Two prominent voices made the case on Tuesday that Canada’s housing market is currently undergoing a soft landing, and that a “sustainable” path is around the corner.
In a speech to the CFA Society in Toronto, Bank of Canada Governor Mark Carney said a combination of new mortgage rules introduced by the federal government, as well as a clear tightening bias from the central bank, are working successfully together to cool Canada’s red hot housing market.
“I wouldn’t say mission accomplished... but a more sustainable housing situation in Canada is within sight,” he said.
That observation came as another optimistic view of the housing market was presented by Scotiabank’s Senior Economist, Adrienne Warren. She predicted that Canada’s housing market was “shifting toward a more sustainable path.”
Click here for full details in the Financial Post.
Ben Bernanke’s US Federal Reserve is, once again, testing the bounds of monetary policy, taking the unprecedented step today of tying the eventual rise of borrowing costs to economic indicators, including the jobless rate.
At the end of the two-day meeting in Washington, the Fed’s policy committee surprised Wall Street by declaring that it had agreed to leave its benchmark interest rate near zero until the unemployment rate drops to 6.5%, as long as the one- to two-year outlook for inflation stays within a half percentage point of the central bank’s 2% target.
The extraordinary guidance replaces the Fed’s previous conditional commitment to keep the benchmark rate near zero until at least the middle of 2015. The Federal Open Market Committee (FOMC) also said it will expand its quantitative easing program in the New Year, adding monthly purchases of $45 billion (US) in Treasuries with maturities of four to 30 years.
“This is as aggressive as Fed easing has ever been,” Sherry Cooper, Chief Economist at Bank of Montreal in Toronto, said in an analysis of the Fed’s decision. She added that the policy shift shows the US central bank is “clearly very concerned about the state of the US economy.”
Click here for the full Globe and Mail article.
Close to two-thirds of Canadians polled in a new study fear the Canadian economy will suffer if the “fiscal cliff” problem in the US isn’t resolved.
“Along with high debt levels and a slowing real estate market in Canada, the fiscal cliff situation in the US is giving Canadians another reason to worry about the Canadian economy,” Sun Life Global Investments Chief Investment Officer Sadiq Adatia said about the results of the survey, conducted for Sun Life Financial by Ipsos Reid.
Bank of Canada Governor Mark Carney said on Tuesday Canada would be threatened with the possibility of another recession if US President Barack Obama and Congress are unable to cut a deal to avoid major tax hikes and spending cuts set to kick in January 1st.
The poll found that 63% of Canadians interviewed are concerned that Canada’s economy will be hurt by the impact of the “fiscal cliff.”
Click here for more survey results from the Globe and Mail.
Just four short years ago, you could buy an investment property with nothing down and get the best interest rates in the market.
That was then. Today, rental financing is night-and-day different. To mortgage a small (a one-to-four unit, non-owner occupied) rental property now, you need to plop down one-fifth of the purchase price. And even then, you don’t always get the lowest rate.
With a tipsy housing market and the credit crisis still fresh in memory, regulators and lenders are putting higher-risk borrowers under a microscope. That includes real estate investors.
As a result, it’s now trickier to qualify for a rental property mortgage – especially compared to the days before April 19th, 2010. (That’s when federal legislation put an end to insured rental mortgages with less than 20% down.)
Click here to read more from the Globe and Mail.