters is, in most markets, in the low single digits or too low to report. This is especially true in Ontario and British Columbia (B.C.). New data: Average rent growth for 2-bedroom units that turned over to a new tenant was well above average rent growth for units without turnover (18.2% vs. 2.8%). This increased affordability challenges. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/rental-market-report/rental-market-report-2022-en.pdf?rev=2a0ed640-6c4c-435d-b13a-0faca94c0667

From National Bank of Canada The Teranet-National Bank HPI continued to decline in December so that the cumulative drop in prices since their peak in May 2022 totaled 10.0%, the largest contraction in the index ever recorded. The current decline in prices has even surpassed the 9.2% loss in value that occurred during the 2008 financial crisis. However, there is some consolation in that the seasonally adjusted monthly decrease in prices in December was less significant than in November, going from -1.0% to -0.3%. With the Bank of Canada raising its key interest rate again in December and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still expect the total correction to be limited to about 15% nationally by the end of 2023, but this assumes that policy rate hikes are coming to an end and that declines occur in the second half of 2023. Although corrections are occurring in all markets covered by the index (except Lethbridge), the CMAs that have experienced the largest price growth over the past two years are also the ones that have experienced the largest declines to date. Ontario, British Columbia and the Maritimes therefore appear to be more vulnerable, while the Prairie markets are less so, helped by a buoyant economic environment. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 0.3% in December compared to the previous month and after adjusting for seasonal effects, the sixth consecutive monthly decrease. After adjusting for seasonal effects, 6 of the 11 markets in the composite index were down during the month: Winnipeg (-1.8%), Calgary (-1.1%), Ottawa-Gatineau (-1.1%), Edmonton (-0.9%), Montreal (-0.5%) and Toronto (-0.4%). Conversely, the Quebec City (+1.3%), Victoria (+1.1%), Hamilton (+0.8%), Halifax (+0.4%) and Vancouver (+0.1%) markets were up. From December 2021 to December 2022, the composite index remained stable, the first time since the financial crisis of 2008-09 that the index did not increase over one year. Price increases in Calgary (12.4%), Edmonton (6.3%), Halifax (4.7%), Quebec City (4.7%} and Montreal (2.5%) were entirely offset by decreases in Victoria (-0.1%), Ottawa-Gatineau (-1.0%), Vancouver (-1.5%), Toronto (-1.9%), Winnipeg (-2.0%) and Hamilton (-2.9%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

The Bank of Canada today increased its target for the overnight rate to 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Global inflation remains high and broad-based. Inflation is coming down in many countries, largely reflecting lower energy prices as well as improvements in global supply chains. In the United States and Europe, economies are slowing but proving more resilient than was expected at the time of the Banks October Monetary Policy Report (MPR). Chinas abrupt lifting of COVID-19 restrictions has prompted an upward revision to the growth forecast for China and poses an upside risk to commodity prices. Russias war on Ukraine remains a significant source of uncertainty. Financial conditions remain restrictive but have eased since October, and the Canadian dollar has been relatively stable against the US dollar. The Bank estimates the global economy grew by about 3% in 2022, and will slow to about 2% in 2023 and 2% in 2024. This projection is slightly higher than Octobers. In Canada, recent economic growth has been stronger than expected and the economy remains in excess demand. Labour markets are still tight: the unemployment rate is near historic lows and businesses are reporting ongoing difficulty finding workers. However, there is growing evidence that restrictive monetary policy is slowing activity, especially household spending. Consumption growth has moderated from the first half of 2022 and housing market activity has declined substantially. As the effects of interest rate increases continue to work through the economy, spending on consumer services and business investment are expected to slow. Meanwhile, weaker foreign demand will likely weigh on exports. This overall slowdown in activity will allow supply to catch up with demand. https://www.bankofcanada.ca/2023/01/fad-press-release-2023-01-25/

Summary On a seasonally adjusted basis, home sales increased 1.3% from November to December, a second monthly gain in ten months. Despite this relative stabilization of the market in December, sales were still down 37.8% from their February 2022 level. New listings were down 6.4% from November to December, a fifth contraction in six months which shows that both buyers and sellers remain on the sidelines in the current market environment. It should also be noted there is still a high proportion of sellers who are changing their minds, as we estimate that about one in five listings are withdrawn during the month. The low level of sales is still allowing supply to rebuild, with the number of months of inventory increasing from 4.1 to 4.2 in December. While easing, market conditions are still pointing in the direction of a favourable to sellers market with supply still very low on a historical basis. Housing starts fell 14.4K in December to a 9-month low of 248.6K (seasonally adjusted and annualized). Urban starts dropped 12.9K to 227.7K on declines in both the single-family (-5.5K to a post-pandemic low of 44.9K) and the multi-family segment (-7.4K to 182.9K). The Teranet-National Bank Composite National House Price Index decreased by 0.3% in December compared to the previous month and after adjusting for seasonal effects, the sixth consecutive monthly decrease. After adjusting for seasonal effects, 6 of the 11 markets in the composite index were down during the month: Winnipeg (-1.8%), Calgary (-1.1%), Ottawa-Gatineau (-1.1%), Edmonton (-0.9%). Montreal (-0.5%) and Toronto (-0.4%). Conversely, the Quebec City (+1.3%), Victoria (+1.1%). Hamilton (+0.8%), Halifax (+0.4%) and Vancouver (+0.1%) markets were up. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

Sales in November were down 3.3% on a month-over-month basis, rejoining the trend of moderating sales that began back in February. The Aggregate Composite MLS Home Price Index (HPI) edged down 1.4% on a month-over-month basis in November, which, as with sales activity, continues the trend that began in the spring. The national MLS HPI now sits about 11.5% below its peak level but there are considerable regional differences. While prices are down more in Ontario and parts of British Columbia, they have softened to some degree almost everywhere. Calgary, Regina and Saskatoon stand out as markets where home prices are barely off their peaks. https://www.creacafe.ca/whats-happening-in-canadian-housing-markets-as-we-head-into-2023/

A lot of the recent talk in financial and real estate circles has been centering on the possibility of a pause in the Bank of Canadas aggressive interest rate increases. Some speculate that could happen at the next rate setting, later this month. The Bank raised rates seven times last year in an effort to rein in galloping inflation. It does seem to be working, but there are some stubborn sticking points. Headline inflation, known as the Consumer Price Index (CPI), has dropped. It was 8.1% in July and decreased to 6.8% in November. However, the drop from October to November was a mere one-tenth of one percentage point and the Banks target rate remains significantly below that, at 2.0%. As well, the BoCs preferred inflation measure, Core Inflation (which strips out volatile components like food and fuel), actually increased. A simple averaging of the three components that the Bank uses to measure Core Inflation came in at nearly 5.7% in November, up from 5.3% in October. Other factors that figure into the Banks plans include Gross Domestic Product and unemployment. Canadas GDP continues to grow, albeit modestly, despite rising interest rates. It increased by 0.1%, month-over-month in November. Unemployment dipped 0.1% to 5.0% in December. Both of these tend to fuel higher wages which are a key driver of inflation. The Bank of Canada, itself, remains firmly dedicated to battling back inflation. Governor Tiff Macklem has said he would rather over-tighten than under-tighten and run the risk of having high inflation linger and become entrenched. The U.S. central bank has made it clear it plans more rate hikes. Given the integration of the Canadian and American economies, the Bank of Canada does have to pay attention to what its American counterpart does. The BoC will have new economic data by the time it makes its January 25th announcement. The December numbers will provide a fresh look at how well the inflation fight is going. Normally it takes 18 to 24 months for interest rate increases to work their way into the economy and we are only about 10 months into this tightening cycle. It is reasonable to expect another 25 basis-point increase on the 25th. Given the Banks apparent success so far it also seems likely to expect a pause sometime after that. Looking ahead to a year from now some forecasters say we might start to hear talk of interest rate cuts, which would be welcome news. Cuts would allow the BoC to move toward its, long-stated, goal of normalizing rates back into the neutral range of 2.5% to 3.5%. The Bank of Canada, and central banks around the world, have been trying to do that for more than a decade since the 08 - 09 financial collapse.

From National Bank of Canada For the first time since the financial crisis of 2008, all of the cities covered by the Teranet-National Bank HPI have seen prices decline from their peak reached over the past 12 months, marking the end of a prosperous period for the Canadian real estate market. Indeed, price declines were observed in all markets covered, with the last cities on the list to experience contractions being Calgary, Edmonton, Lethbridge and Trois-Rivieres. Since its peak in May 2022, the national composite index has already fallen by 9.0%, almost as much as during the last financial crisis (-9.2%). With the Bank of Canada raising its key interest rate again in December and mortgage rates remaining high, we believe that the impact on property prices should continue to be felt in the coming months. All in all, we still anticipate a total correction of about 15% in house prices nationally by the end of 2023, assuming that the policy rate does not increase further and begins to decline in the second half of 2023. Although corrections are being observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have recorded the sharpest declines to date. Ontario, British Columbia, and the Maritimes therefore appear to be more vulnerable, while the Prairie markets are less so, helped by a buoyant economic context. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 1.1% in November compared to the previous month and after adjusting for seasonal effects, a fifth consecutive monthly decrease. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Montreal (-2.2%), Hamilton (-1.9%), Vancouver (-1.5%), Ottawa-Gatineau (-1.3%), Winnipeg (-1.1%), Quebec City (-1.1%), Toronto (-0.9%) and Calgary (-0.8%). Conversely, the Halifax (+1.6%), Victoria (+0.9%) and Edmonton (+0.3%) markets were up. From November 2021 to November 2022, the composite index increased by 2.0%, the lowest annual growth since November 2019. This growth was driven by Calgary (14.6%), Edmonton (7.6%), Halifax (6.2%), Quebec City (5.7%), Montreal (4.7%) and Victoria (3.0%). Growth was lower than average in Winnipeg (1.2%), Vancouver (0.7%) and Ottawa-Gatineau (0.4%), while it remained stable in Toronto and was down in Hamilton (-0.9%). https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-teranet.pdf

Summary On a seasonally adjusted basis, home sales decreased 3.3% from October to November, an eighth monthly decline in nine months. After recording a gain in October, the real estate market has resumed its downward trend of recent months, accumulating a decline in sales of 38.8% since their February level. New listing were down 1.3% from October to November, a fourth contraction in five months which shows that both buyers and sellers remain on the sidelines in the current market environment. It should also be noted that a very high proportion of sellers are changing their minds, while we estimate that about one in five listings are withdrawn during the month. The level of sales is still allowing supply to rebuild, with the number of months of inventory increasing from 3.9 to 4.2 in November. While easing, market conditions are still pointing in the direction of a favourable to sellers market with supply still very low on a historical basis. Housing starts were essentially steady in November at a level way above historical trends (-0.4K to 264.2K, seasonally adjusted and annualized). This was better than consensus expectations calling for a decline. That said, the prior months result was revised downwards from 267.1 to 264.6K. The Teranet-National Bank Composite National House Price lndexTM decreased by 1.1% in November compared to the previous month and after adjusting for seasonal effects, a fifth consecutive monthly decrease. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Montreal (-2.2%), Hamilton (-1.9%), Vancouver (-1.5%), Ottawa-Gatineau (-1.3%), Winnipeg (-1.1%), Quebec City (-1.1%), Toronto (-0.9%) and Calgary (-0.8%). Conversely, the Halifax (+l.6%), Victoria (+0.9%) and Edmonton (+0.3%) markets were up. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/economic-news-resale-market.pdf

From CMHC In this Fall 2022 edition, we find the following: Recent mortgage market trends Mortgage growth slowed down as interest rates hiked in the second quarter of 2022. Mortgage consumers are increasingly turning back to fixed rates as interest rates rapidly increase and the discount on variable interest rates vanishes. Declining ratios of mortgage loan approvals to applications show it is increasingly difficult for potential borrowers to get qualified for loans subject to the stress test. The share of mortgages in arrears (i.e. delinquent for 90 days or more) have continued to trend downwards across all types of lenders. Housing Finance Research at-a-glance In the third quarter of 2022, consumers without a mortgage registered notable delinquency rate increases in auto loans and credit cards. Mortgage lending growth by alternative lenders outpaces conventional lenders. Their portfolio metrics indicate a decreasing risk profile. Mortgage borrowers in the alternative lending space are more likely to renew their loans as it becomes harder to qualify with traditional lenders. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/housing-research/research-reports/housing-finance/residential-mortgage-industry-report/2022/residential-mortgage-industry-report-fall-2022-en.pdf?rev=239fc8ea-a885-430f-97fe-dd700161d872

The Bank of Canada today increased its target for the overnight rate to 4%, with the Bank Rate at 4% and the deposit rate at 4%. The Bank is also continuing its policy of quantitative tightening. Inflation around the world remains high and broadly based. Global economic growth is slowing, although it is proving more resilient than was expected at the time of the October Monetary Policy Report (MPR). In the United States, the economy is weakening but consumption continues to be solid and the labour market remains overheated. The gradual easing of global supply bottlenecks continues, although further progress could be disrupted by geopolitical events. In Canada, GDP growth in the third quarter was stronger than expected, and the economy continued to operate in excess demand. Canadas labour market remains tight, with unemployment near historic lows. While commodity exports have been strong, there is growing evidence that tighter monetary policy is restraining domestic demand: consumption moderated in the third quarter, and housing market activity continues to decline. Overall, the data since the October MPR support the Banks outlook that growth will essentially stall through the end of this year and the first half of next year. CPI inflation remained at 6.9% in October, with many of the goods and services Canadians regularly buy showing large price increases. Measures of core inflation remain around 5%. Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum. However, inflation is still too high and short-term inflation expectations remain elevated. The longer that consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched. https://www.bankofcanada.ca/2022/12/fad-press-release-2022-12-07/

From National Bank of Canada We remain in the midst of the longest sequence of declining home affordability since the 1986-1989 episode (11 quarters). The magnitude of the deterioration, however, is much more pronounced this time (25.5 p.p. vs. 20.2 p.p. in the 1980s). As a result, the mortgage ona representative home in Canada now takes 67.3% of income to service, the most since 1981. A first since the second quarter of 2019 is the downturn in housing prices that has mitigated slightly the impact on affordability of still rising mortgage rates. Our 5-year benchmark mortgage rate used to calculate our affordability metrics rose 75 bps in the third quarter of the year. While this surge was less significant than the one observed in the previous quarter, it propelled the benchmark mortgage rate to its highest level since 2010. To give an idea of scale, all else being equal, a 75-bps increase represents an extra 300$ (or an 8.1% increase) on the monthly mortgage payment for a representative home in Canada. With our affordability indexes at extreme levels in most markets, we see further declines in housing prices. The slowdown in real estate activity in several markets is expected to result in a cumulative 15% decline in home prices in 2023 from the peak (-7.7% to date). This, combined with a stabilization of the benchmark 5-year mortgage rate, should improve affordability in the coming quarters. HIGHLIGHTS: Canadian housing affordability deteriorated for a seventh consecutive quarter in Q322. The mortgage payment on a representative home as a percentage of income (MPPI) rose 3.8 points, a deceleration from the 10.2-point increase in Q222. Seasonally adjusted home prices decreased 1.1% in Q322 from Q222; the benchmark mortgage rate (5-year term) rose 75 bps, while median household income rose 0.9%. Affordability deteriorated in all the ten markets covered in Q3. On a sliding scale of markets from worst deterioration to least: Vancouver, Victoria, Calgary, Montreal, Toronto, Quebec, Edmonton, Ottawa-Gatineau, Hamilton, Winnipeg. This was the seventh consecutive quarter with a worsening in all markets. Countrywide, affordability deteriorated 2.7 pp in the condo portion vs. a 4.8 pp deterioration in the non-condo segment. https://www.nbc.ca/content/dam/bnc/taux-analyses/analyse-eco/logement/housing-affordability.pdf

Summary On a seasonally adjusted basis, home sales increased 1.3% from September to October, the first monthly gains in eight months. Despite this growth in sales, this should not be seen as the beginning of an upward trend, but more like a stabilization of the market, with sales now 35.6% below their February level. This is the first time in four months that new listings are up with an increase of 2.2% from September to October. Despite the increase in soles, the increase in new listings allowed supply to accumulate, resulting in the number of months of inventory increasing from 3.7 to 3.8 in October. We are not yet seeing a large influx of sellers at this time, so supply is still very low on a historical basis and market conditions are still pointing in the direction of a favourable to sellers market. This situation is also present in the majority of Canadian provinces, while only B.C. and Manitoba close to indicating a favourable to buyers market. Housing starts declined by 31.8K in October to 267.1K (seasonally adjusted and annualized) after having reached their highest level for 2022 in the prior month while the consensus was calling for a decline to 275K. Storts continued to be well above their long-term average, despite still increasing interest rates. The Teranet-National Bank Composite National House Price Index decreased by 0.8% in October compared to the previous month and after seasonal adjustments. Nine of the 11 markets in the composite index were down during the month: Halifax (-4.7%), Hamilton (-2.8%), Winnipeg (-2.4%), Victoria (-2.0%), Quebec City (-1.7%), Toronto (-1.1%), Ottawo-Gotineau (-1.1%), Montreal (-1.0%) and Vancouver (-0.3%). Conversely, the Calgary (+1.8%) and Edmonton (+2.0%) markets were still up. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

Statistics released by the Canadian Real Estate Association (CREA) show national home sales edged a little higher in October 2022. HIGHLIGHTS National home sales were up 1.3% on a month-over-month basis in October. Actual (not seasonally adjusted) monthly activity came in 36% below October 2021. The number of newly listed properties edged up 2.2% month-over-month. The MLS Home Price Index (HPI) declined by 1.2% month-over-month and was down 0.8% year-over-year. The actual (not seasonally adjusted) national average sale price posted a 9.9% year-over-year decline in October. https://stats.crea.ca/en-CA/

From National Bank of Canada In September, the seasonally adjusted composite index fell by 2.0%, matching the previous months record decline and representing a fifth consecutive monthly contraction. Since its peak in May, the composite index (not seasonally adjusted) has already declined by 7.0%, whereas during the 2008 financial crisis, prices fell by only 6.2% over the same period and by 9.2% in total over eight months. In a context where monetary policy will continue to be tightened in the coming months, house prices should continue their contraction and exceed that experienced during the financial crisis of 2008. Indeed, we anticipate a record cumulative decline of about 15% nationally by the end of 2023, assuming a policy rate that tops out around 4.0% and a Bank of Canada that throws some weight behind lowering rates in the second half of 2023. Although corrections are observed in the vast majority of markets covered by the index, the CMAs that have experienced the most significant price growth over the past two years are also those that have experienced the most significant declines to date. As a result, the price correction is expected to be more significant in Ontario, British Columbia and the Maritimes, while it is expected to be less significant in the Prairies, which are favoured by a buoyant economic environment. HIGHLIGHTS: The Teranet-National Bank Composite National House Price Index decreased by 2.0% in September compared to the previous month and after seasonal adjustments. After adjusting for seasonal effects, 8 of the 11 markets in the composite index were down during the month: Victoria (-5.9%), Vancouver (-3.5%), Hamilton (-2.1%), Montreal (-1.9%), Toronto (-1.8%), Winnipeg (-1.7%), Ottawa-Gatineau (-1.0%), and Quebec City (-0.1%). Conversely, the Calgary (+1.2%), Halifax (+1.1%) and Edmonton (+0.2%) markets were still up. From September 2021 to September 2022, the composite index increased by 6.0%. This growth was driven by Halifax (16.4%), Calgary (14 .7%) and Montreal (10.5%). Growth was lower than average in Winnipeg (5.9%). Hamilton (5.6%), Edmonton (5.6%), Ottawa-Gatineau (5.0%), Victoria (4.7%), Toronto (4.5%) and Vancouver (3.9%). https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

From National Bank of Canada On a seasonally adjusted basis, home sales fell 3.9% from August to September, bringing the level of sales 18.9% below its 10-year average. This was the seventh consecutive decline for this indicator, with sales down a cumulative 36.2% between February and September. Declines were observed in every province and in 60% of all local markets. We expect the current moderation in sales to continue going forward as the Bank of Canada continues to increase its overnight rate in restrictive territory. The rapid rise in interest rates by the central bank is certainly limiting the purchasing capacity of households while also having a psychological effect on some buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates and the slowdown in the market did not provoke an influx of sellers for the moment. On the contrary, new listings declined 0.8% between August and September, a third monthly drawback in a row. Overall, the number of months of inventory rose from 3.5 to 3.7 months in September, the highest level since May 2020. Based on the active-listings-to-sales ratio, market conditions loosened in the country and are still indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Alberto, Saskatchewan, Manitoba, Ontario and P.E.. The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 32.2% compared to the second-strongest month of September in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in B.C. (-45.2%) and the smallest in Saskatchewan (-7.3%). For the first three quarters of 2022, cumulative sales were down 21.9% compared to the same period in 2021. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

Today, the Bank of Canada increased its overnight benchmark interest rate by 50 basis points to 3.75% from 3.25% in September. This is the sixth time this year that the Bank has tightened the money supply to quell inflation, so far with limited results. Some economists had assumed the increase this time around would be higher, but the BoC decided differently based on its expert economic analysis. We summarize the Banks observations below, including its all-important outlook: Inflation at home and abroad Inflation around the world remains high and broadly based reflecting the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices Energy prices particularly have inflated due to Russias attack on Ukraine The strength of the US dollar is adding to inflationary pressures in many countries In Canada, two-thirds of Consumer Price Index (CPI) components increased more than 5% over the past year Near-term inflation expectations remain high, increasing the risk that elevated inflation becomes entrenched Economic performance at home and abroad Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world In Canada, the economy continues to operate in excess demand, and labour markets remain tight while Canadian demand for goods and services is still running ahead of the economys ability to supply them, putting upward pressure on domestic inflation Canadian businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services Domestic economic growth is expected to stall through the end of this year and the first half of next year as the effects of higher interest rates spread through the economy The Bank projects GDP growth will slow from 3.25% this year to just under 1% next year and 2% in 2024 In the United States, labour markets remain very tight even as restrictive financial conditions are slowing economic activity The Bank projects no growth in the US economy through most of next year In the euro area, the economy is forecast to contract in the quarters ahead, largely due to acute energy shortages Chinas economy appears to have picked up after the recent round of pandemic lockdowns, although ongoing challenges related to its property market will continue to weigh on growth The Bank projects global economic growth will slow from 3% in 2022 to about 1.5% in 2023, and then pick back up to roughly 2.5% in 2024 a slower pace than was projected in the Banks July Monetary Policy Report Canadian housing market The effects of recent policy rate increases by the Bank are becoming evident in interest-sensitive areas of the economy including housing Housing activity has retreated sharply, and spending by households and businesses is softening Outlook The Bank noted that its preferred measures of core inflation are not yet showing meaningful evidence that underlying price pressures are easing. It did however offer the observation that CPI inflation is projected to move down to about 3% by the end of 2023 and then return to its 2% target by the end of 2024. This presumably would be achieved as higher interest rates help rebalance demand and supply, price pressures from global supply chain disruptions fade, and the past effects of higher commodity prices dissipate. As a consequence of elevated inflation and current inflation expectations, as well as ongoing demand pressures in the economy, the Banks Governing Council said to expect that the policy interest rate will need to rise further. The level of such future rate increases will be influenced by the Banks assessments of how tighter monetary policy is working to slow demand, how supply challenges are resolving, and how inflation and inflation expectations are responding. In case there was any doubt, the Bank also reiterated its resolute commitment to restore price stability for Canadians and said it will continue to take action as required to achieve its 2% inflation target. December 7, 2022, is the BoCs next scheduled policy interest rate announcement. First National will follow the Banks commentary and outlook closely and provide an executive summary on our website the same day. For other capital market insights, please visit the Resources page of our website on a regular basis.

The Bank of Canada today increased its target for the overnight rate to 3%, with the Bank Rate at 4% and the deposit rate at 3%. The Bank is also continuing its policy of quantitative tightening. Inflation around the world remains high and broadly based. This reflects the strength of the global recovery from the pandemic, a series of global supply disruptions, and elevated commodity prices, particularly for energy, which have been pushed up by Russias attack on Ukraine. The strength of the US dollar is adding to inflationary pressures in many countries. Tighter monetary policies aimed at controlling inflation are weighing on economic activity around the world. As economies slow and supply disruptions ease, global inflation is expected to come down. In the United States, labour markets remain very tight even as restrictive financial conditions are slowing economic activity. The Bank projects no growth in the US economy through most of next year. In the euro area, the economy is forecast to contract in the quarters ahead, largely due to acute energy shortages. Chinas economy appears to have picked up after the recent round of pandemic lockdowns, although ongoing challenges related to its property market will continue to weigh on growth. Overall, the Bank projects that global growth will slow from 3% in 2022 to about 1% in 2023, and then pick back up to roughly 2% in 2024. This is a slower pace of growth than was projected in the Banks July Monetary Policy Report (MPR). In Canada, the economy continues to operate in excess demand and labour markets remain tight. The demand for goods and services is still running ahead of the economys ability to supply them, putting upward pressure on domestic inflation. Businesses continue to report widespread labour shortages and, with the full reopening of the economy, strong demand has led to a sharp rise in the price of services. https://www.bankofcanada.ca/2022/10/fad-press-release-2022-10-26/

Highlights After a boom recorded last year, housing starts in the countrys six largest census metropolitan areas (CMAs) fell 5% in the first half of 2022. The decrease observed for apartments (-9%) is the main cause of this drop. On an annualized basis, however, housing starts in the first half of 2022 remained high compared to the level of construction over the past five years. Additionally, there was a lot of contrast between the six urban centres studied. Indeed, in the first half of the year, housing starts were up in Edmonton, Calgary and Toronto, while declines were observed in Vancouver, Ottawa and Montral. The effects of rising interest rates and construction costs could have an even greater impact on housing starts in the coming months. New data on physical construction time for housing reveal important differences across centres and dwelling types, which has an impact on the affordability of the end product. Cities that build a lot of large, tall apartment structures will risk having housing construction sectors that are less responsive to a rapid need for new housing units. This is consistent with what is observed in Vancouver and Toronto. Low-rise apartment structures, such as those built in abundance in Montral, take much less time to build than taller apartment structures with a similar number of units. https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-supply-report/housing-supply-report-2022-11-en.pdf?rev=74c50e35-d0a7-4131-b6a5-5829967ed5d1

Highlights Inflationary pressures have been stronger and more persistent than expected since we published our Housing Market Outlook in April 2022. This has led to significantly sharper than predicted interest rate hikes in Canada and other economies. Interest rates are expected to rise further given the need to reduce inflation. The Canadian economy will enter a modest recession by the end of 2022 and start recovering in the second half of 2023. The national house price is expected to decline by close to 15% by Q2 2023 from its historical peak in Q1 2022 as housing demand slows with rising interest rates and deteriorating economic and income conditions. Despite this house price decline, ownership affordability will not improve as the benefit from lower prices will be offset by rising interest rates. Rental affordability pressures will increase with rental demand as fewer renter households can access ownership. https://www.cmhc-schl.gc.ca/en/blog/2022/road-ahead-economy-housing-fall-2022-update

The homeownership rate falls The proportion of Canadian households who own their homeor the homeownership rate (66.5% in 2021)is on the decline in Canada after peaking in 2011 (69.0%). The growth in renter households (+21.5%) is more than double the growth in owner households (+8.4%). Adults under the age of 75 were less likely to own their home in 2021 than adults in that age range a decade earlierespecially young millennials aged 25 to 29 years (36.5% in 2021 vs. 44.1% in 2011). A large share of newer builds are rentals Recently built dwellings are increasingly likely to be occupied by renters40.4% of the housing built in the five years ending in 2021 was tenant-occupied, the highest tenant rate next to that of dwellings built in the 1960s post-war apartment boom, at 44.5%. Over one-third of recently built dwellings, those constructed from 2011 to 2021, were occupied and primarily maintained by millennial (36.6%) renters or owners in 2021, the largest share of any generation. Millennials also represented the largest share of condominium occupants (30.2%) compared with the other generations. The share of condominiums continues to rise The rising trend of condominium construction continuesthe share of occupied dwellings that are condominiums edged up from 13.3% in 2016 to 15.0% in 2021. Most condominiums (90.0%) are located in Canadas large cities, known as census metropolitan areas (CMAs). In Canadas CMAs, condominiums made up 39.9% of the occupied stock in the primary downtowns in 2021, and half of these downtown condos were being rented out by investors. Home values continue to surge through 2021 Expected home values rose in large and small municipalities (census subdivisions [CSDs]) in Ontario and British Columbia from 2016 to 2021. Among CSDs, 77.8% in Ontario and 46.1% in British Columbia saw the average expected value of homes rise by over 50%. Differences in the impact of temporary COVID-19 benefits on household incomesfor renters and for homeownerswere a key contributor to the different degrees of improvement in housing affordability seen for each group, from 2016 to 2021. Canadians find their housing more affordable in 2021 because of higher incomes The rate of unaffordable housing, or the proportion of households that spent 30% or more of their income on shelter costs, fell from 24.1% in 2016 to 20.9% in 2021. The rate of unaffordable housing in Canada for renters fell from 40.0% in 2016 to 33.2% in 2021, with most of the decline occurring among renters earning below the median household income of all renters (68.4% in 2016, compared with 56.0% in 2021). https://www150.statcan.gc.ca/n1/daily-quotidien/220921/dq220921b-eng.htm

From National Bank of Canada On a seasonally adjusted basis, home sales fell 1.0% from July to August, bringing the level of sales 14.4% below its 10-year average. This was the sixth consecutive decline for this indicator, with sales down a cumulative 32.5% between February and August. Declines were observed in every province at the exception of Ontario, due notably to a rebound in sales in the GTA. We expect the current moderation in sales to continue going forward as the Bank of Canada continues to increase its overnight rate in restrictive territory. The rapid rise in interest rates by the central bank is certainly limiting the purchasing capacity of households while also having a psychological effect on some buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates and the slowdown in the market did not provoke an influx of sellers for the moment. On the contrary, new listings declined 5.4% between July and August. Overall, the number of months of inventory rose from 3.4 to 3.5 months in August, the highest level since May 2020. Based on the active-listings-to-sales ratio, market conditions loosened in the country and are now indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Saskatchewan, Alberta, Manitoba, Ontario and P.E.. The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 24.7% compared to the second-strongest month of August in history last year. Sales were down in every province on a year-over-year basis, with the largest decline observed in B.C. (-40.0%) and the smallest in Saskatchewan (-2.2%). For the first eight months of 2022, cumulative sales were down 20.7% compared to the same period in 2021. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

From National Bank of Canada In addition to recording a fourth consecutive monthly decline on a seasonally adjusted basis, the Teranet-National Bank Composite House Price Index experienced its largest contraction ever in a single month (-2.1%) due to rapidly rising interest rates and a slowing resale market. This historic drop broke the previous record of -1.3% recorded in July 2010. Augusts data were also unique in that the declines extended to almost all the 31 cities covered by the index, except for the three CMAs located in Alberta (Calgary, Edmonton and Lethbridge), which is unprecedented. The reason for these isolated increases is obviously the high price of energy and many commodities that drive the economy in this province. Since its peak in May 2022, the composite index has already fallen 4.1%, led by significant declines in Hamilton (-10.5%). Halifax (-8.7%) and Toronto (-8.3%). Significant price declines were also observed in several cities not included in the composite index, including Abbotsford-Mission and many cities in the Golden Horseshoe (Brantford, Oshawa, Barrie, Kitchener, Guelph, and Peterborough). It should be noted, however, that the significant declines in these cities follow dramatic price increases since the start of the pandemic. As the Bank of Canada continues to raise its policy rate into restrictive territory, we expect the composite index to decline from its peak reached earlier this year by 10%-15% by the end of 2023. This assumes a policy rate that tops out below 4.0% and a Bank of Canada that begins to lower interest rates in the second half of 2023. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service (MLS) Systems of Canadian real estate boards and associations in 2022 and 2023. With interest rates on the rise, home sales have continued to cool. In some parts of the country, home prices have fallen from their peaks reached earlier this year, are flat in some regions, and are still climbing in others. The issue of not enough homes for sale has not gone away. Some 532,545 properties are forecast to trade hands via Canadian MLS Systems in 2022, a decline of 20% from the 2021 annual record. The downward revision from CREAs June forecast was mostly the result of a downward revision to sales activity in Ontario, along with smaller revisions in B.C., Alberta and Quebec. The national average home price is forecast to rise by 4.7% on an annual basis to $720,255 in 2022. That said, much of that increase reflects how high prices were to start the year. Annual price gains are forecast to be largest in Quebec and the Maritimes. National home sales are forecast to edge back a further 2.3% to 520,156 units in 2023. The national average home price is forecast to slide mostly sideways (+0.2%) from 2022 to 2023 at around 722,000. https://www.crea.ca/housing-market-stats/canadian-housing-market-stats/quarterly-forecasts/

Sep 7, 2022 The Bank of Canada increased its overnight benchmark interest rate by 75 basis points to 3.25% from 2.50%. This is the fifth time this year that the Bank has tightened the money supply to combat inflation. While the latest increase was comparatively smaller than the move made in July (100 basis points), it is bigger than the changes made in March (+0.25%), April (+0.50%), and June (+0.50%). Moreover, the Bank stated it is not finished hiking its policy interest rate just yet and noted that central banks around the world also continue to tighten monetary policy. These are the highlights of todays announcement. Inflation at home and abroad In Canada, CPI inflation eased in July to 7.6% from 8.1% because of a drop in gasoline prices; however, inflation (excluding gasoline) increased and data indicate a further broadening of price pressures,, particularly in services The Banks core measures of inflation continued to move up, ranging from 5% to 5.5% in July Surveys suggest that short-term inflation expectations remain high domestically and the longer this continues, the greater the risk that elevated inflation becomes entrenched Global inflation remains high and measures of core inflation are moving up in most countries Economic performance at home and abroad The Canadian economy continues to operate with excess demand and domestic labour markets remain tight Canadas GDP grew by 3.3% in the second quarter somewhat weaker than the Bank had projected but indicators of domestic demand were very strong. Canadian consumption grew by approximately 9.5% and domestic business investment was up by almost 12% Commodity prices have been volatile: oil, wheat, and lumber prices have moderated while natural gas prices have risen. Economic activity in the United States has moderated, although the U.S. labour market also remains tight. China is facing ongoing challenges from COVID shutdowns Canadian housing market With higher mortgage rates, the housing market is pulling back as anticipated following unsustainable growth during the pandemic Looking ahead The Bank expects the Canadian economy to moderate in the last half of 2022 as global demand weakens and tighter monetary policy begins to bring demand more in line with supply. However, given the outlook for inflation, the Banks Governing Council continues to note that its policy interest rate will need to rise further. To underscore its current thinking, the Bank wrote that it remains resolute in its commitment to price stability and will continue to take action as required to achieve a 2% inflation target. On the bright side, the Bank offered that as the effects of tighter monetary policy work through the economy, it will be assessing how much higher interest rates need to go to return inflation to target. October 26, 2022, is the BoCs next policy announcement date at which time it will also make its fourth Monetary Policy Report of the year available for review. As always, First National will follow this seminal event. For other capital market insights, please stay tuned to the Resources page of our website on a regular basis.

The Bank of Canada today increased its target for the overnight rate to 3%, with the Bank Rate at 3% and the deposit rate at 3%. The Bank is also continuing its policy of quantitative tightening. The global and Canadian economies are evolving broadly in line with the Banks July projection. The effects of COVID-19 outbreaks, ongoing supply disruptions, and the war in Ukraine continue to dampen growth and boost prices. Global inflation remains high and measures of core inflation are moving up in most countries. In response, central banks around the world continue to tighten monetary policy. Economic activity in the United States has moderated, although the US labour market remains tight. China is facing ongoing challenges from COVID shutdowns. Commodity prices have been volatile: oil, wheat and lumber prices have moderated while natural gas prices have risen.

From the National Bank of Canada Declining transactions in the resale market and rising interest rates continue to weigh on property prices, with the Teranet-National Bank Composite House Price Index falling 0.2% from June to July after seasonal adjustments. This is the first monthly decline since the one seen at the beginning of the pandemic in June 2020. Using the unsmoothed seasonally adjusted index, which is more sensitive to market fluctuations, the decline is even more pronounced, with property prices falling 1.4% from June to July. Moreover, price decreases continue to be widespread across the country. In fact, for all 32 markets where the seasonally adjusted unsmoothed index was available in July, 58% experienced a decline during the month, the same proportion as observed in June, but much higher than those recorded since the beginning of the year. You have to go back to May 2020, at the very beginning of the pandemic when uncertainty was at its peak, to find such a large proportion of markets down. While the Bank of Canada has indicated that it will continue to raise its policy rate and that transactions in the real estate market should continue to decline, we anticipate that the composite index should decrease by 10% by the end of 2023. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

From the National Bank of Canada On a seasonally adjusted basis, home sales fell 5.3% from June to July, bringing the level of sales 12.8% below its 10-year average. This was the fifth consecutive decline for this indicator, with sales down a cumulative 31.1% between February and July. The slowdown was broad- based, with the number of transactions declining in three-quarters of the markets covered. We expect the current moderation in sales to continue going forward as the Bank of Canada is expected to raise its overnight rate further in September. The rapid rise in interest rates by the central bank is certainly having a psychological effect on buyers who are waiting to see how high rates will stabilize before taking action. Rising interest rates also seem to be having an effect on sellers who are postponing their decision to sell to a later date. Indeed, new listings declined 5.3% between June and July. Overall, the number of months of inventory rose from 3.1 to 3.4 months in July, the highest level in two years. Based on the active-listings-to-sales ratio, market conditions loosened in every province during the month, and the housing market in the country as a whole is now on the verged of indicating a balanced market. Six provinces out of 10 are now in balanced territory: B.C., Saskatchewan, Alberta, Manitoba, Ontario and P.E. (the latter having switched this month). The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 29.3% compared to the second-strongest month of July in history last year. For the first seven months of 2022, cumulative sales were down 20.3% compared to the same period in 2021. Housing starts in Canada decreased for the first time in three months, dropping 8.3K in June to 273.8K (seasonally adjusted and annualized), in line with consensus expectations calling for a 274K print. With high commodity prices, labour shortages, and ongoing supply chain issues, this moderation in housing starts was expected and should continue in the coming months. However, with building permits remaining high and housing supply still tight, this moderation should stabilize at levels that remain strong on a historical basis. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

From National Bank of Canada There is a great deal of concern regarding the vulnerability of Canadian households not only to inflation shock but also to sharp interest rate hikes. For heavily indebted households, the bill could prove hefty. Those that contracted mortgages 4.Sx their gross income could see their monthly payments increase by $187 to $281 from 2022 to 2024 and absorb as much as 2.6% to 4.0% of their net income. At the macroeconomic level, however, the story is far different given the high proportion of properties without mortgages. By our calculations, the payment shock related to servicing the accumulated debt will represent 0.65% of disposable income over the next three years. The amount is significant but manageable in that it alone will not suffice to pull the economy into a recession. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/special-report_220728.pdf

With the decrease in resale market transactions and the increase in interest rates, property price growth moderated for a third consecutive month, but still remained solid in June at 1.0% after adjusting for seasonal effects. Using the seasonally adjusted unsmoothed index, which is more sensitive to market fluctuations, the moderation is even more pronounced, with property prices essentially flat in May and June. While the Bank of Canada has indicated that it will continue to raise its policy rate and that transactions in the real estate market should continue to decline, we anticipate that the composite index should decrease by 10% by the end of 2023. The price declines have already begun to spread across the country. In fact, for all 32 markets where the seasonally adjusted unsmoothed index was available in June, 58% experienced a decline during the month, compared to 34% in May and only 16% in January. We have to go back to May 2020, at the very beginning of the pandemic when uncertainty was at its peak, to find such a large proportion of markets in decline. https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-teranet.pdf

From National Bank of Canda On a seasonally adjusted basis, home sales fell 5.6% from May to June, bringing the level of sales 7.0% below its 10-year average. This was the fourth consecutive decline for this indicator, with sales down a cumulative 26.8% between February and June. The slowdown was broad- based, with the number of transactions declining in three quarters of the markets covered. We expect the current moderation in sales to continue going forward as the Bonk of Canada just announced a 1% rate increase this week and more rate hikes are expected by the end of the year. Now that interest rates for variable rate mortgages are generally over 4%, buyers must now qualify for the stress test with their mortgage rate +2% instead of a rate of 5.25%, which will add a drag on the market. The rapid rise in interest rates by the central bank is certainly having a psychological effect on buyers who are waiting to see how high rates will stabilize before taking action. According to CREA, new listings rose 4.1% in June, a second consecutive monthly increase. With the reduction in sales and the increase in new properties for sale, the number of months of inventory rose from 2.7 to 3.1 months in June, the highest level in two years. Based on the active-listings-to-sales ratio, market conditions loosened in every province during the month, but the housing market continued to be tight in the country as a whole. Five provinces out of 10 are now in balanced territory: B.C., Saskatchewan, Alberta, Manitoba and Ontario (the two latter having switched this month). The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales were down 23.9% compared to the strongest month of June in history last year. For the first semester of 2022, cumulative sales were down 18.9% compared to the same period in 2021. Housing starts in Canada increased for a second month in a row by 21.5K in May to 287.3K (seasonally adjusted and annualized), the strongest print since November 2021 (at 305.9K). Starts were well above consensus calling for a 255K print in May while building permits remained high on a historical basis and housing supply continues to be tight. As interest rates rise and demand in the resale market declines, we expect housing starts to moderate in the coming year. Data on housing starts in June will be published on July 18. The Teranet-National Bank Composite National House Price Index increased 1.6% in May compared to April and after seasonal adjustment. Ten of the 11 markets in the composite index were up during the month, with Edmonton being the exception. On a year-over-year basis, home price increased by 18.3% in May. The June Teranet -National Bank HPI will be published on July 20. Source: https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

From Tiff Macklem - Governor Good morning. Im pleased to be here with Senior Deputy Governor Carolyn Rogers to discuss todays policy announcement and the Banks Monetary Policy Report (MPR). Today, we raised the policy interest rate by 100 basis points, or 1%. An increase of this magnitude at one meeting is very unusual. It reflects very unusual economic circumstances: inflation is nearly 8%a level not seen in nearly 40 years. I want to explain to Canadians why weve made this decision. There were three key considerations. First, inflation is too high, and more people are getting more worried that high inflation is here to stay. We cannot let that happen. Restoring price stabilitylow, stable and predictable inflationis paramount. Second, the Canadian economy is overheated. There are shortages of workers and of many goods and services. Demand needs to slow so supply can catch up and price pressures ease. And third, our goal is to get inflation back to its 2% target with a soft landing for the economy. To accomplish that, we are increasing our policy interest rate quickly to prevent high inflation from becoming entrenched. If it does, it will be more painful for the economyand for Canadiansto get inflation back down. With these important considerations in mind, the Governing Council decided to front-load the path to higher interest rates today. This is our fourth consecutive interest rate increase since March. We know that higher interest rates will add to the difficulties that Canadians are already facing with high inflation. But the strain of higher interest rates in the short term will bring inflation down for the long term. It will get us to the other side of this difficult period and back to normal. Things are not normal right now. After 30 years of low, stable inflation, many Canadians are experiencing the pain of high inflationand the uncertainty that comes with itfor the first time. Over half of the components in the consumer price index (CPI) basket are rising above 5%. When inflation is this high, it erodes the purchasing power of every Canadian. The drivers of inflation are the same in Canada as in most countries. The war in Ukraine and continued supply chain disruptions have boosted inflation in Canada and around the world. But what started as global inflation driven by higher global energy and goods prices is broadening here at home. Inflation is broadening because the Canadian economy is in excess demand. There arent enough goods and services to meet the demand were seeing as people enjoy a fully reopened economy. Employers cant find enough workers and theyre increasing wages to attract and retain staff. With households spending robustly, businesses are passing on higher input and labour costs by raising prices. Higher interest rates will help slow demand and allow supply time to catch up. Consumer spending will moderate as the pent-up demand from pandemic restrictions eases and the cost of borrowing increases. Housing market activity is already cooling rapidly from unsustainably high levels during the pandemic. And slower global growth will reduce demand for our exports. Taking all of this into account, we are forecasting annual growth in economic activity will be around 3% this year, 1% next year and 2% in 2024. As global bottlenecks gradually resolve and tighter monetary policy works its way through the economy, inflation will start to come down. While we may see a few more months with CPI inflation around 8%, we expect it to decline later this year, ease to about 3% by the end of next year and return to the 2% target by the end of 2024. This is the soft landing we are projecting. Interest rate increases can cool demand and inflation without choking off growth or causing a surge in unemployment. Some sectors will be more affected by interest rate increases than others, but the very tight labour market means there is room to reduce the number of job vacancies without having a big impact on overall employment. And with the prices of many of the commodities we export expected to remain elevated, the global forces slowing growth will not affect Canada as much as many other countries. But the path to this soft landing has narrowed because elevated inflation is proving more persistent. And this requires stronger action now so consumers and businesses can be confident that inflation will return to its 2% target. Our decision today takes the policy interest rate to 2%. That puts it in the long-run neutral range that neither stimulates nor restricts growth. We estimate that range to be between 2% and 3%. We continue to expect that interest rates will need to rise further to cool demand and achieve the inflation target. How high our policy rate needs to go will depend on how the economy and inflation evolves. By front-loading interest rate increases now, we are trying to avoid the need for even higher interest rates down the road. Front-loaded tightening cycles tend to be followed by softer landings. This argues for getting our policy rate quickly to the top end or slightly above the neutral range.

Today, the Bank of Canada increased its overnight benchmark interest rate 100 basis points to 2.50% from 1.50% in June the largest single increase in almost 25 years. This is also the fourth time this year that the Bank has acted to tighten the money supply to combat the possibility of an entrenched inflationary cycle, although previous moves were much smaller (0.25% in March and 0.50% in each, April and June). The Bank characterized this progressively larger increase as a way to front-load the path to higher interest rates, a clear signal that it is concerned that elevated inflation will become entrenched without affirmative action and that more rate hikes are almost certainly on their way. With this latest increase, the Bank Rate rises to 2.75%, and the deposit rate increases to 2.50%. These are the highlights of todays announcement. Inflation at home and abroad Inflation in Canada is higher and more persistent than the Bank expected in its April Monetary Policy Report, and will likely remain around 8% in the next few months Global factors including the war in Ukraine and supply disruptions are the biggest drivers, but domestic price pressures from excess demand are becoming more prominent Surveys indicate more Canadian consumers and businesses are expecting inflation to be higher for longer, raising the risk that elevated inflation becomes entrenched in price- and wage-setting; if that occurs, the economic cost of restoring price stability will be higher The July outlook for Canada has inflation starting to come back down later this year, easing to about 3% by the end of next year and returning to the 2% target by the end of 2024 Global inflation is higher and accordingly, many central banks are also tightening their monetary policies Canadian and global economies As a result of tighter financial conditions, economic growth is moderating and will continue to do so as tighter monetary policy works its way through the economy; when combined with the resolution of supply disruptions, the Bank believes this change will bring demand and supply back into balance and alleviate inflationary pressures As a result, the Bank now expects Canadas economy to grow by 3.5% in 2022, 1.75% in 2023, and 2.5% in 2024 and for global economic growth to slow to about 3.5% this year and 2% in 2023 before strengthening to 3% in 2024 Canadian labour markets are tight with a record low unemployment rate, widespread labour shortages, and increasing wage pressures With strong demand, Canadian businesses are passing on higher input and labour costs by raising prices Domestic consumption is robust, led by a rebound in spending on hard-to-distance services, while business investment is solid and exports are being boosted by elevated commodity prices The Bank estimates that Canadas Gross Domestic Product grew by about 4% in the second quarter In the United States, high inflation and rising interest rates are contributing to a slowdown in domestic demand. Chinas economy is being held back by waves of restrictive measures to contain COVID-19 Canadian housing market As growth in Canada is expected to slow to about 2% in the third quarter as consumption moderates, the BoC is now projecting that housing market activity will pull back following unsustainable strength during the pandemic Looking ahead Along with noting that its Governing Council decided to front-load the path to higher interest rates with todays 100 basis point increase, the BoC also said it continues to judge that interest rates will need to rise further, and the pace of increases will be guided by the Banks ongoing assessment of the economy and inflation. The Governing Council stated that it is resolute in its commitment to price stability and will continue to take action as required to achieve its 2% inflation target. The message to the market is clear: inflation must be corralled and higher interest rates are to be expected. This is an evolving story with the next scheduled chapter landing on September 7th, 2022 the date of the BoCs next policy announcement.

Weve downgraded our 2022 growth forecasts in most provinces by 0.1-0.9 percentage points compared to our March forecast, as a steeper climb in borrowing costs and persistently elevated inflation crimp household and business spending across the country. Real GDP is now projected to run from 1.4% in Newfoundland and Labrador to 5.5% in Alberta. The good news is that most regional economies appear to have entered the summer in solid form, leaving a cushion to absorb these shocks. As in recent months, households in the Atlantic region are expected to face the most intense inflation pressures in the near term, given the relatively high share of household budgets taken up by food and energy products. However, household debt burdens in the Atlantic (alongside Quebec and Saskatchewan) tend to be comparatively small. The opposite is true in Ontario and B.C., likely increasing the sensitivity of households to higher interest rates. Meanwhile, the Prairie and B.C. economies should continue to benefit from higher prices for agricultural and energy commodities, providing a strong counterbalance to the financial headwinds on households in those regions. Averaging around $110 per barrel in the second quarter, crude oil prices have moved in line with our March forecast. We project an even higher level for prices in the third quarter, before they gradually fall back towards $100 per barrel by year end on the back of a reduced fear premium, some demand destruction and modestly higher global supply. In the recently concluded provincial budget season, several governments committed to rolling out relief to households to help them cope with inflation. Notably, government spending should provide a tailwind to expansions. In aggregate, the Provinces are projected to remain in deficit over the medium term, while little headway will be made on reducing debt-to-GDP ratios. Housing markets are retrenching under the weight of higher interest rates. Home sales are down across nearly all provinces since February, while average home prices have dropped in Alberta, B.C. and especially Ontario. We believe that there is further downside left for markets as rates climb, and are forecasting continued declines in home sales and prices through the remainder of the year. Source: https://economics.td.com/provincial-economic-forecast

On a seasonally adjusted basis, home sales slumped 8.6% from April to May, bringing the level of sales slightly below its 10-year average for the first time in 24 months. This decline also represents a third consecutive decrease, with sales down a cumulative 23.0% between February and May. The downward trend is now well established in the country as 75% of the markets have seen their number of transactions decrease during the month. We believe this market moderation should continue in the coming months as the tightening of monetary policy should push variable rates higher and make the stress test even more biting for buyers. Indeed, the stress test uses the higher of 5.25% or the contractual interest rate +2%. Until now, only customers opting for a fixed rate had to qualify with a rate of more than 5.25%. With the Bank of Canada policy rate increase expected in July, the qualification for a variable rate will also exceed 5.25%, a development that should cool the market further since over half of new mortgages are at variable rates. According to CREA, new listings rose 4.5% in May, the first increase in three months. With the reduction in sales and the increase in new properties for sale, the number of months of inventory rose from 2.3 to 2.7 months in May, its highest level since July 2020. Based on the active-listings-to-sales ratio, market conditions loosened in almost every province during the month, but the housing market continued to be tight in the country as a whole. There are now 3 provinces out of 10 in balanced territory; B.C., Saskatchewan, and Alberta (the latter switched this month). The others continued to indicate market conditions favourable to sellers mainly due to lack of supply. On a year-over-year basis, home sales fell 21.7% compared to the strongest month of May recorded in 2021. For the first five months of 2022, cumulative sales were down 17.8% compared to the same period in 2021. Housing starts in Canada increased for a second month in a row by 21.SK in May to 287.3K (seasonally adjusted and annualized), the strongest print since November 2021 (at 305.9K). Starts were well above consensus calling for a 255K print in May while building permits remained high on a historical basis and housing supply continues to be tight. As interest rates rise and demand in the resale market declines, we expect housing starts to also moderate in the coming year. The Teranet-National Bank Composite National House Price Index increased 2.0% in April compared to March and after seasonal adjustment. On a year-over-year basis, home price increased by 18.8% in April. Ten of the 11 markets in the composite index were up during the month, with Edmonton being the exception. Source: https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

Were in a housing crisis. This report looks at the overall affordability for the entire housing system in Canada. The report has taken steps to estimate how much additional housing supply is required beyond current trends to restore housing affordability by 2030. Key Highlights CMHC projects that if current rates of new construction continue, the housing stock will increase to close to 19 million housing units by 2030. To restore affordability, CMHC projects Canada will need an additional 3.5 million units. Two-thirds of the 3.5 million housing unit gap is in Ontario and British Columbia where housing markets are least affordable. Additional supply would also be needed in Quebec, a province once considered affordable. It has seen a marked decline in affordability over the last few years. Other provinces remain largely affordable for a household with the average level of disposable income. However, challenges remain for low-income households in accessing housing that is affordable across Canada. Source: https://www.cmhc-schl.gc.ca/en/professionals/housing-markets-data-and-research/housing-research/research-reports/accelerate-supply/housing-shortages-canada-solving-affordability-crisis

The Housing Experiences in Canada series of fact sheets highlights the diversity of housing situations experienced by different groups of people living across Canada. This fact sheet focuses on persons with disabilities living in private dwellings. Statistics below are derived from the 2017 Canadian Survey on Disability (CSD). The 2017 CSD identifies persons with disabilities based on responses to the disability screening questions in the survey. Since this fact sheet focuses on persons with disabilities in private dwellings, those living in collective dwellings such as hospitals and nursing homes are not included in the data. The National Housing Strategy Act (2019) declared that the right to adequate housing is a fundamental human right affirmed in international law. Adequate housing is understood in international law as housing that provides secure tenure; is affordable; is habitable; provides access to basic infrastructure; is located close to employment, services and amenities; is accessible for persons of all abilities; and is culturally appropriate. Source: https://www150.statcan.gc.ca/n1/pub/46-28-0001/2021001/article/00011-eng.htm

New data from the Canadian Housing Statistics Program (CHSP) show the extent of inequalities in housing: multiple-property owners possess nearly one-third of all residential properties and the top 10% wealthiest owners account for around one-quarter of residential housing value. Despite these inequalities, new data show an increase in the number of first-time home buyers from 2018 to 2019. The data tables accompanying this release have been updated for the 2020 reference year, and expanded to include owners in Newfoundland and Labrador, Yukon, the Northwest Territories, and Nunavut. A new table on home buyers has also been added, covering Nova Scotia, New Brunswick, British Columbia and Yukon. These data provide a snapshot of property owners and buyers in the period prior to the outbreak of the COVID-19 pandemic. Multiple-property owners own 31% of residential properties in Ontario In addition to their primary residences, multiple-property owners hold properties to receive rental income or for other investment purposes, or as a recreational property which may also provide rental income. Owners seeking additional properties contribute to increased competition in already tight real estate markets, making it more difficult for prospective homeowners to purchase a home. The overall impact of such holdings on housing prices and housing affordability, however, depends on a multitude of factors that are not fully assessed in this release. Individual multiple-property owners hold a significant share of the residential property stock, despite accounting for a relatively small number of owners. In Nova Scotia, New Brunswick, Ontario, and British Columbia in 2020, these owners held between 29% (British Columbia) and 41% (Nova Scotia) of the property stock while accounting for 15% (British Columbia) to 22% (Nova Scotia) of owners. Source: https://www150.statcan.gc.ca/n1/daily-quotidien/220412/dq220412a-eng.htm

Let me break this down and shed a better light on the situation. The Bank of Canada changes to their overnight lending rate do not impact borrowers who have a Fixed Rate Mortgage. Only borrowers with a variable rate mortgage, Home Equity Line of Credit (HELOC), and unsecured credit lines will be affected. In an effort to curb a 30-year inflation high, the Bank of Canada did it again, raising the overnight lending rate by 0.50%. That means prime and variable-rate mortgages will lift by 0.50%. They also indicated that they will continue to increase their rate further as necessary to reach their goals against inflation. With prime now moving from 3.2% to 3.7%with most lenders, expect approximate payment increases to look like this for variable-rate mortgages IF youre not on a static payment: $400,000 Mortgage ⬆️$100/ month $600,000 Mortgage ⬆️ $125 / month $800,000 Mortgage ⬆️$200 / month $1,000,000 Mortgage ⬆️$250 / month DO NOT PANIC! No really, dont! Variable rates are rising, however, they are still below pre-pandemic times. The variable rate option has proven to be a better choice for most mortgage holders for over thirty years, and your loan will likely be with you for many years to come. The best way to counter any stress or sleepless nights is to review your personal situation and make a plan you are comfortable with. I am happy to help you with that process. The best way to save interest on your loan is to pay down the principal as fast as comfortably possible. If you are on a static payment, note that more of each payment goes toward the interest. This will extend your amortization out, as it will now take longer to pay off the loan. I recommend increasing your monthly payments accordingly or, planto make a few equivalent lump sum payments throughout the year to keep paying down your principal balance. This will help keep your amortization schedule on track. Depending on your mortgage balance (see above), this doesnt need to break the bank. Say for a $500,000 mortgage, plan on making an annual lump sum payment of $1500-$2000 ... maybe when you receive your CRA tax refund, or at the time of your next bonus, or next larger commission cheque. Or plan for $500-$1000 per quarter. HELOCs and unsecured lines of credit rates typically float with prime as well, so you will likely see an increase in interest and payments for these credit facilities as well. If I can assist you with any action, or questions you may have please reach out.

Today, the Bank of Canada showed once again that it is seriously concerned about inflation by raising its overnight benchmark rate to 1.50%. This latest 50 basis point increase follows a similar-sized move in April and is considered the fastest rate hike cycle in over two decades. With it, the Bank brings its policy rate closer to its pre-pandemic level. As a result, the Bank Rate rises to 1.75% and the deposit rate increases to 1.50%. The Bank is also continuing its policy of quantitative tightening and signalled that more rate hikes are likely. In rationalizing its 3rd increase of 2022, the Bank cited several factors, most especially that the risk of elevated inflation becoming entrenched has risen. As a result, the BoC will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored. These are the highlights of todays announcement. Inflation at home and abroad Largely driven by higher prices for food and energy, the Bank noted that CPI inflation reached 6.8% for the month of April, well above its forecast and will likely move even higher in the near term before beginning to ease As pervasive input pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1% Almost 70% of CPI categories now show inflation above 3% The increase in global inflation is occurring as the global economy slows The Russian invasion of Ukraine, Chinas COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation The war has increased uncertainty, is putting further upward pressure on prices for energy and agricultural commodities and dampening the outlook, particularly in Europe U.S. labour market strength continues, with wage pressures intensifying, while private domestic U.S. demand remains robust despite the American economy contracting in the first quarter of 2022 Global financial conditions have tightened, and markets have been volatile The Canadian economy and the housing market Economic growth is strong, and the economy is clearly operating in excess demand, a change in the language the Bank used in April when it said our economy was moving into excess demand National accounts data for the first quarter of 2022 showed GDP growth of 3.1%, in line with the Banks April Monetary Policy Report projection Job vacancies are elevated, companies are reporting widespread labour shortages, and wage growth has been picking up and broadening across sectors Housing market activity is moderating from exceptionally high levels With consumer spending in Canada remaining robust and exports anticipated to strengthen, growth in the second quarter is expected to be solid Looking ahead With inflation persisting well above target and expected to move higher in the near term, the Bank used todays announcement to again forewarn that interest rates will need to rise further. The pace of future increases in its policy rate will be guided by the Banks ongoing assessment of the economy and inflation. In case there was any doubt, the Banks message today was clear: it is prepared to act more forcefully if needed to meet its commitment to achieving its 2% inflation target. July 13, 2022 is the date of the BoCs next scheduled policy announcement.

The Bank of Canada today increased its target for the overnight rate to 1%, with the Bank Rate at 1% and the deposit rate at 1%. The Bank is also continuing its policy of quantitative tightening (QT). Inflation globally and in Canada continues to rise, largely driven by higher prices for energy and food. In Canada, CPI inflation reached 6.8% for the month of April well above the Banks forecast and will likely move even higher in the near term before beginning to ease. As pervasive input price pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1%. Almost 70% of CPI categories now show inflation above 3%. The risk of elevated inflation becoming entrenched has risen. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored. The increase in global inflation is occurring as the global economy slows. The Russian invasion of Ukraine, Chinas COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation. The war has increased uncertainty and is putting further upward pressure on prices for energy and agricultural commodities. This is dampening the outlook, particularly in Europe. In the United States, private domestic demand remains robust, despite the economy contracting in the first quarter of 2022. US labour market strength continues, with wage pressures intensifying. Global financial conditions have tightened and markets have been volatile.

National Overview Residential building construction costs increased 5.6% in the first quarter of 2022, the highest increase since the second quarter of 2021. Non-residential building construction costs were up 2.6% in the first quarter. Contractors surveyed attributed part of the growth in building construction costs to the rise in labour costs, and a surge in the number of vacancies for construction trades has contributed to increased wages in these occupations. In addition, amid rising fuel prices, contractors cited that a larger share of their expenses were now allocated to the transportation of their building materials. Increase in price growth for residential building construction Growth in residential building construction costs accelerated during the first quarter of 2022, after moderating in the previous two quarters. The majority of the 11 census metropolitan areas (CMAs) covered by the survey recorded larger quarterly increases than the previous two quarters. Rising residential construction costs were largely driven by rebounding softwood lumber prices. Costs to construct residential buildings increased the most in Calgary (+6.9%), followed by Edmonton and Toronto (both up 6.8%). While the construction costs to build a single-detached house in Toronto grew the most in the first quarter, the cost to build townhouses rose the most of all the buildings in scope for the survey in both Calgary and Edmonton. It is interesting to note that the rise in residential construction costs in Calgary and Edmonton coincided with the highest monthly increases recorded in new housing prices in over 15 years, with Calgary recording its recent high in March 2022 (+5.2%) and Edmonton reaching its recent high in February (+3.7%). Source: https://www150.statcan.gc.ca/n1/daily-quotidien/220505/dq220505b-fra.htm?indid=18843-2indgeo=0

Home sales recorded over Canadian MLS Systems dropped by 12.6% between March and April 2022. The decline placed monthly activity at the lowest level since the summer of 2020. While the national decline was led by the Greater Toronto Area (GTA) simply because of its size, sales were down in 80% of local markets, with most other large markets posting double-digit month-over-month declines in April. The exceptions were Victoria, Montreal and Halifax-Dartmouth where sales edged up slightly. The actual (not seasonally adjusted) number of transactions in April 2022 came in 25.7% below the record for that month set last year. That said, as has been the case since last summer, it was still the third-highest April sales figure ever behind 2021 and 2016. Following a record-breaking couple of years, housing markets in many parts of Canada have cooled off pretty sharply over the last two months, in line with a jump in interest rates and buyer fatigue, said Jill Oudil, Chair of CREA. For buyers, this slowdown could mean more time to consider options in the market. For sellers, it could necessitate a return to more traditional marketing strategies. Of course, there are significant regional differences, so your best bet is to contact your local REALTOR. They have the information, guidance negotiation skills to help you navigate this rapidly-changing market as it evolves, continued Oudil.

By Daren King On a seasonally adjusted basis, home sales decreased 5.4% from February to March, a first monthly decline in three months. Despite this decline, the resale market remained very active on a historical basis, standing above the historically high level of 45K now for 21 consecutive months. Is this the beginning of a downward trend in the Canadian real estate market? In our opinion, the housing market should remain active during the spring due to many people who have secured advantageous interest rates and will want to act before the end of their interest rate guarantee. However, with the recent increase in mortgage interest rates and the worst affordability conditions on record, we expect the residential market to slow down in the second half of the year. According to CREA, new listings decreased by 5.5% during the month. However, the reduction in sales compensated for the decrease in new properties for sale, so that the number of months of inventory rose from its historical low of 1.6 to 1.8 months in March. Based on the active-listings-to-sales ratio, the housing market continued to be tight in 9 of the 10 provinces, with only Saskatchewan indicating a balanced market. These market conditions should continue to support prices in the coming months. On a year-over-year basis, home sales fell 16.3% compared to the most active month ever recorded for any period of the year that was March 2021. Nevertheless, it remains the second most active month of March on record. Housing starts decreased by 4.0K in March to 246.2K, a slide of 1.6% m/m from 250.2K in February and below consensus expectations calling for a 250K print. Although housing starts in March were slightly below consensus expectations, they remained high on a historical basis. The trend in housing permits continues to suggest a higher level of starts at this time. Moreover, with the tight conditions in the resale market, the willingness of various levels of government to build more and the resumption of immigration, housing starts should remain high for some time. That being said, we are entering the building season in Canada with elevated commodity prices and renewed supply chain challenges. Combined with more restrictive monetary policy by the Bank of Canada, we expect housing starts to taper in 2023. The Teranet-National Bank Composite Notional House Price Index increased 1.7% in February compared to January after seasonal adjustment. On a year-over-year basis, home price increased by 17.7% in February. All 11 markets of the composite index were up in the month. The March Teranet-National Bank HPI will be published on April 20. Source: National Bank of Canada https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/economic-news-resale-market.pdf

The Bank of Canada today increased its target for the overnight rate to 1%, with the Bank Rate at 1% and the deposit rate at 1%. The Bank is also ending reinvestment and will begin quantitative tightening (QT), effective April 25. Maturing Government of Canada bonds on the Banks balance sheet will no longer be replaced and, as a result, the size of the balance sheet will decline over time. Russias ongoing invasion of Ukraine is causing unimaginable human suffering and new economic uncertainty. Price spikes in oil, natural gas and other commodities are adding to inflation around the world. Supply disruptions resulting from the war are also exacerbating ongoing supply constraints and weighing on activity. These factors are the primary drivers of a substantial upward revision to the Banks outlook for inflation in Canada. The war in Ukraine is disrupting the global recovery, just as most economies are emerging from the impact of the Omicron variant of COVID-19. European countries are more directly impacted by confidence effects and supply dislocations caused by the war. Chinas economy is facing new COVID outbreaks and an ongoing correction in its property market. In the United States, domestic demand remains very strong and the US Federal Reserve has clearly indicated its resolve to use its monetary policy tools to control inflation. As policy stimulus is withdrawn, US growth is expected to moderate to a pace more in line with potential growth. Global financial conditions have tightened and volatility has increased. The Bank now forecasts global growth of about 3% this year, 2% in 2023 and 3% in 2024.

In its third scheduled policy decision of 2022, the Bank of Canada took direct aim at inflation by increasing its overnight benchmark rate to 1% from 0.50% in March. As a result, the Bank Rate rises to 1.25% from 0.75%, and borrowing costs for Canadians will rise again. Deputy BoC Governor Sharon Kozicki told an audience of central bankers in San Francisco last month that the Bank was prepared to act forcefully to combat inflation and provided a strong hint that as much as a half a percentage point increase was on its way in April. Even so, this is strong medicine and marks the first time in 22 years that the overnight rate moved up by 50 basis points in one fell swoop. The BoC also announced it is ending what it calls its reinvestment phase, during which it added Government of Canada bonds to its balance sheet. Effective April 25th, it will begin quantitative tightening and maturing Government of Canada bonds will no longer be replaced. In rationalizing these moves, the Bank singled out the invasion of Ukraine by Russia as a new economic uncertainty that is causing supply disruptions, exacerbating ongoing supply constraints, and weighing on activity. These are the other highlights of todays announcement. Canadian economy and the housing market Economic growth is strong and the economy is moving into excess demand Labour markets are tight, and wage growth is back to its pre-pandemic pace and rising Businesses increasingly report they are having difficulty meeting demand, and are able to pass on higher input costs by increasing prices While the COVID-19 virus continues to mutate and circulate, high rates of vaccination have reduced its health and economic impacts Growth looks to have been stronger in the first quarter than projected in January and is likely to pick up in the second quarter Consumer spending is strengthening with the lifting of pandemic containment measures Exports and business investment will continue to recover, supported by strong foreign demand and high commodity prices Housing market activity, which has been exceptionally high, is expected to moderate Canadian inflation and the impact of the invasion of Ukraine CPI inflation of 5.7% is above the Banks forecast in its January Monetary Policy Report (MPR), driven by rising energy and food prices and supply disruptions, in combination with strong global and domestic demand Core measures of inflation have all moved higher as price pressures broaden CPI inflation is now expected to average almost 6% in the first half of 2022 and remain well above the control range throughout 2022 before easing to about 2.5% in the second half of 2023 and returning to the Banks 2% target in 2024 There is an increasing risk that expectations of elevated inflation could become entrenched The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well-anchored Global economy The war in Ukraine is disrupting the global recovery, just as most economies are emerging from the impact of the Omicron variant of COVID-19 European countries are more directly impacted by confidence effects and supply dislocations caused by the war Chinas economy is facing new COVID outbreaks and an ongoing correction in its property market In the U.S., domestic demand remains very strong and the US Federal Reserve has clearly indicated its resolve to use its monetary policy tools to control inflation As policy stimulus is withdrawn, U.S. growth is expected to moderate to a pace more in line with potential growth Global financial conditions have tightened and volatility has increased such that the Bank now forecasts global growth of about 3.5% in 2022, 2.5% in 2023, and 3.25% in 2024 Looking ahead The Bank forecasts that Canadas economy will grow by 4.25% this year before slowing to 3.25% in 2023 and 2.25% in 2024. It is the Banks view that robust business investment, labour productivity growth and higher immigration will add to the economys productive capacity, while higher interest rates should moderate growth in domestic demand. Given that the Bank is ending quantitative easing, the size of its balance sheet can be expected to decline over time. Are more interest rate increases in store this year? The last word on this topic goes to the Banks Governing Council: With the economy moving into excess demand and inflation persisting well above targetinterest rates will need to rise further. The timing and pace of further increases in the policy rate will be guided by the Banks ongoing assessment of the economy and its commitment to achieving its 2% inflation target. BoCs next scheduled policy announcement is June 1, 2022. We will update you following that announcement and as always, you can find other important capital market insights on the Resources page of this website.

The size of companies represented in the survey ranged from 125 employees to 500+, with 43% of the brokerages having 26100 employees. Among the respondents, 50% were classified as brokerages, 36% were lenders, and the rest are in the technology, network, or other categories. This years 5-Star winners gained high scores for putting the working environment front and center, under what can only be characterized as extraordinary times, by focusing on what is best for brokers and, by extension, the clients they serve. As the survey showed, the winners made work-life balance, benefits and bonus compensation, a supportive working atmosphere, and a productive work culture their top priorities. The impressive 5-star accolade recognizes Canadas award-winning independent and storied brokerage, VERICO, for their outstanding contributions to the mortgage sector when it comes to career development, commitment to diversity and inclusion, and incentive and training programs, says Dino Di Pancrazio, Chief Strategy Officer, Head of Mortgage Division of M3 Mortgage. Read More: https://www.mpamag.com/ca/best-in-mortgage/5-star-mortgage-employers-2022/399366#winnersListSection

MPC Commentary on Budget 2022 by Paul Taylor, President, and CEO of Mortgage Professionals Canada | Apr 08, 2022 Reviewing some of the housing measures proposed in the 2022 Federal Budget In recent weeks, Mortgage Professionals Canada, the national association for the mortgage broker channel, met with more than 60 parliamentarians from all official federal parties as part of our Advocacy Days (which you can learn more about here). These meetings were held in advance of the Federal Budget 2022 tabled today by Finance Minister Chrystia Freeland, so that MPCs messaging could be widely heard in the halls of Parliament Hill. With that, we are pleased that Housing is Chapter 1 in Budget 2022. We may not agree on all the measures introduced, and regret that some were avoided, but the government and MPC definitely agree on how Canadians perceive the future of homeownership, and that confidence needs to be raised in younger Canadians trying to join the middle class. In 2019, Prime Minister Justin Trudeau said that his goal for the First Time Home Buyer Incentive was, To make sure homeownership remains an achievable dream, not a privilege afforded to only the richest few. While MPC disagreed that FTHBI was an effective way to help him achieve that goal, we did believe that his government was sincere in its hopes to grow Canadas middle class through homeownership. Since Budget 2019, we have held well over 100 meetings with parliamentarians from all official parties, helping to ensure that our recommendations turned into election promises. We have worked especially hard to get officials to recognize the need to shift collective focus from policies which tried to throttle housing demand to those which increased housing supply. After all, a global pandemic proved that demand, and prices, could not be easily controlled absent greater supply. For Canadas first post-COVID budget, MPC recommended in our February 2022 pre-budget submission to Finance Minister Chrystia Freeland that the federal government should immediately: Implement the mortgage insurance pledge to increase the insured mortgage cut-off from $1 million to $1.25 million, and index this to inflation, to better reflect todays home prices; Provide qualified first-time homebuyers access to mortgage amortization periods of up to 30 years for insured mortgages; Implement the pledged tax-free First Home Savings Account, which would allow Canadians under 40 to save up to $40,000 towards their first home, and to withdraw it tax-free to put towards their first home purchase, with no requirement to repay it. On Thursday, Finance Minister Freeland chose to begin Budget 2022 with Housing: Chapter 1: Making Housing More Affordable Everyone should have a safe and affordable place to call home. But that goalone that was taken as a given for previous generationsis increasingly out of reach for far too many Canadians. Young people cannot imagine being able to afford the house they grew up in. Foreign investors and speculators are buying up homes that should be for Canadians to own. Rents in our major cities continue to climb, pushing people further and further away from where they work. All of this has an impact on our economy, too. In cities and communities across the country, a lack of affordable housing makes it more difficult to attract the workers that businesses need. Increasing our housing supply will make Canada more competitive in the global race for talent and investment. It will help make sure that our economy can continue to grow in the years to come. MPC agrees and is grateful that Housing is this governments top item in Budget 2022. The Housing measures proposed in Budget 2022 are categorized under Building Affordable Homes, Helping Canadians Buy Their First Home, Protecting Buyers and Renters, and Curbing Foreign Investment and Speculation. Below are our comments on items related to those issues we have advocated for, and/or are directly related to our industry. We are very glad the housing supply is front and center. This needs to be the top priority of all levels of government, and incenting lower levels to get digging and moving is what the federal government needs to continue doing. From Budget 2022, Incentivizing cities to build more homes and create denser, more sustainable neighbourhoods to increase housing supply, Using Infrastructure Funding to Encourage More Home Construction, and Leveraging Transit Funding to Build More Homes are all laudable goals. We foresee some challenges in their successful implementation and expect that to achieve success, provinces must also help to encourage municipalities and allay the fears of small but tactically savvy groups of NIMBY residents. The Housing Accelerator Fund, administered by CMHC, has noble goals which we hope can deliver what it promises, and at a reasonable cost to taxpayers. We are pleased to see the government is moving forward with the campaign promise to create a First Home Savings Account (FHSA), one of MPCs three recommendations. We said there was real value and benefit to the concept, as it will help aspiring Canadian homeowners to prudently save and grow their money, an essential element to sensibly achieving homeownership. We note that we have already asked that the government would permit transfers from existing RSP plans into the proposed FHSA, and that it would allow immediate family members siblings, parents, grandparents - to make gifts of transfers from their own RSPs to a FHSA without any tax penalties to the benefactor. We will continue to advocate for this in advance of FHSAs implementation in 2023. The proposed doubling of the First-Time Home Buyers Tax Credit to $10,000 is strongly supported by MPC. Budget 2022 also announced an extension of the First-Time Home Buyer Incentive (FTHBI) to March 31, 2025, and that the government is exploring options to make the program more flexible and responsive to the needs of first-time homebuyers, including single-led households. MPC continues to believe that allowing for 30-year amortizations for insured mortgages is the superior, more accessible, simpler, more practical, and fairer overall solution for Canadas aspiring first-time homebuyers, a solution with benefits to CMHC and other mortgage insurers and providers, and without FTHBIs known administrative costs, very limited eligibility criteria, and other potential taxpayer burdens. Without prejudice, the facts behind FTHBIs unpopularity no longer merely speak for themselves - they shout. We hoped the government would finally agree with the NDP, Conservatives, and many within the Liberal caucus and finally allow 30-year amortizations for insured mortgages for Canadas first-time homebuyers, a multipartisan solution preferred by a wide majority of Parliament. That being said, we agree that single-led households have had an exceptionally difficult time in recent years, and are glad this group received specific mention. We will see how Ministers Freeland and Hussen will attempt to tweak FTHBI for the third time in its three years of existence. We also will work to ensure that MPC representing a mortgage brokering channel that now helps to originate roughly 60% of all mortgages for Canadas first-time homebuyers will play a part in the FTHBI review process. MPC recently submitted comments to the Government of British Columbia on items contained in the announced Home Buyers Bill of Rights related to real estate practices. Like many in the community, we believed that such measures fall under provincial jurisdiction, but we will see how this item progresses and be part of the process as required. On Protecting Canadians From Money Laundering in the Mortgage Lending Sector, MPC supports AML and anti-terrorism measures which protect Canadians. We look forward to working with the federal government and provincial governments where required as legislation related to this announcement is developed. Members should note that Budget 2022 also discusses Making Property Flippers Pay Their Fair Share. The government looks to tax anyone who sells a property they have held for less than 12 months would be considered to be flipping properties and would be subject to full taxation on their profits as business income, with understandable exemptions. We are disappointed with the lack of mention of the election campaign promise to increase the mortgage insurance purchase price eligibility limit but also understand that such a change does not require budgetary approval; such an amendment is available at the Finance Ministers discretion when she deems appropriate. Hopefully there will be a separate announcement related to this in the coming weeks. A lengthy delay in the implementation of this promise, in the face of continual house price increases, will only serve to erode the benefits of such a change. We believe these are the items to inform our members of at this time. Again, Housing is Chapter 1 in Budget 2022, and we appreciate that the government has acknowledged the importance of MPCs advocacy to Parliament in recent months. We look forward to ongoing conversations with officials, and to the progression of these proposals through 2022. We will also continue to keep MPC members informed. Thank you. Paul Taylor President and CEO

Statistics released by the Canadian Real Estate Association (CREA) show national home sales were up in February 2022 as buyers jumped on the first batch of spring listings. Home sales recorded over Canadian MLS Systems climbed 4.6% between January and February 2022. The monthly increase in activity was likely the result of a rebound in new listings in February following big a decline in January. As such, stronger activity may persist as late-February new listings continue to sell in March. Sales were up in about 60% of local markets in February, led by some big jumps in Calgary and Edmonton, as well as a gain ahead of the national increase in the GTA. The actual (not seasonally adjusted) number of transactions in February 2022 came in 8.2% below the monthly record set in 2021. That said, as was the case in January and throughout the second half of 2021, it was still the second-highest level on record for that month.

Because of China-U.S. trade tensions and the pandemic, many corporations and governments had already made long-term plans to diversify supply chains and re-shore production in key sectors in order to break their reliance on geopolitical rivals for key goods. Russias invasion of Ukraine will accelerate this trend. One example of how recent sanctions will further rejig supply chains are U.S. restrictions on Russias ability to purchase such things as microchips, advanced machinery, and airplane parts. These measures apply not just to goods made in America, but also to those made in other countries with American technology.While China will no doubt step in to replace America in some of these areas, it cannot yet produce latest-generation semiconductors or provide spare parts for Western-made aircraft. It is important to note, also, that it will take Western countries many years to find or develop alternative sources for many of Russias commodity exports, particularly in the mineral sector. The International Energy Agency estimated that it takes more than 16 years on average to move mining projects from the discovery to the production phase.Europe has been an especially large consumer of Russian commodities, including copper, nickel, palladium, and titanium. Source: https://www.nbc.ca/content/dam/bnc/en/rates-and-analysis/economic-analysis/geopolitical-briefing-220315.pdf

The Bank of Canada increased its target for the overnight rate to %, with the Bank Rate at % and the deposit rate at %. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds on its balance sheet roughly constant until such time as it becomes appropriate to allow the size of its balance sheet to decline. The unprovoked invasion of Ukraine by Russia is a major new source of uncertainty. Prices for oil and other commodities have risen sharply. This will add to inflation around the world, and negative impacts on confidence and new supply disruptions could weigh on global growth. Financial market volatility has increased. The situation remains fluid and we are following events closely. Global economic data has come in broadly in line with projections in the Banks January Monetary Policy Report (MPR). Economies are emerging from the impact of the Omicron variant of COVID-19 more quickly than expected, although the virus continues to circulate and the possibility of new variants remains a concern. Demand is robust, particularly in the United States. Global supply bottlenecks remain challenging, although there are indications that some constraints have eased. Economic growth in Canada was very strong in the fourth quarter of last year at 6.7%. This is stronger than the Banks projection and confirms its view that economic slack has been absorbed. Both exports and imports have picked up, consistent with solid global demand. In January, the recovery in Canadas labour market suffered a setback due to the Omicron variant, with temporary layoffs in service sectors and elevated employee absenteeism. However, the rebound from Omicron now appears to be well in train: household spending is proving resilient and should strengthen further with the lifting of public health restrictions. Housing market activity is more elevated, adding further pressure to house prices. Overall, first-quarter growth is now looking more solid than previously projected.

The Bank of Canada today increased the overnight rate to %, with the Bank Rate at % and the deposit rate at %. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds on its balance sheet roughly constant until it becomes appropriate to allow the size of its balance sheet to decline. Russias unprovoked invasion of Ukraine is a significant new source of uncertainty. Prices for oil and other commodities have risen sharply. This will add to inflation worldwide, and negative impacts on confidence and new supply disruptions could weigh on global growth. Financial market volatility has increased. The situation remains fluid, and we are following events closely. Global economic data has come in broadly in line with projections in the Banks January Monetary Policy Report (MPR). Economies are emerging from the impact of the Omicron variant of COVID-19 more quickly than expected, although the virus continues to circulate, and the possibility of new variants remains a concern. Demand is robust, particularly in the United States. Global supply bottlenecks remain challenging, although there are indications that some constraints have eased. Canadas economic growth was robust in the fourth quarter of last year at 6.7%. This is stronger than the Banks projection and confirms its view that economic slack has been absorbed. Both exports and imports have picked up, consistent with solid global demand. In January, Canadas labour market recovery suffered a setback due to the Omicron variant, with temporary layoffs in service sectors and elevated employee absenteeism. However, the rebound from Omicron now appears to be well in train: household spending is proving resilient and should strengthen further with the lifting of public health restrictions. In addition, housing market activity is more elevated, adding further pressure to house prices. Overall, first-quarter growth is now looking more solid than previously projected. CPI inflation is currently at 5.1%, as expected in January, and remains well above the Banks target range. Price increases have become more pervasive, and measures of core inflation have all risen. Poor harvests and higher transportation costs have pushed up food prices. In addition, the invasion of Ukraine is putting further upward pressure on prices for both energy and food-related commodities. All told, inflation is now expected to be higher in the near term than projected in January. Persistently elevated inflation increases the risk that longer-run inflation expectations could drift upwards. The Bank will use its monetary policy tools to return inflation to the 2% target and keep inflation expectations well-anchored. The policy rate is the Banks primary monetary policy instrument. As the economy continues to expand and inflation pressures remain elevated, the Governing Council expects interest rates will need to rise further. The Governing Council will also be considering when to end the reinvestment phase and allow its holdings of Government of Canada bonds to begin to shrink. The resulting quantitative tightening (QT) would complement the policy interest rate increases. The timing and pace of further increases in the policy rate, and the start of QT, will be guided by the Banks ongoing assessment of the economy and its commitment to achieving the 2% inflation target. Information note The next scheduled date for announcing the overnight rate target is April 13, 2022. The Bank will publish its next full outlook for the economy and inflation, including risks to the projection, in the MPR at the same time.

A credit card is only a benefit if you have a good relationship with your spending. Otherwise, your shiny new financial tool can quickly turn into a burden. How do you make sure that doesnt happen? Try these three key money habits. 1. Pay off your purchases When you use your credit card to make purchases, youre then responsible for paying it off. Each month, youll receive a statement outlining how much youve spent on your card and how much you need to pay off. Paying off the entire balance each month will help you avoid costly interest charges, but if you cant afford that, at least make the minimum payment to prevent a ding on your credit score. 2. Manage your credit utilization ratio Your credit cards limit is the maximum amount of debt you can carry at one time. Your limit will usually be between $1,000 and $10,000. You shouldnt spend right up to your credit cards limit, though. Getting too close to the limit will negatively affect your credit score due a calculation called your credit utilization ratio. Your credit utilization ratio is a measure of your credit card balance against your total credit limit. To maximize your credit score, keep your credit utilization ratio below 35%. For example, if you have a credit card with a $10,000 limit, try not to carry a balance higher than $3,500. 3. Choose the right credit limit Choose a credit limit that accurately reflects your spending habits. If you only plan to use your credit card for occasional purchases and online shopping, a few thousand dollars should be enough. If you spend thousands of dollars per month on it, pick a higher credit limit to keep your credit utilization ratio in check. Be realistic about how youll pay it back, as well. If you know that you occasionally carry a credit card balance and incur interest charges, choose a smaller credit limit to minimize the monthly interest youll pay.

Variable Rates Are Not Out To Get You There is a lot of economic uncertainty ahead in 2022 and it has a lot of us feeling on edge. Alongside recent reports of inflation reaching a 30 year high, chatter of the Bank of Canadas (BoC) overnight lending rate increase for the first time in nearly 2 years has lent a certain tension to the economic newsreel. Rightfully, the thought of this increase has lots of borrowers scrambling to move to fixed rates before the snow melts. But if you hold a variable mortgage, will this increase leave you out in the cold? Short answer - no. Currently, variable rates are significantly lower than fixed, forcing borrowers to pay a premium for peace of mind. A borrower is able to set it and forget it, guaranteeing a consistent payment for the duration of their term. Variable rates on the other hand fluctuate based on the Prime rate which is set by the lender and is informed by the BoC overnight rate (which has been at 0.25% since Covid began). Pundits are expecting a series of 0.25% incremental increases over 2022. Some economists are posting as many as 5 throughout the coming year and it is understandably discouraging for homeowners who are facing a growing payment in their wake. But how will it really affect you if you are currently in a variable rate term? Lets break it down: Lets say your balance is $400,000 with a 30-year amortization. For each $100,000 owing, your monthly payment will increase by about $13 - so, roughly a $52 increase per month, with each 0.25% BoC increase. If you currently have a variable rate, how do you feel about the potential of your payment going up by $200 over the next year? If you answered not great, did you know that there are variable rate products on the market that allow the payment to remain consistent while enjoying the benefits of the variable rate gamble? If you have been considering making the switch to fixed, have you considered how early payout penalty structures might impact you? If you are one of the millions of Canadian homeowners questioning what the future holds for your mortgage, now would be a great time for us to chat Questions on your mortgage, or want to compare your mortgage to what is currently available? Pleaseemail me.

In 2021, nearly three in four Canadians (73.7%) lived in one of Canadas large urban centres, up from 73.2% five years earlier. These large urban centres with a population of 100,000 or more people, referred to as census metropolitan areas (CMAs), accounted for most of Canadas population growth (+5.2%) from 2016 to 2021. Canada continues to urbanize as large urban centres benefit most from new arrivals to the country. From 2016 to 2019, Canada welcomed a record high number of immigrants and more than 9 in 10 settled in CMAs. There were six more CMAs in 2021 compared with five years earlier, another sign of the increasing urbanization of the country. Rapid population growth in cities is increasing the need for infrastructure, transportation and services of all kindsincluding front-line emergency services. Further urban spread also raises environmental concerns such as car-dependent cultures and encroachment on farmlands, wetlands and wildlife. Source:https://www150.statcan.gc.ca/n1/daily-quotidien/220209/dq220209b-eng.htm?HPA=1

This morning in its first scheduled policy decision of 2022, the Bank of Canada left its target overnight benchmark rate unchanged at what it describes as its lower bound of 0.25%. As a result, the Bank Rate stays at 0.5% and the knock-on effect is that borrowing costs for Canadians will remain low for the time being. The Bank also updated its observations on the state of the economy, both in Canada and globally, leaving a strong impression that rates will rise this year. More specifically, the Bank said that its Governing Council has decided to end its extraordinary commitment to hold its policy rate at the effective lower bound and that looking ahead, it expects interest rates will need to increase, with the timing and pace of those increases guided by the Banks commitment to achieving its 2% inflation target. These are the other highlights of todays BoC announcement. Canadian economy The economy entered 2022 with considerable momentum, and a broad set of measures are now indicating that economic slack is absorbed With strong employment growth, the labour market has tightened significantly with elevated job vacancies, strong hiring intentions, and a pick up in wage gains Elevated housing market activity continues to put upward pressure on house prices Omicron is weighing on activity in the first quarter and while its economic impact will depend on how quickly this wave passes, the impact is expected to be less severe than previous waves Economic growth is then expected to bounce back and remain robust over the Banks projection horizon, led by consumer spending on services, and supported by strength in exports and business investment After GDP growth of 4.5% in 2021, the Bank expects Canadas economy to grow by 4% in 2022 and about 3.5% in 2023 Canadian inflation CPI inflation remains well above the Banks target range and core measures of inflation have edged up since October Persistent supply constraints are feeding through to a broader range of goods prices and, combined with higher food and energy prices, are expected to keep CPI inflation close to 5% in the first half of 2022 As supply shortages diminish, inflation is expected to decline reasonably quickly to about 3% by the end of 2022 and then gradually ease towards the Banks target over the projection period Near-term inflation expectations have moved up, but longer-run expectations remain anchored on the 2% target The Bank will use its monetary policy tools to ensure that higher near-term inflation expectations do not become embedded in ongoing inflation Global economy The recovery is strong but uneven with the US economy growing robustly while growth in some other regions appears more moderate, especially in China due to current weakness in its property sector Strong global demand for goods combined with supply bottlenecks that hinder production and transportation are pushing up inflation in most regions Oil prices have rebounded to well above pre-pandemic levels following a decline at the onset of the Omicron variant of COVID-19 Financial conditions remain broadly accommodative but have tightened with growing expectations that monetary policy will normalize sooner than was anticipated, and with rising geopolitical tensions Overall, the Bank projects global GDP growth to moderate from 6.75% in 2021 to about 3.5% in 2022 and 2023 January Monetary Policy Report The key messages found in the BoCs Monetary Policy Report published today were consistent with the highlights noted above: A wide range of measures and indicators suggest that economic slack is now absorbed and estimates of the output gap are consistent with this evidence Public health measures and widespread worker absences related to the Omicron variant are slowing economic activity in the first quarter of 2022, but the economic impact is expected to be less severe than previous waves The impacts from global and domestic supply disruptions are currently exerting upward pressure on prices Inflationary pressures from strong demand, supply shortages and high energy prices should subside during the year Over the medium term, increased productivity is expected to boost supply growth, and demand growth is projected to moderate with inflation expected to decline gradually through 2023 and 2024 to close to 2% The Bank views the risks around this inflation outlook as roughly balanced, however, with inflation above the top of the Banks inflation-control range and expected to stay there for some time, the upside risks are of greater concern Looking ahead The Bank intends to keep its holdings of Government of Canada bonds on its balance sheet roughly constant at least until it begins to raise its policy interest rate. At that time, the BoCs Governing Council will consider exiting what it calls its reinvestment phase and reducing the size of its balance sheet. It will do so by allowing the roll-off of maturing Government of Canada bonds. While the Bank acknowledges that COVID-19 continues to affect economic activity unevenly across sectors, the Governing Council believes that overall slack in the economy is now absorbed, thus satisfying the condition outlined in the Banks forward guidance on its policy interest rate and setting the stage for increases in 2022.

The Bank of Canada today held its target for the overnight rate at the effective lower bound of %, with the Bank Rate at % and the deposit rate at %. With overall economic slack now absorbed, the Bank has removed its exceptional forward guidance on its policy interest rate. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant. The global recovery from the COVID-19 pandemic is strong but uneven. The US economy is growing robustly while growth in some other regions appears more moderate, especially in China due to current weakness in its property sector. Strong global demand for goods combined with supply bottlenecks that hinder production and transportation are pushing up inflation in most regions. As well, oil prices have rebounded to well above pre-pandemic levels following a decline at the onset of the Omicron variant of COVID-19. Financial conditions remain broadly accommodative but have tightened with growing expectations that monetary policy will normalize sooner than was anticipated, and with rising geopolitical tensions. Overall, the Bank projects global GDP growth to moderate from 6 % in 2021 to about 3 % in 2022 and 2023.

The Bank of Canada and Office of the Superintendent of Financial Institutions (OSFI) released the results of a pilot project on climate scenario analysis. This pilot was an important step in helping Canadas financial sector improve its ability to analyze economic and financial risks affecting financial institutions that could arise from climate change. Together with six Canadian financial institutions, the Bank and OSFI developed scenarios that will help the financial sector identify, measure and disclose climate-related risks. These scenarios were not intended to be forecasts or predictions. Rather, they were specifically designed to capture a range of potential outcomes and illustrate the kinds of stresses on the financial system and economy that could occur as the world transitions to a low-carbon future. All scenarios showed that this transition will entail important risks for some economic sectors. Mispricing of transition risks could expose financial institutions and investors to sudden and large losses. It could also delay investments needed to help mitigate the impact of climate change. source: https://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/clrsk-mgm_nr.aspx

This note is part of a series that will be published after important data releases, documenting mechanical updates of the nowcast for Canadian GDP coming from the Scotiabank nowcasting model. The evolution of this nowcast will inform Scotiabank Economics official macroeconomic outlook. The Canadian labour market continued to power ahead in December according to Statistics Canadas labour force survey (LFS), with the net gain of +55K jobs for the month that brought the unemployment rate down to 5.9%, just 0.2 ppts above the level of February 2020. This bodes well for the overall Canadian GDP growth in December and is in line with our Q4-2021 estimate of +6.22% Q/Q SAAR. The timing of the survey (December 5 to 11) means that it largely missed the beginning of the spread of the Omicron variant and the late-December tightening in public health measures that occurred in response to it. The flooding in BC, a source of downside risk to the short term outlook, occurred after the LFS was completed in November. In December, however, the LFS picked up the beginning of the reconstruction phase, according to StatCan. As a result, we are not likely to find out the true impact of this disaster on the labour market until the November survey of employment, payrolls and hours (SEPH) is released in late January. With these caveats, the underlying picture of the labour market in Canada is one of continuing recovery. The ratio of employment to population (61.5%), the labour force participation rate (65.3%), the unemployment rate (5.9%) are all within 0.2 0.3 ppts of their respective February 2020 levels, signalling a rapid diminishing of the labour market slack. Even the ranks of those unemployed for 52 weeks or longer, while still significantly elevated at 293K (Feb 2020: 179K), continued to fall rapidly in December. The tightness in the labour market spurred a recovery in wages, which grew 2.7% y/y in December, although this increase was much weaker than the rate of inflation over the same period. While the spread of the Omicron variant will likely lead to short term weakness in employment, in particular in the high-contact industries that are subject to public health restrictions, it is already exacerbating labour shortages in essential services as scores of employees self-isolate having tested positive for the virus. With inflation running significantly above the Bank of Canadas inflation-control target range, the labour market slack essentially gone and wages picking up, the short term impact of the Omicron spread is unlikely to alter the Bank of Canada on its path to higher rates in 2022. Source: Scotiabank Global Economics

The Office of the Superintendent of Financial Institutions (OSFI) confirmed that the minimum qualifying rate for uninsured mortgages will remain the greater of the mortgage contract rate plus 2 percent or 5.25 percent. In an environment characterized by increased household indebtedness and low interest rates, it is essential that lenders test their borrowers to ensure that mortgages can continue to be paid during more adverse conditions. This environment supports todays decision to maintain the current minimum qualifying rate. Mortgages are typically one of the largest exposures that banks carry on their balance sheets. Ensuring that borrowers can continue to repay their mortgage loans strongly contributes to the safety and soundness of Canadas financial system. OSFI reviews and communicates the minimum qualifying rate at least every December. Throughout the year, we will continue to monitor the appropriateness of the minimum qualifying rate and will make further adjustments, if conditions warrant.

The Bank of Canada today held its target for the overnight rate at the effective lower bound of percent, with the Bank Rate at percent and the deposit rate at percent. The Banks extraordinary forward guidance on the path for the overnight rate is being maintained. The Bank is continuing its reinvestment phase, keeping its overall holdings of Government of Canada bonds roughly constant. The global economy continues to recover from the effects of the COVID-19 pandemic. Economic growth in the United States has accelerated, led by consumption, while growth in some other regions is moderating after a strong third quarter. Inflation has increased further in many countries, reflecting strong demand for goods amid ongoing supply disruptions. The new Omicron COVID-19 variant has prompted a tightening of travel restrictions in many countries and a decline in oil prices, and has injected renewed uncertainty. Accommodative financial conditions are still supporting economic activity. Canadas economy grew by about 5 percent in the third quarter, as expected. Together with a downward revision to the second quarter, this brings the level of GDP to about 1 percent below its level in the last quarter of 2019, before the pandemic began. Third-quarter growth was led by a rebound in consumption, particularly services, as restrictions were further eased and higher vaccination rates improved confidence. Persistent supply bottlenecks continued to inhibit growth in other components of GDP, including non-commodity exports and business investment.

The Bank of Canada made its eighth and final (scheduled) interest rate decision of the year and for the eighth time, left its overnight benchmark unchanged at 0.25%. As a result, the Bank Rate stays at 0.5%. These low rates have been a feature of monetary policy since March 2020 with the initial pandemic lockdown of the economy. Going into todays announcement, the question on the minds of economists and borrowers alike is when will the Bank change its policy? We looked for clues in the Banks statement and summarize what was said below: Inflation CPI inflation is elevated and the impact of global supply constraints is feeding through to prices on a broader range of goods The effects of these constraints will likely take some time to work their way through, given existing supply backlogs Gasoline prices, a major factor pushing up CPI inflation, have recently declined Core measures of inflation are little changed since September The Bank is closely watching inflation expectations and labour costs to ensure that the forces pushing up prices do not become embedded Canadian housing economic performance Housing activity had been moderating, but appears to be regaining strength, notably in resales Canadas economy grew by about 5.5% in the third quarter, in line with expectations and bringing the level of GDP to about 1.5% below the last quarter of 2019, before the pandemic began Third-quarter 2021 GDP growth was led by a rebound in consumption, particularly services, as restrictions were further eased and higher vaccination rates improved confidence Persistent supply bottlenecks continued to inhibit growth in other components of GDP, including non-commodity exports and business investment Recent indicators suggest the economy had considerable momentum heading into Q4 Broad-based job gains in recent months have brought the employment rate essentially back to its pre-pandemic level Job vacancies remain elevated and wage growth has picked up Devastating floods in British Columbia and uncertainties arising from the Omicron (COVID-19) variant could weigh on growth by compounding supply chain disruptions and reducing demand for some services Global economy The global economy continues to recover from the effects of COVID-19 Economic growth in the United States has accelerated, led by consumption, while growth in some other regions is moderating after a strong third quarter Inflation has increased further in many countries, reflecting strong demand for goods amid ongoing supply disruptions Omicron has prompted a tightening of travel restrictions in many countries and a decline in oil prices, and injected renewed uncertainty Accommodative financial conditions are still supporting economic activity Outlook: Stimulus continues The Bank continues to expect CPI inflation to remain elevated in the first half of 2022 and ease back towards 2% in the second half of next year. The Banks Governing Council noted that in view of ongoing excess capacity, the economy continues to require considerable monetary policy support. Accordingly, it remains committed to holding its policy interest rate at the effective lower bound until economic slack is absorbed so that the Banks 2% inflation target is sustainably achieved. In the Banks October projection, the inflation target would be sustainably achieved sometime in the middle quarters of 2022. It didnotprovide further updates to this timing. Consequently, the market is left to speculate about when rates will rise. The Bank did note, however, that it will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve its inflation target. Time to borrow With the benchmark rate unchanged for now but signs of a coming shift in monetary policy, it pays to think proactively about your property financing plans for 2022. First National is ready to help with prompt service and always competitive rates. January 26, 2022 is the Bank of Canadas next scheduled meeting on monetary policy.

Canadian home sales rose by 8.6% (sa m/m) in October, the largest increase since July 2020. Listings moved in the same direction, albeit by a much smaller 3.2% (sa m/m). The larger increase in sales carried the sales-to-new listings ratio, an indicator of how tight the market is, to 79.5%, up from 75.5% in September, and much higher than its long-term average of 54.5%. As a result, the composite MLS Home Price Index (HPI) rose by 2.7% (sa m/m)the third consecutive acceleration, and the biggest, after months of price gains deceleration. Single-family homes and apartments were the main drivers of Octobers price gain. Movements in the market were broad-based, with the uptick in sales spread out across much of the country. Sales went up in 28 of 31 local markets we track. Kitchener-Waterloo recorded the largest increase (29.5% sa m/m) followed by Thunder Bay, Kingston, Okanagan-Mainline, and Winnipegall recording increases of over 15% (sa m/m). While these are mainly suburban secondary markets, primary markets are also showing signs of strength, with Torontos sales going up by 9.9% (sa m/m) and Montreals and Vancouvers by 7.8% (sa m/m). Octobers national level of sales is historically strongthe second highest on record for October after October 2020, and a remarkable 40% (sa) higher than the 20002019 October-average. source: https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.housing.housing-news-flash.november-15--2021.html

Canadians have built up a record amount of savings during the pandemic. By some estimates, it totals around $300 billion. This stockpiled spending firepower has fueled concerns that inflation could be higher and more persistent than currently thought, especially at a time of growing supply-side constraints. However, there are a few reasons to suggest the inflation impulse from excess savings may not be as hefty as some believe. The amount of funds in highly liquid cash form is significantly lower than the headline estimate, consumers are likely to gradually draw on their savings to spend, and the reorientation of outlays from goods to services will dampen price pressures. Still, the amount accumulated in savings is large and unprecedented. This represents an important upside risk to the Bank of Canadas consumption and inflation forecast in the October Monetary Policy Report. Source: https://economics.td.com/ca-excess-saving

Bank of Canada holds benchmark interest rates steady, ends special quantitative easing The Bank of Canada made its seventh interest rate decision of the year and for the seventh time, left its overnight benchmark unchanged at 0.25%. This low rate has been the order of the day since March 2020. As a result, the Bank Rate stays at 2.45%. It also ended its massive, pandemic-induced quantitative easing program in place since March 2020. The Bank also made some new comments on the state of the economy at home and abroad as summarized below: Global economy The Bank projects global GDP will grow by 6.5% in 2021 a strong pace but less than projected in the July Monetary Policy Report and by 4.25% in 2022 and about 3.5% in 2023. The global economic recovery is progressing although vaccine availability and distribution worldwide remain uneven and COVID variants pose risks to health and economic activity. Due to strong global demand for goods, pandemic-related disruptions to production and transportation are constraining growth. Inflation rates have increased in many countries, boosted by these supply bottlenecks and by higher energy prices. While bond yields have risen in recent weeks, financial conditions remain accommodative and continue to support economic activity. Canadian housing economic performance Robust economic growth has resumed, following a pause in the second quarter. The Bank now forecasts Canadas economy will grow by 5% this year before moderating to 4.25% in 2022 and 3.75% in 2023. Demand is expected to be supported by strong consumption and business investment and a rebound in exports as the US economy continues to recover. Housing activity has moderated but is expected to remain elevated. Shortages of manufacturing inputs, transportation bottlenecks, and difficulties in matching jobs to workers are limiting the economys productive capacity. This output gap is likely to be narrower than the Bank had forecast in July, although the impact and persistence of these supply factors are hard to quantify. Strong employment gains in recent months were concentrated in hard-to-distance sectors and among workers most affected by lockdowns and this has significantly reduced the very uneven impact of the pandemic on workers. Canadian inflation A recent increase in CPI inflation was anticipated in July, but the main forces pushing up prices higher energy prices and pandemic-related supply bottlenecks now appear to be stronger and more persistent than the Bank expected. BoC now expects CPI inflation to be elevated into 2022 and ease back to around the Banks 2% target by late 2022. The Bank is closely watching inflation expectations and labour costs to ensure that the temporary forces pushing up prices do not become embedded in ongoing inflation. Outlook The Banks Governing Council believes that in view of ongoing excess capacity, the economy continues to require considerable monetary policy support. That support will continue to come from the Banks ongoing commitment to holding its policy interest rate at what it defines as the effective lower bound until economic slack is absorbed so that its 2% inflation target is sustainably achieved. In the Banks projection, this happens sometime in the middle quarters of 2022, which is perhaps a little earlier than the central bank originally forecast. Accordingly, and in light of the progress made in the economic recovery, the Banks Governing Council decided to end quantitative easing and keep its overall holdings of Government of Canada bonds roughly constant. This is not entirely surprising since the Bank has signaled its intention to taper its special bond-buying activity for some time. The end of QE also broadly aligns with the approach undertaken by central bankers in the United States. The Bank noted that it will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation target. A great time to borrow With the benchmark rate unchanged (for now), employment at pre-pandemic levels, Canadas borders re-opening, Lenders are ready to serve you with competitive rates and services, now might be the best time on record to finance a residential or commercial property purchase. The BoCs next scheduled policy announcement is December 8, 2021.

Home sales recorded over Canadian MLS Systems were up 0.9% between August and September 2021, marking the first monthover-month increase since March. The actual (not seasonally adjusted) number of transactions in September 2021 was down 17.5% on a year-over-year basis, from the record for that month set last year. That said, it was still the second-highest ever September sales figure by a sizeable margin. September provided another months worth of evidence from all across Canada that housing market conditions are stabilizing near current levels, said Cliff Stevenson, Chair of CREA. In some ways that comes as a relief given the volatility of the last year-and-a-half, but the issue is that demand/supply conditions are stabilizing in a place that very few people are happy about. There is still a lot of demand chasing an increasingly scarce number of listings, so this market remains very challenging. Thats why your best bet is to consult with your local REALTOR for information and guidance about navigating the current market, continued Stevenson.

Residential permits decreased 8.3% to $6.4 billion in August, the lowest level since March. Ontario and British Columbia drove most of the decline. Construction intentions for multi-family units fell 15.9%, largely reflecting Ontarios decline (-24.3%). This was despite the approval of high value condominium projects in the city of Toronto. In contrast, single family intentions were up slightly (+1.2%), led by a 15.7% gain in Quebec. Additionally, Newfoundland and Labrador (+0.7%) reported the first provincial increase in this component after six consecutive monthly declines.

In August, the TeranetNational Bank National Composite House Price IndexTM was up 1.0% from the previous month. It is now the third consecutive month in which the monthly price increase is lower than the previous month (2.8% in May, 2.7% in June and 2.0% in July). The August index was led by six of the 11 constituent markets: Ottawa-Gatineau (2.1%), Hamilton (1.7%), Montreal (2.1%), Quebec City (1.3%), Winnipeg (1.3%) and Victoria (1.3%). Growth was equal to the national average in Halifax (1.0%), while it was more moderate in Vancouver (0.8%), Calgary (0.8%), Toronto (0.7%) and Edmonton (0.6%). This is the sixth consecutive month in which gains were observed in all regions included in the composite index. The slowdown in price growth can be linked to the slowdown in housing sales reported in recent months by the Canadian Real Estate Association. In fact, when analyzing the 12-month growth in the number of sale pairsused to calculate the 11 metropolitan indices, this is the first time in twelve months that they have not increased in all cities. Moreover, this slowdown in price is expected to continue in the coming months as the unsmoothed composite index adjusted for seasonal effects rose only 0.1% from July. Source: https://housepriceindex.ca/2021/09/august2021/

The Bank of Canada on September 8th held its target for the overnight rate at the effective lower bound of percent, with the Bank Rate at percent and the deposit rate at percent. The Bank is maintaining its extraordinary forward guidance on the path for the overnight rate. This is reinforced and supplemented by the Banks quantitative easing (QE) program, which is being maintained at a target pace of $2 billion per week. The global economic recovery continued through the second quarter, led by strong US growth, and had solid momentum heading into the third quarter. However, supply chain disruptions are restraining activity in some sectors and rising cases of COVID-19 in many regions pose a risk to the strength of the global recovery. Financial conditions remain highly accommodative. In Canada, GDP contracted by about 1 percent in the second quarter, weaker than anticipated in the Banks July Monetary Policy Report (MPR). This largely reflects a contraction in exports, due in part to supply chain disruptions, especially in the auto sector. Housing market activity pulled back from recent high levels, largely as expected. Consumption, business investment and government spending all contributed positively to growth, with domestic demand growing at more than 3 percent. Employment rebounded through June and July, with hard-to-distance sectors hiring as public health restrictions eased. This is reducing unevenness in the labour market, although considerable slack remains and some groups particularly low-wage workers are still disproportionately affected. The Bank continues to expect the economy to strengthen in the second half of 2021, although the fourth wave of COVID-19 infections and ongoing supply bottlenecks could weigh on the recovery. CPI inflation remains above 3 percent as expected, boosted by base-year effects, gasoline prices, and pandemic-related supply bottlenecks. These factors pushing up inflation are expected to be transitory, but their persistence and magnitude are uncertain and will be monitored closely. Wage increases have been moderate to date, and medium-term inflation expectations remain well-anchored. Core measures of inflation have risen, but by less than the CPI. The Governing Council judges that the Canadian economy still has considerable excess capacity, and that the recovery continues to require extraordinary monetary policy support. [The Bank of Canada] remains committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Banks July projection, this happens in the second half of 2022. The Banks QE program continues to reinforce this commitment and keep interest rates low across the yield curve. Decisions regarding future adjustments to the pace of net bond purchases will be guided by Governing Councils ongoing assessment of the strength and durability of the recovery. [The Bank of Canada] will continue to provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective. Information note The next scheduled date for announcing the overnight rate target is October 27, 2021. The next full update of the Banks outlook for the economy and inflation, including risks to the projection, will be published in the MPR at the same time. Source: Bank of Canada

The total value of building permits in Canada decreased 3.9% to $9.9 billion in July. All provinces except British Columbia and Newfoundland and Labrador posted lower values, with the majority of the national decline reported in Alberta (-23.4%). Building permits fell 3.1% in the residential sector and 5.6% in the non-residential sector. On a constant dollar basis (2012=100), building permits fell 3.8% to $7.0 billion. Seven provinces reported declines in the residential sector, led by Ontario (-10.5%). Single-family permits fell 9.6% in July, with two provinces showing growth. Ontario (-9.1%) contributed the most to the decrease. Construction intentions for multi-family units rose 2.7% in July. British Columbia posted an increase of 55.1%, which was driven by high-valued condo projects in the city of Surrey. In contrast, Ontario reversed strong growth in June (+67.6%) and fell 11.7% in July due to fewer high-valued condo permits reported for the census metropolitan areas (CMA) of Hamilton and Guelph.

July Labour Force Survey (LFS) data reflect labour market conditions during the week of July 11 to 17. Between the June and July reference weeks, many jurisdictions substantially eased public health restrictions affecting indoor and outdoor dining, recreation and cultural activities, retail shopping, and personal care services. All public health restrictionsaside from some masking and screening requirements in select settingswere lifted in Alberta (July 1) and Saskatchewan (July 11). British Columbia also lifted virtually all restrictions (July 1), although some capacity limits on certain activities remained. All regions of Quebec moved into the lowest level of restrictions (June 28), followed by a removal of retail capacity limits (July 12). In Ontario, personal care services partially resumed at the end of June, and the province reopened indoor dining and permitted recreational activities, with certain limitations, at the end of the LFS reference week (July 16). In Manitoba, personal care services and restaurants reopened at the end of June, and capacity limits on restaurants, gyms, and retail stores were further eased on July 17.

The total value of building permits rose 6.9% to $10.3 billion in June. Seven provinces contributed to the gain, led by Ontario, which jumped 22.7%. Construction intentions in the residential sector were up 9.1%, while the non-residential sector advanced 2.2%. On a constant dollar basis (2012=100), building permits increased 5.2% to $7.2 billion. High-value permits for new apartment buildings in the census metropolitan areas (CMA) of Toronto and Hamilton helped push multi-family permits up 13.5% to $3.7 billion nationally in June. Provincially, Ontario led the way, rebounding 67.8% to $1.8 billion. On the other hand, Quebec reported the largest decrease (-29.9%), pulling back from a record high in May. Construction intentions for single-family dwellings increased 4.7% to $3.4 billion. Seven provinces saw gains in this component, led by Ontario and Alberta. Overall, the value of residential building permits increased 9.1% to $7.2 billion, following two months of lower construction intentions.

Statistics released today by the Canadian Real Estate Association (CREA) show national home sales were down between May and June 2021. Home sales recorded over Canadian MLS Systems fell by 8.4% month-over month in June 2021, marking the third straight monthly slowdown since activity hit an all-time record back in March. While sales are now down a cumulative 25% from their peak, and below every other month in the last year, June transactions still managed to set a record for that month. Month-over-month declines in sales activity were once again quite broad-based, with sales moderating in around 80% of all local markets, including almost all large markets across Canada. The actual (not seasonally adjusted) number of transactions in June 2021 was up 13.6% on a year-over-year basis and marked a new record for that month. While there is still a lot of activity in many housing markets across Canada, things have noticeably calmed down in the last few months, said Cliff Stevenson, Chair of CREA. There remains a shortage of supply in many parts of the country, but at least there isnt the same level of competition among buyers we were seeing a few months ago. As these conditions continue to evolve over the summer and fall, your best bet is to consult with your local REALTOR for information and guidance about buying or selling a home at this stage in the cycle, continued Stevenson.

In May the TeranetNational Bank National Composite House Price IndexTM was up 2.8% from the previous month, the largest monthly rise since the index series began in 1999. It was led by four of the 11 constituent markets: Ottawa-Gatineau (4.9%), Halifax (4.3%), Hamilton (3.7%) and Toronto (3.4%). Rises were more moderate for Vancouver (2.3%), Winnipeg (2.2%), Montreal (2.2%), Victoria (2.1%), Calgary (1.4%), Quebec City (1.2%) and Edmonton (1.2%). It was a third consecutive month in which all 11 markets of the composite index were up from the month before. The May rise was consistent with the increase in number of home sales over the last several months as reported by the Canadian Real Estate Association. For a ninth straight month, the number of sale pairs entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 2.1% in May, suggesting that the uptrend of the published (smoothed) index could continue. The May composite index was up 13.7% from a year earlier, for a 10th consecutive acceleration and the strongest 12-month gain since July 2017. The 12-month rise was led by five markets Halifax (29.9%), Hamilton (25.5%), Ottawa-Gatineau (22.8%), Montreal (17.6%) and Victoria (15.3%). Toronto matched the countrywide average at 13.7%. Lagging that average were Vancouver (11.9%), Winnipeg (10.4%), Quebec City (9.8%), Calgary (4.5%) and Edmonton (3.6%). Besides the Toronto and Hamilton indexes included in the countrywide composite, indexes exist for seven smaller urban areas of the Golden Horseshoe Barrie, Guelph, Brantford, Kitchener, St. Catharines, Oshawa and Peterborough. In May all seven were up from the previous month and from a year earlier. The 12-month gains ranged from 27.6% for Brantford to 31.4% for Barrie. Source: https://housepriceindex.ca/2021/06/may2021/

Housing markets in Canada and the US are sizzling. Recent headlines have used superlatives to describe housing market conditions in both countries and the data do back this up. Still, a closer look reveals some interesting distinctions as well. Home price and sales metrics show that while the US market is hot, Canadas is hotter. For example, existing home sales, which make up the majority of overall sales in both countries, is well above historical averages, but Canadian home sales have outperformed. As of March 2021, home sales in Canada were 75% higher than the average over 2018 and 2019, while it was 13% above in the US. Likewise, home prices also spiked. In Canada, the average home sold was 32% more expensive than what it was a year ago, and it was 17% higher stateside. From a high level, the list of commonalties across markets during the pandemic is longer than the areas of difference, particularly on the demand side. Perhaps the most influential demand-side driver has been historically low mortgage rates. Responding to the impacts of the pandemic, the Bank of Canada and the Federal Reserve slashed rates and enacted large quantitative easing programs early last year, resulting in a sharp drop in borrowing costs. Given that the US conventional mortgage rate is a 30-year rate compared to Canadas 5-year benchmark, borrowing costs fell faster in America as flight to safety flows lowered longer term yields at the onset of the pandemic. Source:https://economics.td.com/housing-heat-check

Canadian home sales took a turn in April 2021, declining by 12.5% (sa m/m) from the highest level on record in March 2021. Listings followed suit, falling by 5.4% (sa m/m). While both sales and listings decreased in April, the smaller decline in listings further eased the national-level sales-to-new listings to 75.2% from record high readings earlier this year (the highest being 91% in January). While this is a move in the right direction towards a better supply-demand balance, the ratio is still significantly higher than its long-term average of 54.5%. As a result of this persistent tightness in the housing market, the composite MLS Home Price Index (HPI) rose by 2.4% (sa m/m). This is a deceleration in price gains from paces observed over the last two months, owing in the most part to a slowing in prices for single-family homes and townhouses. Apartments, which had remained relatively close to pre-pandemic levels before accelerating earlier this year have maintained momentum in April. Movements in the housing market this month continued to be broad-based rather than market-specific, as declines in sales were spread out across much of the country. The Office of the Superintendent of Financial Institutions (OSFI) also announced that, effective June 1, the minimum qualifying rate for uninsured mortgages (i.e., residential mortgages with a down payment of 20 percent or more) will be the greater of the mortgage contract rate plus 2 percent or 5.25 percent.

The recent run-up in housing prices, and the attendant worries about affordability and accessibility, have many stakeholders scrambling to find quick solutions. While understandable, those approaches are likely to have only minimal impacts on Canadas housing situation and its consequences for people looking for a reasonably priced place to live. Focusing on interest rate policy or macroprudential instruments, such as stricter mortgage stress tests, draws attention away from the underlying cause of the problem: the inability of supply to meet demand. Put simply, this country doesnt build enough housing. We should not be surprised by this. Canada has increased immigration dramatically in recent years to tremendous benefit to the economy, but we failed to pro-actively address the housing challenges the consequent population boom was sure to bring. Policy efforts must focus far more on anticipatory, collaborative, multistakeholder and very specific solutions to the housing situation rather than on the short-term and ultimately ineffective macroprudential Band-Aids applied in recent years. Scotiabank Economics is publishing research this week looking at the increase in Canadas housing stock relative to the increase in population over the past several years to get a sense of how effective we have been in creating new units. The numbers are not encouraging. One way to look at it is by using the ratio of new housing to population growth. By that measure, construction has been well below its historical average since mid-2017. That is perhaps not surprising, given that Canada has seen an immigration-fuelled population boom since 2015. In the three years leading up to the COVID-19 pandemic, population grew nearly twice as fast as new housing units were being built. That ratio improved somewhat with the COVID-related stall in immigration, but it is likely to reverse course once immigration returns to planned levels. Dan Rees is group head, Canadian banking at the Bank of Nova Scotia. Jean-Franois Perrault is Scotiabanks chief economist

Just over two-thirds (67.1%) of Canadians were asset resilient for at least three months in 2019, up from 63.6% in 1999. Over these two decades, several factors contributed to the overall rate of asset resilience. For one thing, Canadians held more liquid assets at the end of the period. Median person-adjusted household liquid assets rose from $6,300 in 1999 to $10,700 in 2019. Canadians were also slightly older, on averagethe median age of Canadians increased from 36.4 years to 40.8 years. Family income has also been rising since 1999, and asset resilience is associated with higher income. The median person-adjusted, household after-tax income of Canadians increased by one-third (+34.9%), rising from $37,300 in 1999 to $50,300 in 2019, while the share of Canadians below the LIM-AT edged down from 12.4% to 12.1%. source: https://www150.statcan.gc.ca/n1/daily-quotidien/210504/dq210504e-eng.htm

The Teranet-National Bank HPI jumped 1.5% to a new high in March, its 17th straight monthly rise. Its recent vigour coincides with historically high numbers of home sales in most regions of Canada, coupled with limited supply. The monthly jump of the unsmoothed HPI was even bigger 2.7%, the most of any month since July 2006, taking the unsmoothed index to a cumulative rise of 11.9% since last June (left chart). The rapid rise of home prices continues in the great majority of large Canadian cities, with prices up 10% or more from a year earlier in an unprecedented 81% of the 32 urban markets surveyed (right chart). However, the magnitude of the price rise varies with category of dwelling. In the main metropolitan markets the rise was much smaller for the condo segment than for single-family homes. Among the reasons for the difference is a shift of preferences away from small dwellings in city centres toward larger homes in suburbs. Source: https://housepriceindex.ca/2021/04/march2021/

(NC) Many of us have heard of scammers pretending to be from the Canada Revenue Agency. You may have even received a call or email yourself. But how do you know what you can trust? Avoiding this common scam is easier when you know what the agency will and wont do. The agency will never threaten you with immediate arrest or jail for a tax debt, and never uses text or instant messaging to communicate about taxes. It will never demand that you settle tax debt by buying gift cards or prepaid credit cards, or using cryptocurrency like Bitcoin, or offer to pay you a refund by e-transfer. Remain vigilant when you receive communication from someone claiming to be from the CRA, especially when asked for personal information such as a social insurance, credit card, bank account or passport number. If you are unsure that the person on the phone is a legitimate agency employee, ask for the agents phone number and badge number and call 1-800-959-8281 to validate the caller. If you receive a call demanding immediate payment, take time to think it over. If you believe it was legitimate, you can check the status of your account online. If you use online or telephone services, you can further protect yourself by keeping your access codes, user ID, passwords and PINs secret, and changing them frequently. Enabling email notifications for online CRA accounts will notify you by email of changes to them, warning you of potentially fraudulent activity. Finally, suspicious phone calls or messages can be reported to the Canadian Anti-Fraud Centre online or by telephone. If you think you have fallen victim to a scam, contact your local police. Find more information at canada.ca/taxes. www.newscanada.com

In February the TeranetNational Bank National Composite House Price IndexTM was up 0.5% from the previous month, an acceleration from the January increase after three consecutive months of slowing. The advance was led by four of the 11 constituent markets: Halifax (2.3%), Hamilton (1.1%), Vancouver (0.8%) and Quebec City (0.7%). Rises of less than the countrywide average were reported for Montreal (0.5%), Victoria (0.4%), Calgary (0.4%) and Toronto (0.4%). The index for Winnipeg was flat on the month. Down from the month before were the indexes for Edmonton (0.1%) and Ottawa-Gatineau (0.5%). After three months, from September to November last fall, in which all 11 markets of the composite index were up from the month before, February was a third consecutive month in which one or more markets were down on the month. The February rise is consistent with the increase in the number of home sales over the last several months reported by the Canadian Real Estate Association. For a sixth straight month, the number of sale pairs entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 1.1% in February, suggesting that the uptrend of the published (smoothed) index could persist. Source: National Bank

The Bank of Canada held its target for the overnight rate at the effective lower bound of percent, with the Bank Rate at percent and the deposit rate at percent. The Bank is maintaining its extraordinary forward guidance, reinforced and supplemented by its quantitative easing (QE) program, which continues at its current pace of at least $4 billion per week. The global economy is recovering from the economic effects of COVID-19, albeit with ongoing unevenness across regions and sectors. The US economic recovery appears to be gaining momentum as virus infections decline and fiscal support boosts incomes and consumption. New fiscal stimulus will increase US consumption and output growth further. Global yield curves have steepened, largely reflecting the improved US growth outlook, but global financial conditions remain highly accommodative. Oil and other commodity prices have risen. The Canadian dollar has been relatively stable against the US dollar, but has appreciated against most other currencies. In Canada, the economy is proving to be more resilient than anticipated to the second wave of the virus and the associated containment measures. Although activity in hard-to-distance sectors continues to be held back, recent data point to continued recovery in the rest of the economy. GDP grew 9.6% in the final quarter of 2020, led by strong inventory accumulation. GDP growth in the first quarter of 2021 is now expected to be positive, rather than the contraction forecast in January. Consumers and businesses are adapting to containment measures, and housing market activity has been much stronger than expected. Improving foreign demand and higher commodity prices have also brightened the prospects for exports and business investment.

In January the TeranetNational Bank National Composite House Price IndexTM was up 0.3% from the previous month. It was the third consecutive month in which the index rose less than the month before. The increase was led by five of the 11 constituent markets: Hamilton (2.0%), Montreal (1.0%), Victoria (0.6%), Halifax (0.4%) and Vancouver (0.4%). Rises of less than the countrywide average were reported for Quebec City (0.3%) and Ottawa-Gatineau (0.1%). Indexes were down from the month before in Toronto (0.1%), Calgary (0.2%), Edmonton (0.4%) and Winnipeg (0.4%). After three months September, October, November in which all 11 markets of the composite index were up from the month before, it was a second consecutive month in which one or more markets were down on the month. The price rise is consistent with the rise of home sales volume over the last several months as reported by the Canadian Real Estate Association. For a fifth straight month, the number of sale pairs[1] entering into the 11 metropolitan indexes was higher than a year earlier. The unsmoothed composite index, seasonally adjusted, was up 0.9% in January, suggesting that the published (smoothed) index could continue its uptrend.

In January, Canadian home sales increased 2.0% month-on-month, building on Decembers 7.0% gain. On a year-on-year basis, they were up 35.2%. Provincially, sales were up in 8 of 10 provinces in January, with strong gains recorded in PEI (+20.5% m/m) and Alberta (+11.9%). On the flipside, a relatively steep decline was recorded in Nova Scotia (-8.3%). New listings dropped by 13.5% m/m in January. The combination of rising sales and falling new listings brought the months supply of inventory measure to under 1.9 months. The national sales-to-new listings ratio also increased to 90.7% its highest level by far. Every province was in sellers territory in December, and many of those in the eastern part of Canada had ratios over 100% (Quebec: 128.3%; New Brunswick: 116.0%; Nova Scotia: 114.3% and PEI:101.5%). This means that there were more sales than new units listed last month in these provinces. This is a rare situation, but has occurred before in the Atlantic Provinces. However, January marked a first on this front in Quebec. Elsewhere, ratios were particularly elevated in Manitoba (86.1%) and Ontario (88.6). Strong demand and historically tight conditions were reflected in prices. Indeed, Canadian average home prices surged by 4.7% m/m in January. On a year-on-year basis, they were up 22.8%, marking an acceleration from December. However, prices were up in 8 of 10 provinces during the month, with the largest gains occurring in Alberta (+8.1%) and Ontario (7.4%). Compared with the average sales price, the MLS home price index, a more like for like measure, increased 2.0% m/m. Single family home prices rose 2.6% m/m (and a robust 17.4% y/y), whereas apartment prices advanced by a smaller 0.2% m/m (and decelerated to 3.3% y/y). In Toronto, apartment prices increased 0.4% m/m, the first gain in 4 months. Key Implications Home sales picked up right where they left off to start 2021. Demand was likely given a lift by ultra-low mortgage rates, which dropped again during the month. Januarys robust gain coupled with a strong handoff into this year virtually ensures that sales will increase in the first quarter. However, with sales likely running above fundamentally-supported levels, we think some cooling in activity will take place, especially in the second half. A dwindling supply of inventories, when benchmarked against the current sales pace, could also weigh on activity moving forward. With todays data showing a solid gain in prices last month and new supply collapsing across nearly the entire country, markets were historically tight. This points to further strong price gains ahead in the near-term. Also notable was that benchmark condo prices grew for the first time in several months in Toronto. Although supply remains elevated, conditions are becoming tighter than what we saw last fall. This suggests that further gains are in store. Source: https://economics.td.com/ca-existing-home-sales

(NC) Due to current travel restrictions, families will be spending March Break at home. One way to keep your kids busy is by making personal finance a group activity. Research shows that young people who discuss money matters with their parents have higher financial knowledge and skills, which leads to stronger financial well-being in the future. Here are five ideas for simple things you can do with your kids to help them develop good money habits early: Involve your children in age-appropriate conversations about news related to economics or budgeting, and discuss how the family is responding to the unprecedented circumstances caused by the pandemic. Use the Financial Consumer Agency of Canadas online interactive budget Planner to teach your children about the importance of a financial plan. Try making a budget for your next family vacation. Encourage your child to set up a savings account. Forming good savings habits early can help kids learn how to be financially independent and avoid relying on credit cards and loans in the future. Help your child to make a plan to save for something they really want, like a new toy or video game. Show your child how to set up an automatic payment for either a subscription or their cellphone. This is an opportunity teach them about the importance of never missing a payment, which could have a negative impact on their credit report in the future. Review your childs bank account agreement with them and make sure they understand their responsibilities, such as keeping their PIN secret, even from their parents. Sharing their PIN means they may not be protected from a fraudulent transaction on their account. Understanding personal finances can have a big impact on the present and future well-being of young people. No matter what life stages your child is at, you can find unbiased and fact-based information from the Financial Consumer Agency of Canada at canada.ca/money.

Statistics released today by the Canadian Real Estate Association (CREA) show national home sales set another all-time record in December 2020. Home sales recorded over Canadian MLS Systems jumped by 7.2% between November and December to set another new all-time record. Seasonally adjusted activity was running at an annualized pace of 714,516 units in December 2020 the first time on record that monthly sales at seasonally adjusted annual rates have ever topped the 700,000 mark. The month-over-month increase in national sales activity from November to December was driven by gains of more than 20% in the Greater Toronto Area (GTA) and Greater Vancouver. Actual (not seasonally adjusted) sales activity posted a 47.2% y-o-y gain in December the largest year-over-year increase in monthly sales in 11 years. It was a new record for the month of December by a margin of more than 12,000 transactions. For the sixth straight month, sales activity was up in almost all Canadian housing markets compared to the same month in 2019. For 2020 as a whole, some 551,392 homes traded hands over Canadian MLS Systems a new annual record. This is an increase of 12.6% from 2019 and stood 2.3% above the previous record set back in 2016.

Deferred mortgage payments are discretionary. Lenders maintain the legal right to timely repayment of their mortgages and mortgage payment deferral programs are offered at their sole discretion and each lender has different policies on how they handle these requests. Note: These programs are generally restricted to Institutional lenders only. Private mortgages do not qualify. No lender is going to forgive your mortgage payment. A deferred payment program allows you to roll a defined number of mortgage payments into your mortgage, however you are still expected to ultimately pay all of the money you owe, with interest. True financial hardship must be demonstrated. These programs are for customers who are genuinely struggling to make their next mortgage payment. They may have lost their job(s) and/or a portion of their income, and they do not have the cash reserves necessary to draw on. If you are not in this group, you are not likely to be eligible. However, if you do make the decision to request a payment deferral, please be prepared to submit a detailed breakdown of your personal assets, current income and expenses. If you do not currently fall into this distressed category, please do not call your lender at this time. Lender phone lines are overloaded right now with many of the calls being from customers who are worried but are not in a situation as per # 3 above. If you are still receiving your normal income and have enough money to make your next mortgage payment, please delay a call to your lender until you are in that situation. Or better yet contact the mortgage professional that you originally worked with when you obtained your mortgage. They will be happy to review all of your options with you! Deferring mortgage payments will not hurt your credit score. A lender-approved deferment is not a missed paymentand it will not appear on your credit bureau report as such. Lenders are also typically offering to waive any fees associated with these types of programs during the COVID-19 crisis. Deferred Payment Programs are typically capped at six months. Deferring the first payment will be easier than deferring the second one, and so on. Right now, six months is about the longest deferment you should expect to receive, but no lenders will do this all at once. Most of them will require that you reach out with a request for each individual payment that you are going to miss. Communication is the key. If you are going to miss your mortgage payment, contact your lender first! Be honest with them about your circumstances and have a plan for how you are going to get back on track. If you are about to miss a payment and cannot get through on the phone lines, send your lender an email. Lenders may waive NSF fees if you miss a payment but can demonstrate to them that you attempted to notify them in advance. A mortgage deferred payment program is for your mortgage payment only. Property tax installments and insurance premiums are entirely separate from these programs and must continue to be paid. If municipalities and insurance companies offer similar programs (which most municipalities are currently doing), they should be contacted separately. Other options may be available. In addition to rolling missed payments back into your mortgage for a specified period of time, lenders also have the ability to refinance your mortgage to pay out other debt (subject to qualification), restore your original amortization (which lowers your payment amount), hold a payment (during a temporary suspension of income), or offer you a reduced payment for a specific time. We recommend that you contact your mortgage professional to review these other options. Note: Interest-only payments are usually not available under these programs. Rental property investors may also be eligible. Property investors with tenants who have stopped making their rent payments will also be considered, however they will be assessed by the same rigorous standards as noted in # 3 above. Note: Some provincial governments have introduced tenant relief programs. Rental-property owners can also encourage their tenants who have been adversely impacted by COVID-19 to apply for these programs if available. Please remember that these are challenging times for not only customers but for the lenders themselves. They are all working extremely hard to try to provide all their customers with first class service and to help those borrowers who are being adversely impacted by COVID-19. It may take you a significant amount of time to reach a customer service representative at your particular lender, so when you do finally get a live person on the other end of the phone, remember that they are doing their best in difficult times and treat them with the respect they deserve.

Credit: First National Financial LP The Bank of Canadas Qualifying Mortgage Rate has popped back onto the real estate radar. Back in July, the central bank lowered the rate for the first time in nearly three years. The idea behind the QMR is to ensure that home buyers will be able to afford their mortgage as interest rates rise in the future. It is a stress test that sets the lowest theoretical interest rate the buyer will be charged. That rate is significantly higher than any actual rates being charged by mainstream lenders. The Bank of Canada bases the qualifying rate on the five-year rates posted by Canadas Big Six, federally regulated banks. The number is rather arbitrary, though, because the big banks do not actually charge their posted rates. The real rates are markedly lower. The posted rates tend to have more to do with the penalties charged when a home buyer breaks their mortgage before the end of its term. There is no obvious standard for setting the qualifying rate. A well known Toronto mortgage broker uses this illustration: two years ago the yield on Government of Canadas five-year bonds was 1.42% and the QMR was 4.64%. Earlier this year, five-year bonds were back at 1.42%, but the QMR was 5.19%. It is important for consumers to know that the current rules around the qualifying rate tend to favour the big, federally regulated banks. For example, the QMR stress test is not applied when customers renew their mortgage with their existing, federally regulated lender. This can have the effect of trapping customers who might otherwise be able to take advantage of lower rates with a different lender. Many in the mortgage industry have been calling for more transparency and consistency in the QMR rules in order to make them fairer and simpler.

Sep 30, 2019 First National Financial LP In an earlier commentary, we took a look at what central banks are and what they do. In this piece, we focus on the Bank of Canada. Like other central banks around the world, the Bank of Canada has broad responsibility for managing the economic and financial welfare of the country. The Bank of Canada was founded in 1934 and it is relatively young by central bank standards. In 1938 it became a Crown Corporation, which means it is owned by the federal government. The bank is governed by legislation in the Bank of Canada Act which says the bank exists to regulate credit and currency in the best interests of the economic life of the nation. There are three main ways the Bank of Canada shows up in our daily lives. Monetary Policy is designed to preserve the value of money. This is the part of the banks job that most people know about because it gets the most coverage in the media. The factor in monetary policy is managing inflation to keep it low, stable and predictable. The banks main tool for managing inflation is interest rates. The bank sets its Policy Rate eight times a year. It is the rate large financial institutions are charged when they borrow money from the Bank of Canada, or each other, to settle their daily accounts. The Policy Rate is also known as the overnight rate. Financial institutions base their interest rates on the Policy Rate. As it goes up or down so do the rates for business and consumer borrowing such as variable-rate mortgages, lines of credit and car loans. Raising interest rates makes borrowing and spending more expensive which slows down economic activity and inflation. Lowering rates does the opposite. The Policy Rate can also influence the value of our dollar which affects the cost of Canadian goods and services on world markets. Higher interest rates tend to increase the value of the Canadian dollar, making Canadian goods more expensive which, again, slows economic activity and inflation. So, you can see the bank is performing an economic balancing act. The Bank of Canada is known as the bankers bank and it helps manage and regulate the countrys Financial System. The bank facilitates borrowing and investing for Canadas large financial institutions and it regulates those institutions. The bank controls how much they can lend out by setting standards for how the loans are secured and imposing cash reserve requirements. The most obvious way the Bank of Canada enters our lives is through our Currency. The bank is responsible for designing, issuing and delivering banknotes (coins are the responsibility of the Royal Canadian Mint).

Article Link; https://www.canadianmortgagetrends.com/2019/05/bocs-call-for-longer-mortgage-terms-raises-questions/ Earlier this week, Bank of Canada Governor Stephen Poloz called on banks and other lenders to offer more innovative mortgage products, namely longer-term mortgages. During a speech in Winnipeg, he said longer mortgage terms would mitigate the normal risks in the system both for lenders and for borrowers. He didnt specify just how long those terms could be, but the longest widely available term in Canada is currently 10 years, while terms of 15, 20 or even 30 years are common in the U.S. For consumers, the reduced mortgage renewal frequency over the life of the mortgage would remove the risk of renewing into higher rates, Poloz said. Of course, a longer-term mortgage will carry a higher interest rate, but some homebuyers may be willing to pay more to lower their risk, he added. Just how much more? Rate expert Rob McLister of RateSpy.com suggested a 30-year mortgage, for example, could run around 3.75% or more given where bond market spreads are right now. And thats probably a best-case rate, assuming a liquid funding market. In the U.S., 30-year rates are north of 4%, he wrote on RateSpy.com. On a standard $300,000 30-year mortgage at 3.75% youd pay $10,829 more interest over the first 60 months aloneversus a 3.00% 5-year fixed. Little Appetite for Longer Terms The Bank of Canadas own data shows that currently, just 2% of mortgages have terms greater than five years. And thats for good reason. A longer mortgage comes with certain drawbacks. Aside from paying a higher rate, they would also face a higher likelihood of having to break the mortgage early. Even though mortgage terms longer than five years are protected by the Interest Actwhich means the penalty for breaking that mortgage would be limited to three months interest (vs. an IRD penalty) after the first five yearsa multi-decade term would heighten the likelihood of borrowers breaking their mortgage early. For that reason, Ron Butler of Butler Mortgage said mortgages of that length would have to be exempt from breakage penalties, similar to the no penalty system in place in the U.S. Even Canadas most popular mortgage termthe 5-year fixedis longer than most borrowers stick with their current mortgage for. James Laird, President of CanWise Financial and co-founder of Ratehub.ca, says stats show most mortgage terms are kept for just shy of four years. Some might suggest that perhaps its bad advice to be recommending these longer terms, Laird said. Because even though the borrower might feel settled, we know that life events occur, which can cause people to break their mortgage more quickly than they are expecting. Additionally, he said borrowers would need a compelling reason to pay more for the security of a longer term, namely the expectation that interest rates are going to rise over that time. Plus, the extra cost to lock in would have to be reasonable. If those two things are occurring, and you have a household that thinks theyre not moving for 10 years, okay, youve got ingredients for someone to take a longer term, Laird said, adding the last time he saw those ingredients come together was in 2012 when 10-year fixed rates fell below 4.00%, 5-year rates were above 3.00% and many expected interest rates to rise. But the Governor doesnt help his case by telling us rates are not going to move for a sustained period of time. That is not a good reason to go with a longer term. Thats justification for taking a variable rate or short term. An Answer to the Stress Test? Polozs call to arms for the industry to introduce longer mortgage terms appears to be a response to criticism over the governments stress test, which has sidelined the buying intentions of an estimated 40,000 homebuyers since it was introduced last year. The Bank of Canada has a particular view of the stress test as a means to reduce leverage and tamp down soaring prices, Butler said, suggesting theyre floating the idea of longer mortgages as an alternative solution to assisting homebuyers as opposed to adjusting the stress test. Poloz himself said, The longer the mortgage term, the less relevant a mortgage interest-rate stress test becomes, pointing to the increased amount of equity built up in between renewal periods. Up to Government to Create the Appropriate Conditions, Not Lenders But not everyone believes the onus should fall on the industry to develop solutions to make longer-term mortgages more attractive. I found it interesting that Poloz is calling on others to make this happen when, in my opinion, its the policy-makers in Ottawa who have actually completely taken away any incentive to lock into a longer-term fixed rate, Laird said, pointing to the stress tests added qualification burden on longer-term rates. For a 10-year rate at 4.00%, the borrower instead needs to qualify at 6.00% vs. a qualification rate of 5.34% for a shorter term fixed or variable rate, Laird noted. In my opinion, the tools are in (Polozs) hands and the other regulatory bodies in Ottawa. If theyre thinking, Lets get more borrowers into longer-term fixed rates, they can make that happen. McLister added that if the government is serious about this, it would also have to facilitate cost-effective long-term funding to support those mortgages. Government-sponsored funding vehicles (like the NHA MBS and Canada Mortgage Bond programs) currently only support up to 10-year terms and are dominated by 5-year securities, he noted. Private mortgage-backed securities, in their current incarnation, would not have tight enough spreads to allow for competitive 30-year rates. Butler agreed, saying, Vast changes would be required in our mortgage financing system. In other words, dont hold your breath for cost-effective longer-term mortgages anytime soon.

Apr 29, 2019 Be the expert First National Financial LP As expected the Bank of Canada has, once again, moved to the sidelines when it comes to interest rate policy. This time, though, the bankers appear to have unfolded their lawn chairs, taken a seat and put their feet up; settling-in for an extended period of inactivity. The central banks benchmark policy rate was left unchanged at 1.75% during last weeks setting. More significantly, the Bank made a small change in wording to its Monetary Policy Report that sends a big message. It eliminated references to the need for future interest rate hikes, signalling it has shifted to a wait-and-see status. Many market watchers do not expect any rate increases (or decreases) until early 2020. So what would it take for the Bank of Canada to get back in the game? It would have been something drastic, like a sudden jump in inflation or a rapid drop in employment. Right now, though, the Bank finds itself somewhat boxed-in. Inflation is showing some signs of increasing, but not enough to justify interest rate intervention. Canadian household debt is climbing back into record territory and higher rates would only compound that problem. The BoC has to pay attention to what the U.S. Federal Reserve is doing, and right now there is little political appetite for rate increases in the United States. As well, the election cycle is heating up in both the U.S. and Canada and central banks are loath to make any moves that could be seen as giving advantage to any side in an election campaign.

Apr 22, 2019 First National Financial LP The likelihood of a Bank of Canada interest rate increase appears to be getting pushed further and further beyond the horizon. The Bank is expected to remain on the sidelines again this week when it makes its scheduled rate announcement on Wednesday. A recent survey by Reuters suggests economists have had a significant change of heart about the Banks plans. Just last month forecasters were calling for a quarter-point increase in the third quarter with another hike next year. Now the betting is for no change until early 2020. There is virtually no expectation there will any rate cut before the end of next year. The findings put the Bank of Canada in line with the U.S. Federal Reserve and other major central banks. World economies have hit a soft spot largely due to trade uncertainties between China and the United States. Canada is also being affected by depressed oil prices and a slowdown in the housing market. Market watchers will be paying close attention to the Monetary Policy Report that comes with this weeks BoC rate setting. Realtors and mortgage lenders have been pressuring for some loosening of the B20 stress test to allow some life back into the market. The odds are against the Bank advocating for any easing. Canadian households are still carrying record high debt loads and there are growing expectations of a recession within the next two years.

Lets compare a CHIP reverse mortgage Income Advantage plan to a home equity line of credit, or HELOC. To be clear this gets tricky as one is an apple and the other is an orange. A Home Equity Bank CHIP Income Advantage equity loan program allows you to arrange a monthly or even quarterly draw against the approved limit while you are NOT REQUIRED to make regular monthly mortgage payments. The plan starts with an initial draw of a minimum $20,000 and then you draw a monthly amount of $1,000 for your needs. You can continue to do so until you have reached the maximum amount available to be withdrawn. A HELOC, on the other hand, is a line of credit secured against the equity in your home. Often the interest rate is set at Prime plus 0.50%. Today, with prime at 3.95% this will have an effective rate of 4.45%. A HELOC requires a minimum monthly payment of at least the interest due at the end of each month. For comparison, we draw an income supplement amount of $1,000 per month from the beginning to a point in time where the balance owing is matching the maximum withdrawal amount for the CHIP loan. To do this let us use the CHIP Calculator to assess the borrowers age and the value of the Home. For this demonstration, we use the average price of a home in this area of $535,000. The calculator suggests an amount of $175,500 on a single family home if owners are 70 years of age. With this value, you will reach the maximum drawdown in the 13th year with CHIP and the 14th year with HELOC. Here is where the two plans differ. With the CHIP you will receive the full $1,000 every month. With the HELOC you draw $1,000 every month and required to make the minimum monthly payment which grows each month. By the 13th year, the minimum amount is $645/ month; you are only receiving $355/m to use for living. Then once you have reached the limit, you need to continue to make the minimum monthly payments, but you can no longer draw more as you are at the ceiling. With the CHIP you cannot pull more, but you also do not have any payments while living in the home. The last paragraph describes how with a CHIP you will draw $1,000 every month, and with a HELOC the $1,000 decreases more each month with the rising minimum interest payment. A consideration to be compared is the cost of the two different options. By the time the balance hits the $175,500 ceiling of each plan (for arguments sake, as each will have a different limit) lets look at the interest costs. The HELOC will have a total interest cost of approx $ 57,000. The price after 14 years in the CHIP will be approx $ 76,000 in total. The Chip will consume more of your equity over time but will also provide you the full $1,000/m draw for longer. A strategy some use is to start with the HELOC plan and then at an appropriate time the HELOC is paid out with a CHIP reverse mortgage. The benefit here is the CHIP does not get paid until you sell or move out of the home. The balance will continue to climb but you are never required to make a payment, and if the balance outgrows the equity and cost to sell the home, CHIP absorbs the price, not your estate.

One Big 5 Bank did in fact drop their 5 year fixed rates late last week 0.15%. PM me to find out which one. Will other banksfollow suit? Yes. If you have an approval in place today...will your bank aoutomatically drop the rate on your approval? No! Does my firm have access to lenders that ALREADY were BEATING the big banks (some by 0.50%) - 100% yes. In most cases we can at least match if not significantly beat bank rates. The last calculation I ran for a client last week on his $465,000 RBC Renewal, we would save him $8600 in interest versus the RBC offer. It pays (BIG) to talk to a mortgage broker outside your bank at renewal time! 60-90 days before renewal is the time to reach out to us. A Little on Regulations (Behind the Curtain)... As of Jan 1, 2019 Capital Requirements for the Banks, imposed by Government Regulators, has increased. This cuts into their profits (which they dont like) and so they have been slow to drop rates following the bond market, which they always do. Prepayment Penalties on Variable Rate Mortgages are precisely regulated to a maximum of 3 months interest. Fixed Fate Mortgages are regulated too, however are based on Interest Rate Differential (IRD), which can cost borrowers the equivalent of 10 months - 20 months - or even 30 months interest! Its not all about Rate. Equally as important is early term break penalties (AKA Prepayment Penalties). The Big 6 have the HIGHEST breakage penalties of any other Canadian lenders. IRD Penalties (Interest Rate Differential) should be a clear and concise, easy to understand calculation, just like Rates are easy to understand. They are not as the government allows the banks to keep them hidden and difficult to calculate for the lay person, and even for many bankers. MOST IMPORTANT: In Decreasing Interest Rate Environments - These penalties can be TENS of THOUSANDS of dollars on mortgages $300k-$600k (Fairly common mortgage amounts for most Canadians). Protect yourself and ask the question What if I need to break this 5 year mortgage early - How is my penalty calculated?. Most lenders will shy away from answering this as it can be so convoluted and they really dont know as its based on posted rates at time of payout. Did you know approx 60% of Canadians break their 5 year term mortgages (sell/move to another property, refinance, marital breakdown, traumatic life event, etc). Truly, when you are trying to negotiate with your bank over 0.05 or 0.10 less on a rate - they often will come down, knowing 6 of 10 will break and the thousand or two they concess on up front interest they will make up by the FIFTEEN to THIRTY THOUSAND prepayment penalty they charge many of their clients (in decreasing rate environments due to their IRD clause). Working with an independent Licensed Mortgage Broker ensures you get a great Rate and also your other interests are protected. My business is built on Client Relationships NOT Client transactions. Call, Text orEmail at any time - I am happy to discuss your individual needs andprovide custom mortgage advise.

Here is a great video from Home Equity Bank... CHIP Explained As a certified CHIP mortgage broker I am here to answer your questions and guide your application.

Fixed Vs Variable To Lock In or Not? The above video applies 100% if you are taking a new mortgage, whether a purchase, refinance, or renewal. The variable is the main contender. But what about all the economists saying if you are in a variable rate mortgage current then lock in? You mean the economists that are employed by profit driven shareholder owned institutions that directly benefit from your locking-in (banks) via instantly increased profit margins and massively higher (up to 900% higher) prepayment penalties that 2/3 mortgage holders will trigger? A bit biased, that crowd. Also they are generalists, the are not specialists. But what about independent real estate experts? While these experts may have their finger on the pulse of many facets of the real estate market, many remain totally unaware of how exactly mortgage prepayment penalties are calculated, and just how likely you are to trigger them. Also generalists, unaware of many nuances of mortgage products. So whats my game? Ive never really had game. so to speak. And I dont stand to profit from your locking in, or from your staying variable. In fact as I type this on a stunning day Im wondering just what Im doing in my office at all. Im just a Mortgage Broker offering an opinion. An opinion that reflects my personal policy, an opinion shaped through 25 years of experience with my own mortgages, an opinion based on 11 years of experience with 1,673 clients mortgages. Ive seen a few things, mortgage specific things. Ive watched 2/3 of my clients break their mortgages and trigger penalties. Almost every single one of them a small and relatively painless penalty thanks to staying variable. But what about these rising rates? If you are currently in a Prime -.65% to Prime -1.00% variable then to lock-in would be to inflict an immediate rate hike on yourself that might take the government another 12-18 months to pull off... if they pull it off. Stay variable. If you are in a Prime -.35 or shallower mortgage, we should discuss restructuring that into a Prime -1.00% mortgage and reducing your rate by .65% or more. Staying variable. My crystal ball says yes, perhaps another two or three 0.25% hikes through 2019, but at that point the odds favour (heavily) an economic contraction that will in turn trigger a corresponding reduction in interest rates. It is my theory, and that of others smarter than I, that the fed is pushing rates up aggressively to beat said economic contraction, because they want to have the tool of reducing interest rates back in their toolbox when the rainy days come. And we are overdue for stormy economic times. In short, life is variable - your mortgage should be as well. The above is credit to Dustan Woodhouse.

Haider-Moranis Bulletin: If anything, a rent-to-own housing option is likely to limit housing and career choices of struggling households instead of expanding them Special to Financial Post Updated: October 31, 2018 When it comes to affordable housing, there are no silver bullets. Still, election campaigns deliver catchy slogans for stubborn housing problems, which at times defy economic fundamentals and common sense. The rent-to-own housing option, which surfaced as an electoral promise in Toronto, is one such idea is likely to limit housing and career choices of struggling households instead of expanding them. Many supporters of rent-to-own (RTO) housing naively believe that it offers an affordable and viable alternative to mortgage finance for home ownership. The proponents argue that households who could not save for a down payment or are deemed uncreditworthy by mainstream lenders could rely on RTO for homeownership. The reality is far more complex, and, in many circumstances, RTO programs can hurt the long-term financial prospects of struggling households. Before one signs off on an RTO housing contract, some basic facts must be understood. An RTO contract enables a household to rent a dwelling that the household may buy in the future at a predetermined price. The RTO thus enables households to select a neighbourhood and dwelling of their choice. In instances where the household may not have enough for a down payment to secure a mortgage, the RTO might put such households on the path to homeownership. At a predetermined date in the future, the transfer takes place from the landlord to the renter. The prearranged price offers protection to renters against unexpected housing price inflation. What could possibly be wrong with such a benevolent arrangement? The answer is a lot. The devil, as always, is in the detail. To begin with, a typical RTO client is one with a down payment that is not adequate to qualify for a mortgage from mainstream lenders, who charge lower interest rates than the lenders who lend to highly leveraged borrowers. As the loan-to-value increases, so does the charged interest rate. Given the way RTO contracts are structured, they may hurt the financial interest of a struggling household. For starters, a renter household cannot avoid a down payment, which is called the option money and is likely to be less than 20 per cent but is still required. The one-time, often non-refundable, payment at the initiation of an RTO contract buys renters the option to purchase the dwelling in the future. The predetermined future purchase price serves as a hedge against rapidly increasing housing prices. Yet, if housing prices were to decline in the future, the renter must pay the higher agreed upon price. Equally important is the realization that the rent in RTO contracts is usually higher than the rent for a comparable property because part of the rent is credited towards the purchase price. So, from a cashflow perspective, an RTO contract carries a higher burden than a comparable rental unit. While an RTO dwelling is not technically owned by the renter, it is still the renters responsibility to maintain the property. Thus, if the furnace blows out during the renting phase, the renter might be on the hook for it, depending on the terms of the agreement. When the renting period ends, the renter has the option to purchase the dwelling. During the renting period, part of the rent accrues towards the purchase price, which is akin to building equity. However, the renter must borrow the balance from a lender. At this point, depending upon changes to interest rates, a mortgage could be cheaper or more expensive than when the RTO contract was signed. RTO contracts are predicated on the assumption that the renters finances in the future will improve in terms of creditworthiness. Should that fail to happen, the renter will have to walk away, leaving the equity built over the years behind. Furthermore, such contracts restrict one to the same location, making it expensive to relocate to more lucrative job markets in other cities. Sanjiv Jaggia and Pratish Patel in the Journal of Derivatives analyzed RTO contracts in the U.S. after the Great Recession when many homes faced foreclosure. Their analysis concluded that RTO contracts were no silver bullet. They found that lenders could benefit from entering into an RTO contract when a borrower was about to default on a mortgage. If the borrower faced severe financial constraints, the option to buy the dwelling in the future was essentially worthless. RTO contracts have existed with limited success in certain niche markets. But without subsidies, market-based RTO solutions to promote housing affordability are unlikely to succeed. A preferred option to improve housing affordability is to increase the supply of new housing by aggressively releasing land suitable for development and streamlining the development approval processes. Murtaza Haider is an associate professor at Ryerson University. Stephen Moranis is a real estate industry veteran. They can be reached at www.hmbulletin.com.

Its no surprise to Canadians that the fall and winter seasons can bring some very severe weather of high winds, heavy rains, sleet, hail, ice, snow and any weird combination of all of them. The Insurance Bureau of Canada reports that severe weather has resulted in nearly one billion dollars in insured damages so far this year, just in Ontario alone. With summer behind us and winter looming, Annie-Marie Thomas, an insurance expert with insurancehotline.com, an insurance rate comparison website, says this is a great time to look at the insurance coverage on your homes and cars to prepare for possible weather-related damages in the months ahead. She recommends taking advantage of multi-line discounts. Many insurers will offer a discount of anywhere from five per cent to 15 per cent off one or even both policies when you bundle both your home and auto insurance with the same company. If you have both policies the insurance company at their discretion may even have just one deductible for losses on both policies in the event of a catastrophe. When it comes to insurance, fire used to be the main peril to peoples homes. Now there are a lot more claims for water damage than damage from fire. Water is the new fire, Thomas says. Basements are often the centres for a familys entertainment with recreation rooms, equipment, appliances, good flooring and other good furnishings. When water comes in it can cause a lot of damage. The cause for water damage to your home and/or cottage may determine whether or not you are covered. There are a few things you can do to help keep water damage from occurring. For water to drain off freely from the roof, make sure your downspouts and eavestroughs are in good repair, are cleaned regularly and make sure the downspouts extend at least two metres from the foundation so water drains away properly. When undertaking maintenance or home improvement projects, use water-resistant materials. Repair any cracks in the foundation and if the caulking around windows and doors is showing signs of age re-seal them. Insurance for water damage caused from sewer backups and overland floods usually are not covered in general policies and need to be purchased separately. Installing a backwater or backflow valve could be your last line of defence against an overloaded storm system thats trying to flow water (often sewage) back into your basement. Disconnecting your downspouts if they drain directly into your municipalitys storm system can help prevent overloading of the system and the possibility of a sewer back-up into your basement. An auto insurance policy that includes comprehensive or all perils coverage can help to offset the cost of repairs to your vehicle by damage caused from hail, heavy rains that flood roads and toppled trees from high winds. Damage to your home or cottage caused by fallen trees or branches usually is covered by your home insurance. Damage caused by debris also can be covered as long as the debris is not from a lack of maintenance or poor upkeep. If you have a cottage and plan to rent it for the fall and/or winter, Thomas recommends you contact your insurance provider and confirm that your plan allows for rentals. Many providers will void coverage if they find out you are renting your cottage without their knowledge. For Canadian snowbirds, arrange to have someone check your house every few days and make sure they know how to get in touch with you if something goes wrong. This arrangement can be informal and verbal. Thomas also recommends that any fireplaces in the house or cottage be inspected each year to make sure that those pesky raccoons and squirrels havent made winter lodgings in your chimney. A little preventive maintenance can help protect your valuable assets from potential damages from the harsh Canadian fall and winter climate. Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. Copyright 2018 Talbot Boggs Talbot Boggs , The Canadian Press

Its no surprise to Canadians that the fall and winter seasons can bring some very severe weather of high winds, heavy rains, sleet, hail, ice, snow and any weird combination of all of them. The Insurance Bureau of Canada reports that severe weather has resulted in nearly one billion dollars in insured damages so far this year, just in Ontario alone. With summer behind us and winter looming, Annie-Marie Thomas, an insurance expert with insurancehotline.com, an insurance rate comparison website, says this is a great time to look at the insurance coverage on your homes and cars to prepare for possible weather-related damages in the months ahead. She recommends taking advantage of multi-line discounts. Many insurers will offer a discount of anywhere from five per cent to 15 per cent off one or even both policies when you bundle both your home and auto insurance with the same company. If you have both policies the insurance company at their discretion may even have just one deductible for losses on both policies in the event of a catastrophe. When it comes to insurance, fire used to be the main peril to peoples homes. Now there are a lot more claims for water damage than damage from fire. Water is the new fire, Thomas says. Basements are often the centres for a familys entertainment with recreation rooms, equipment, appliances, good flooring and other good furnishings. When water comes in it can cause a lot of damage. The cause for water damage to your home and/or cottage may determine whether or not you are covered. There are a few things you can do to help keep water damage from occurring. For water to drain off freely from the roof, make sure your downspouts and eavestroughs are in good repair, are cleaned regularly and make sure the downspouts extend at least two metres from the foundation so water drains away properly. When undertaking maintenance or home improvement projects, use water-resistant materials. Repair any cracks in the foundation and if the caulking around windows and doors is showing signs of age re-seal them. Insurance for water damage caused from sewer backups and overland floods usually are not covered in general policies and need to be purchased separately. Installing a backwater or backflow valve could be your last line of defence against an overloaded storm system thats trying to flow water (often sewage) back into your basement. Disconnecting your downspouts if they drain directly into your municipalitys storm system can help prevent overloading of the system and the possibility of a sewer back-up into your basement. An auto insurance policy that includes comprehensive or all perils coverage can help to offset the cost of repairs to your vehicle by damage caused from hail, heavy rains that flood roads and toppled trees from high winds. Damage to your home or cottage caused by fallen trees or branches usually is covered by your home insurance. Damage caused by debris also can be covered as long as the debris is not from a lack of maintenance or poor upkeep. If you have a cottage and plan to rent it for the fall and/or winter, Thomas recommends you contact your insurance provider and confirm that your plan allows for rentals. Many providers will void coverage if they find out you are renting your cottage without their knowledge. For Canadian snowbirds, arrange to have someone check your house every few days and make sure they know how to get in touch with you if something goes wrong. This arrangement can be informal and verbal. Thomas also recommends that any fireplaces in the house or cottage be inspected each year to make sure that those pesky raccoons and squirrels havent made winter lodgings in your chimney. A little preventive maintenance can help protect your valuable assets from potential damages from the harsh Canadian fall and winter climate. Talbot Boggs is a Toronto-based business communications professional who has worked with national news organizations, magazines and corporations in the finance, retail, manufacturing and other industrial sectors. Copyright 2018 Talbot Boggs Talbot Boggs , The Canadian Press

About $12 per $100,000 of mortgage balance. So a $300,000 mortgage loan payment will increse by about $36/month. And not every Lender treats their required payments the same. TD RBC for example have a payment requirement where they are collecting a little more right from the beginning, so they only adjust upward, or reset your payment when the actual maximum Amortization is triggered. So for some borrowers they may not see any change in their monthly payment, but they should know that when the rate edges upward, more of the payment is going towards interest then prior to the increase. For strategies that make sense watch for my next blog where I outline how a Mortgage Inflation Hedge Plan can save you thousands of dollars. Call me anytime, Dean