Source: Edge Realty Analytics Millions of Canadians have “won” the Canadian housing lottery in the last year. Of the three quarters of homeowners who have owned for more than five years, they’ve amassed over $175,000 of equity, on average. Many, including those most able to spend their equity, have accumulated far more thanks to incessantly rising home values. “Canadians have never had this much equity in their homes,” reports Ben Rabidoux from Edge Realty Analytics. That equity is not just a theoretical number. Equity is real and it can be spent. And Canadians will spend a good chunk of it if ..read more

Bond yields have sunk this month. And it’s taken no time for skeptics to pronounce that inflation fears are therefore unfounded. Yields were unjustifiably high, they say, because inflation is transitory. But those who believe that historic global stimulus and spending and supply constraints won’t lead to above-normal inflation and higher rates might want to give it more time. Economic recoveries don’t travel in a straight line. Yields have been prone to setbacks in most meaningful recoveries throughout history. This recovery will be no different. Heck, consumers haven’t even begun to spend li ..read more

There’s a widening chasm between what the Bank of Canada is telling Canadians about inflation and what corporate leaders expect. The following chart ain’t pretty, and it contrasts starkly with the BoC’s inflation outlook. Source: CFIB This graph from CFIB shows that businesses now plan to boost prices by 4.7% in the next 12 months. That is not only 135% more than the BoC’s 2% mid-point target for inflation, it “is by far a record high,” writes Capital Economics. Meanwhile, the BoC’s last monetary policy report in April forecasted inflation at just 2.3% in 2021—and 1.9% next year. With that kin ..read more

One truth in economics is that mortgage rates typically follow inflation expectations, at least over time. That eventually poses a problem for borrowers, particularly after consumer prices take flight, like they have this year. U.S. core inflation, for example, recently jumped the most in four decades, 0.9% on a monthly basis. That “was well above what I and outside forecasters expected,” remarked Federal Reserve Vice Chair Richard Clarida. (Our country usually takes its rate cues from the U.S., so when the Fed talks, Canadian markets listen.) But the bond market, which is normally hyper-se ..read more

One truth in economics is that mortgage rates typically follow inflation expectations over time. Well, that’s a problem, because consumer prices (e.g., U.S. core inflation) recently rose the most in four decades, 0.9% on a monthly basis. That “was well above what I and outside forecasters expected,” opined Federal Reserve Vice Chair, Richard Clarida. (Our country usually takes its rate cues from the U.S. so when the Fed talks, Canada’s market listens.) But the bond market, which is normally hyper sensitive to rising inflation, did something unexpected this week. It shrugged the news off. Inst ..read more

. Here’s a daily helping of fresh Canadian mortgage news (the italics are the Spy’s 2 cents). Reader note: RateSpy’s breaking mortgage news is now at → RATESDOTCA. Can the BoC Manage Inflation Expectations? (RATESDOTCA) Three Cities Have Exuberant Home Prices: BoC (RATESDOTCA) Government’s mortgage policy will hurt lower-income Canadians even more (Ottawa Citizen) New stress test level makes it harder to qualify for a mortgage in Canada (CBC News) Hoping for higher interest rates, to tame home prices? Be careful (Edmonton Sun) Is it a good idea to sell your house and start renting ..read more

. Here’s a daily helping of fresh Canadian mortgage news (the italics are the Spy’s 2 cents). Reader note: RateSpy’s breaking mortgage news is now at → RATESDOTCA. Our Housing Market Through the Eyes of Other Countries (RATESDOTCA) The Stress Test’s Biggest “Stress” Could Start in 2023 or 2024 (RATESDOTCA) CIBC’s Tal on Inflation and Interest Rate Expectations (RATESDOTCA) Mortgage stress tests are about to get tougher, but no rush to buy (BNN Bloomberg) Mortgage rules or not, anytime you see home prices up 42% in 12 months (like this), that means many fewer are able to buy. In fact ..read more

. Here’s a daily helping of fresh Canadian mortgage news (the italics are the Spy’s 2 cents). Reader note: RateSpy’s breaking mortgage news is now at → RATESDOTCA. Overbidding on a home? Here are 4 things that could go wrong (The Globe & Mail – Subscription) Bidding wars continued in earnest across the country in May. But by most accounts, it was at a less frenetic pace than March and April. Young Ontario residents giving up on home ownership: survey (Yahoo News) 70% of prospective home buyers say a 150 bps jump in rates would have “no effect” on their buying plans. And a good perc ..read more

. Here’s a daily helping of fresh Canadian mortgage news (the italics are the Spy’s 2 cents). Reader note: RateSpy’s breaking mortgage news is now at → RATESDOTCA. More Seniors Plan to Rely on Reverse Mortgages. Here’s Why. (RATESDOTCA) What rising inflation means to the loonie and the timing of a Bank of Canada rate hike (Financial Post – Subscription) Canadians need more than basic housing market knowledge from their professional realtor, new study finds (Newswire) “51% of Canadians feel that REALTOR®’s commissions are their only priority.” How prevalent are non-resident owners in ..read more

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