Category Archives: economy

Fraser valley boom

You know Vancouver is hot, but did you know that house prove gains in the Fraser valley are outpacing Vancouver? Southseacompany points out this CBC article with the details.

“The Canadian Mortgage and Housing Corporation says demand for less expensive condominiums and apartments in North Delta, Surrey and Langley has inflated prices at a sharper rate than in Vancouver.”

“”Those municipalities have some of the most affordable units in the region, particularly for condos,” he (Eric Bond, a regional analyst with CMHC) said. “For first-time buyers, given the price increases we’ve seen in the rest of the region, often those units are what’s most interesting to them.”

Read the full article here.

How sharp a correction?

Most economist are predicting a slower housing market in Canada, but how slow is too slow?

Southseacompany points to this article wondering how ‘sharp’ any correction would be:

Last week, the Bank of Canada hiked the overnight rate to 1.25 per cent, causing the credit union to note that Canadians have some of the highest levels of household debt in the world.

The interest rate hike — when combined with a new mortgage stress test for uninsured borrowers that came into effect on January 1 — could severely limit the purchasing power of many would-be home buyers, cooling the market dramatically.

But while most economists agree that these factors will dampen the market in the first few months of 2018, many believe it will eventually adjust to the changes. What’s more, some argue that Canadians debt levels aren’t as worrying as they might first appear.

“Household debt in Canada is seen by some as unsustainably high and a source of vulnerability for the financial system,” write National Bank chief economist Stéfane Marion and senior economist Matthieu Arseneau in a recent report. “But the international evidence suggests that Canadian household leverage and home prices are not abnormal.”

Read the full article here.

Mortgages getting more expensive

Southseacompany shared this article, looks like everyone’s mortgage is going to get more expensive:

The Bank of Canada raised its benchmark interest rate to 1.25 per cent Wednesday and signalled that, barring certain risks, more hikes are likely in the rest of the year. That’s creating an unusual situation for Canadians: for the first time in years, those renewing mortgages will be faced with higher rates and an increase in payments.

Even before Wednesday’s decision, five of the country’s largest banks hiked five-year fixed rates 15 basis points to 5.14 per cent last week. (CIBC is still offering 4.99 per cent.) In a country where consumers have grown accustomed to low rates, and where households are burdened with record levels of debt relative to income, this kind of change is worth noting. A recent survey published by insolvency trustee MNP Ltd.found 48 per cent of Canadian respondents were $200 or less away from being unable to fulfill their monthly financial obligations, an eight point increase since September.

Read the full article over at Macleans.

No plan to prohibit foreign buyers

Bullwhip29 points out that BC Finance Minister Carol James has no plans to prohibit foreign buyers in BC.

Foreign buyers who want to buy residential real estate in Metro Vancouver pay a 15 percent tax.

Meanwhile, Finance Minister Carole James has no intention to outlaw foreign buying of B.C. homes when the NDP government introduces a series of policies in the next couple of months to address the high cost of housing.

James has said that there will be no ban like the one that exists in New Zealand.

B.C. Green Leader Andrew Weaver, on the other hand, has demanded an outright ban on foreign buying of residential real estate to curb demand. And he wants James to introduce this in her upcoming budget.

Read the full article over at the Straight.

Interest rates shoot higher

Southseacompany pointed out this article about rising interest rates around the world:

The bond market is getting a wake-up call from global central banks that the post-financial crisis era of easy money and super low interest rates is coming to an end.

In what was a sizzling move for the Treasury market, the 10-year yield zipped higher Tuesday amid talk that the Bank of Japan could finally be ready to wind down its easy policies. The 10-year yield broke above the key 2.50 percent level and was trading as high as 2.55 percent, the highest since March.

The 10-year is key since it is a benchmark that mortgages and many other consumer and business loans are based on.

Read the full article here.