Canadian home ownership inches further out of reach

Rising house prices made home-ownership slightly less affordable in Canada during the second quarter of this year, when buyers returned to the market after a lengthy slump.

Royal Bank of Canada’s housing affordability index, which looks at the proportion of household income required to keep up with the cost of owning a home, rose by 0.3 percentage points to 42.7 per cent for detached bungalows, and by 0.4 percentage points to 48.4 per cent for two-storey homes, according to a report to be released Tuesday.

Posted by The Globe and Mail dated August 27, 2013 http://www.theglobeandmail.com/report-on-business/economy/housing/canadian-home-ownership-less-affordable-report-finds/article13959274/

Bank of Canada Publishes 2014 Schedule for Policy Interest Rate Announcements and Monetary Policy Report Releases

Ottawa –
The Bank of Canada today published its 2014 schedule of key policy interest rate announcements and quarterly Monetary Policy Report (MPR) releases, and re-confirmed the scheduled announcement dates for the remainder of this year.

The scheduled announcement dates from September 2013 through December 2013 are re-confirmed as:
•Wednesday, 4 September 2013
•Wednesday, 23 October 2013*
•Wednesday, 4 December 2013

The scheduled announcement dates for 2014 are:
•Wednesday, January 22*
•Wednesday, March 5
•Wednesday, April 16*
•Wednesday, June 4
•Wednesday, July 16*
•Wednesday, September 3
•Wednesday, October 22*
•Wednesday, December 3
Posted by Bank of Canada on July 23, 2013 http://www.bankofcanada.ca/2013/07/publications/press-releases/bofc-publishes-2014-schedule-fad-and-mpr-releases/

Bank of Canada maintains overnight rate target at 1 per cent

Ottawa –
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

Global economic growth remains modest, although the pace of economic activity varies significantly across the major economies. The U.S. economic expansion is proceeding at a moderate pace, with the continued strengthening in private demand being partly offset by the impact of fiscal consolidation. In Japan, fiscal and monetary policy stimulus is contributing to a rapid recovery in economic growth. In contrast, economic activity in the euro area remains weak. While stronger than in the advanced economies, real GDP growth in China and other emerging market economies has slowed, exerting downward pressure on global commodity prices and, as a consequence, the Bank has downgraded slightly its global growth forecast. The global economy is still expected to pick up in 2014 and 2015.

Posted by Bank of Canada on July 17, 2013 http://www.bankofcanada.ca/2013/07/publications/press-releases/fad-press-release-2013-07-17/

New stricter mortgage rules come into effect today-New amortization period reduced to 25 years

New rules Ottawa announced last month that will tighten Canada’s mortgage industry go into effect today, but a major Canadian bank says many people are unaware of what exactly is changing.

In June, Finance Minister Jim Flaherty unveiled major changes to the limits of what the Canada Mortgage and Housing Corporation is allowed to insure, effectively tapping the brakes on a housing industry that many experts worry has become too hot.

Starting Monday, lenders can only issue home equity loans up to a maximum of 80 per cent of a property’s value — down from 85 per cent. And anyone wanting to buy a home worth more than $1 million, for instance, must now have a downpayment of at least $200,000.

But the biggest change of all is the shortening of the maximum amortization period to 25 years from 30 years — forcing borrowers to pay back their debts sooner. That will reduce the amount of interest they’ll pay over the life of the loan, but make mortgage payments larger as more debt gets paid back with each payment.

http://www.cbc.ca/news/business/story/2012/07/09/bmo-mortgage-housing.html

New mortgage rules may dampen economic growth: Flaherty

OTTAWA — Finance Minister Jim Flaherty says he realizes tightening mortgage rules could slow economic growth and cool the housing market, but that he’s prepared to take the risk.

Flaherty says he took action last week because there was no sign of a let-up in the hot condo market in major cities and because many Canadians can’t seem to resist the lure of low mortgage rates.

TD Bank has estimated that Ottawa’s move to reduce the maximum amortization period to 25 years from 30, effective next month, will curtail economic growth by about 0.2 percentage points in 2013.

Flaherty told reporters in a conference call from Ireland that he realizes the action may dampen the economy.

But he says the risk of a housing bubble if had he not acted would have been greater.

In fact, he says it would be a good thing if Canada’s housing market cools somewhat.

http://business.financialpost.com/2012/06/29/new-mortgage-rules-may-dampen-economic-growth-flaherty/

 

 

Bank of Canada maintains overnight rate target at 1 per cent

Ottawa, Ontario –
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The outlook for global economic growth has weakened in recent weeks. Some of the risks around the European crisis are materializing and risks remain skewed to the downside. This is leading to a sharp deterioration in global financial conditions. While the U.S. economy continues to expand at a modest pace, economic activity in emerging-market economies is slowing a bit faster and a bit more broadly than had been expected. More modest global momentum and heightened financial risk aversion have reduced commodity prices.
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Bank of Canada maintains overnight rate, but hints at higher rates

Ottawa, Ontario –

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The profile for global economic growth has improved since the Bank released its January Monetary Policy Report (MPR). Europe is expected to emerge slowly from recession in the second half of 2012, although the risks around this outlook remain high.  The profile for U.S. growth is slightly stronger, reflecting the balance of somewhat improved labour markets, financial conditions and confidence on the one hand, and emerging fiscal consolidation and ongoing household deleveraging on the other.  Economic activity in emerging-market economies is expected to moderate to a still-robust pace over the projection horizon, supported by an easing of macroeconomic policies.  Improved global economic prospects, supply disruptions and geopolitical risks have kept commodity prices elevated.  In particular, the international price of oil has risen further and is now considerably higher than that received by Canadian producers.  If sustained, these oil price developments could dampen the improvement in economic momentum.

Overall, economic momentum in Canada is slightly firmer than the Bank had expected in January. The external headwinds facing Canada have abated somewhat, with the U.S. recovery more resilient and financial conditions more supportive than previously anticipated.  As a result, business and household confidence are improving faster than forecast in January. The Bank projects that private domestic demand will account for almost all of Canada’s economic growth over the projection horizon.  Household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk.  Business investment is projected to remain robust, reflecting solid balance sheets, very favourable credit conditions, continuing strong terms of trade and heightened competitive pressures.  The contribution of government spending to growth is expected to be quite modest over the projection horizon, in line with recent federal and provincial budgets. The recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.

The Bank projects that the economy will grow by 2.4 per cent in both 2012 and 2013 before moderating to 2.2 per cent in 2014. The degree of economic slack has been somewhat smaller than the Bank had anticipated in January, and the economy is now expected to return to full capacity in the first half of 2013.

As a result of this reduced slack and higher gasoline prices, the profile for inflation is expected to be somewhat firmer than anticipated in January.  After moderating this quarter, total CPI inflation is expected, along with core inflation, to be around 2 per cent over the balance of the projection horizon as the economy reaches its production potential, the growth of labour compensation remains moderate, and inflation expectations stay well-anchored.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.

Posted by Bank of Canada dated April 17, 2012: http://www.bankofcanada.ca/2012/04/press-releases/fad-press-release-2012-04-17/

labels: bank of canada, canadian economy, market trends, real estate, residential mortgages

Bank of Canada holds overnight rate steady for 12th time

Ottawa, Ontario –

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The heightened uncertainty around the global economic outlook has decreased in the weeks since the Bank released its January Monetary Policy Report (MPR). With tentative signs of stabilisation in European bank funding and sovereign debt markets, conditions in global financial markets have improved and risk aversion has decreased. However, the global economy is still expected to grow below its trend rate as the deleveraging process in advanced economies proceeds.

The U.S. expansion is proceeding at a modest pace, reinforced by recent improvements in the labour market.  Growth in China is moderating to a still-high rate as expected, in response to past policy tightening and weaker external demand. Commodity prices are higher than anticipated, supported by improved global economic conditions and a geo-political risk premium on oil.  If sustained, the latter could ultimately dampen the improvement in global economic momentum. Recent developments suggest that the outlook for the Canadian economy is marginally improved from the January MPR.  Although the economy will likely grow faster than forecast in the first quarter due to temporary factors, underlying economic momentum remains around trend, balancing domestic strength and external weakness.  Private demand is now expected to be slightly stronger than projected, owing to improved sentiment and highly-supportive financial conditions.  Canadian household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk.  Net exports have been supported by stronger-than-anticipated U.S. activity but are expected to contribute little to growth, reflecting still-moderate foreign demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.

The profile for core and total CPI inflation is somewhat firmer than previously anticipated as a result of reduced economic slack and higher oil prices.  After moderating in the second quarter, total inflation is expected, along with core inflation, to be around 2 per cent over the forecast horizon, reflecting the combination of modest growth of labour compensation, an economy operating around its potential over time, and well-anchored inflation expectations.

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. With the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in Canada. The Bank will continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2 per cent inflation target over the medium term.

Posted by Bank of Canada dated March 08, 2012 http://www.bankofcanada.ca/2012/03/press-releases/fad-press-release-2012-03-08/

2012 Schedule-Bank of Canada interest rate announcements

January 17
March 8
April 17
June 5
July 17
September 5
October 23
December 4

Bank of Canada maintains overnight rate target at 1 per cent

Ottawa –
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.The global economic expansion is proceeding broadly as projected in the Bank’s April Monetary Policy Report (MPR), with modest growth in major advanced economies and robust expansions in emerging economies. The U.S. economy has grown at a slower pace than expected and continues to be restrained by the consolidation of household balance sheets and slow growth in employment. While growth in core Europe has been stronger than expected, necessary fiscal austerity measures in a number of countries will restrain growth over the projection horizon. The Japanese economy has begun to recover from the disasters that struck in March, although the level of economic activity in that country will remain below previous expectations. In contrast, growth in emerging-market economies, particularly China, remains very strong. As a consequence, commodity prices are expected to remain at elevated levels, following recent declines. These high prices, combined with persistent excess demand in major emerging-market economies, are contributing to broader global inflationary pressures. Widespread concerns over sovereign debt have increased risk aversion and volatility in financial markets.In Canada, the economic expansion is proceeding largely as projected, although the expected rotation of demand is somewhat slower than had been anticipated. Household spending remains solid and business investment robust. Net exports remain weak, reflecting modest U.S. demand and ongoing competitiveness challenges, particularly the persistent strength of the Canadian dollar. Despite increased global risk aversion, financial conditions in Canada remain very stimulative and private credit growth is strong.

Posted by Bank of Canada dated July 19/2011
http://www.bankofcanada.ca/2011/07/press-releases/fad-press-release-2011-07-19/