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Housing Market Malaise
After a rapid series of hikes that saw the Bank of Canada’s policy interest rate climb from 0.25% to 5.0% over 18 months, the central bank held firm in its last two meetings. Most analysts anticipate that the Bank will maintain its current stance. However, uncertainty over this stance combined with a deceleration in the…
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CMI Housing Affordability Watch: Don’t Count on Tax Incentives for Mom-and-Pop Real Estate Investors
Small-time real estate investors have formed the backbone of Canada’s housing rental market. Despite data indicating that individual investors have been a growing share of the housing market, I don’t believe these figures tell a story that mom-and-pop investors are crowding out home buyers. Overall home buying activity has fallen significantly with the rise in…
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Renewal Redux – Assessing the Risk as Payment Shock Looms
Earlier this month, the Bank of Canada voiced concern over variable rate mortgages. Worries stem from the growing balances some borrowers are facing in the wake of a rapid rise in interest rates. This so-called negative amortization occurs when interest costs exceed a borrower’s fixed mortgage payment, and the shortfall is added to the outstanding…
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Mortgage Renewals Keeping the Bank of Canada on the Sidelines
At the House of Commons Standing Committee on Finance on October 30th, Bank of Canada governor Tiff Macklem said the decision to hold rates was driven by the anticipated economic impact of upcoming mortgage renewals. Macklem explained that the effect of previous rate hikes is still filtering through the economy, including through mortgage renewals, and…
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CMI Housing Affordability Watch: Looking Back to See the Way Forward – Part 2
As discussed in part one, studying past housing policies can provide valuable insight into potential solutions for the current housing crisis. Canada’s significant change in approach to housing policy throughout the 1970s – another period when affordability concerns and rental market pressures captured public attention – offers particularly useful lessons. During this time, governments at…
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CMI Housing Affordability Watch: Looking Back to See the Way Forward – Part 1
When looking at what could be done to improve housing, it’s helpful to revisit past efforts. This examination can offer valuable insights into potential policy recommendations, some of which may involve repackaging previously attempted policies from years ago. During the 1970s Canada underwent a significant shift in housing policy orientation. The shift entailed a substantial…
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Hitting the Pause Button
Last week, the Bank of Canada held its policy rate at 5%. The decision was expected given slowing in the economy and modest improvement to core inflation measures. The Bank is likely at the end of its tightening cycle. How soon it eases rates – and how low will rates go in the near to…
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