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Repo Market Trading – Nothing to See Here
The Bank of Canada produces a Financial Stability Report to assess the resilience of the domestic financial system and identify risks that could undermine its stability. One item highlighted in the report is the growth of asset managers’ leverage over the past 12 months, primarily driven by an increase in hedge fund repo activity. These…
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Addressing Affordability Challenges – Longer Term Mortgages are not a Panacea
Loan characteristics vary significantly across nations, with differences such as variable rate loans, foreign exchange loans, or interest-only loans. For example, in countries like Poland, variable rate products are predominant, whereas in Belgium and Denmark, most mortgages have fixed-rate periods exceeding ten years. A recent report by Desjardins suggests that we would not have seen…
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Inflation Cooled in April. Is it Enough to Sway the Bank of Canada?
The headline annual inflation number for April was 2.7%, which was broadly in line with expectations and marked the fourth consecutive month of easing. The better news was that key core inflation measures all came in below 3%. Each measure rose by 0.1% month-over-month, and their three-month trends were below 2% on an annual basis,…
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No Immediate Relief in Sight for Soaring Rents
In April, average asking rents for all residential property types in Canada remained near record highs, reaching $2,188 per month, marking a 9.3% increase compared to the previous year. However, there were indications of easing in certain markets within the Greater Toronto and Hamilton Area (GTHA) and surrounding areas, particularly in 1-bedroom and, in some…
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Where are the Current Risks to the Mortgage Market?
Mortgage holders have been anxiously waiting for the Bank of Canada to cut interest rates. The increase of 90,400 jobs in April – five times what analysts expected – has heightened concerns that the Bank will continue to wait before lowering rates. While the economy has not slowed as much as expected, there’s growing economic…
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Who Will Build the New Homes We Need?
The government aims to build 3.87 million new homes by 2031 through its housing strategy, which focuses on increasing construction of both owner-occupied and rental housing construction. However, a major constraint to achieving this ambitious target is finding enough skilled workers. RBC estimates that Canada could need more than 500,000 additional construction workers to meet…
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Hope Remains for US Rate Cuts Later in the Year
On May 1, the US Federal Reserve held its two-day FOMC (Federal Open Market Committee) meeting where it kept policy rates unchanged. The fed funds target range remained at 5.25% to 5.50%, where it has been since last July. Fed Chairman Jerome Powell emphasized in policy statements that rates will persist at current levels “as…
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