Tag Archives: debt crisis
No cause for rate hikes in latest inflation data
Gordon Isfeld – Financial Post
If the Bank of Canada was looking for justification to finally begin squeezing the trigger on interest rates, it’s unlikely recent inflation numbers brought its target any closer.
While the annual rate of price increases edged up more than expected last month, it was still within the central bank’s comfort zone. The dollar declined after the report’s morning release and closed down 17 basis points at 97.96 cents US.
And despite a string of strong economic numbers – pointing to steady, moderate growth – the latest debt-crisis flare-up in Europe will overwhelm domestic considerations, according to BMO Capital Markets deputy chief economist Douglas Porter. “Look for the bank to maintain its tough talk, but not to act on it any time soon.”
The consumer price index was up 2% in April from a year ago, with increases in all eight of the categories tracked by Statistics Canada.
Last month’s rise put CPI right at the Bank of Canada’s mid-range target of between 1% and 3%. But the 2% reading was slightly higher than the 1.9% average forecast of analysts, which was the same level as March.
The core rate – stripping out volatile items, such as some food and energy products – rose to an annual rate of 2.1% from 1.9% a month earlier. Market expectations were for the core rate to remain at the March level.
“If find it interesting that there is some underlying strength in core inflation, but I don’t think it’s enough to be concerned about at this stage,” Porter said.
Surprisingly, energy costs increased in April at a slower pace than the overall index for this first time since October 2009, with price rises slowing for gasoline, electricity and natural gas.
“Gasoline prices have been rising in recent months, pushing April’s gasoline index to its highest level since July 2008,” StatsCan said. “Nevertheless, the year-over-year increase in gasoline prices in April was the smallest since September 2010, partly due to near-record prices in April 2011.”
In fact, easing energy prices had a dampening effect on the overall number. Once energy costs are removed, CPI actually rose by a slightly higher 2.1% in April from a year ago.
Newfoundland and Labrador had the highest inflation rate last month, at three%. Nova Scotia and New Brunswick were also above the national average, both at 2.6%. The lowest rate was in Alberta, at 0.8%, on falling costs for electricity and natural gas, while British Columbia had an annual increase of 1.6%.
In between were Quebec, at 2.4%, and Ontario and Saskatchewan, both at 2.1%.
Given the uncertain environment coming out the recession, the Bank of Canada has left its trendsetting interest rate at 1%, a near-record low, since September 2010 to help underpin the recovery.
Many economists now expect the central bank to begin gradually raising rates before for the end of the year.
Carlos Leitao, chief economist at Laurentian Bank, said “the reason for those modest rate hikes is purely from a financial stability point of view, not because of inflation and not because the Canadian economy will be so hot that it requires tighter policy, but because the housing market requires some assistance in making sure it does slow down.”
The Bank of Canada’s next interest rate decision will be on June 5.
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Contact the Jeffrey Team for more information – 416-388-1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
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Wary Canadians holding off on home buying
Sunny Freeman – The Canadian Press
Canadians surveyed in a new poll appear to be conflicted about whether to buy a home this year, with a majority believing now is the right time to buy but more than 70% saying they are unlikely to do so.
The Royal Bank’s annual home ownership survey found 59% of respondents believe now is the time to get into the housing market, instead of waiting until next year.
That’s four percentage points higher than in last year’s poll.
But 73% said they are unlikely to buy within the next two years, up two percentage points from last year.
The poll was done in late January, about the time Prime Minister Stephen Harper first indicated his government’s intention to reform Canada’s retirement system. There was also widespread concern about the Greek debt crisis at the time.
“I would say that people are pretty conflicted around home buying intentions,” said Marcia Moffat, head of home equity financing for RBC.
“Consumer sentiment is not all pointing in the same direction,” she said.
However, confidence in home ownership is on the rise, she added.
About 88% said they believed a home is a good investment, up two percentage points from last year and 68% said they thought the value of their home has risen in the past two years.
Most of the 2,006 Canadians surveyed also said they expect home prices to remain stable next year, in line with economist consensus.
“Where the mix of opinions comes in is as to whether or not it makes sense to buy a home right now.”
“I think consumers recognize that mortgage rates are at historic lows so that would factor into people thinking that it makes sense to buy now
“Some may have already recently bought and may not be in the market for another home, or maybe the available supply is not there in their community, or what they think is affordable and appealing to them.”
After four years of sentiment leaning toward the belief the market is tilted toward buyers, there was an increase this year to 27% of respondents who felt the market is in sellers’ hands. That’s up from 20% in 2011.
Still, nearly four-in-ten of those surveyed said they believed it is still a buyers market, in which the number of homes available exceeds the number of buyers.
Meanwhile, three-quarters of survey respondents said they feel they are well-positioned to weather a potential downturn in home prices.
The Bank of Canada and some economists have warned that Canadians are piling on too much mortgage debt while interest rates are low, and some may no longer be able to afford their homes when interest rates rise.
One paper issued by the central bank suggested that home prices have been influenced not only by low mortgage rates but also on expectations that values will keep rising.
In RBC’s poll, less than half of respondents felt that housing prices will be higher this time next year, while 46% said they expect mortgage rates to stay the same.
“There’s a mix of opinions on the housing market, as Canadians still feel confident about real estate but are a little uncertain about where the market is heading and when it makes sense to buy,” said Moffat.
The survey findings come as some of Canada’s biggest banks begin raising variable mortgage rates, even though the Bank of Canada’s overnight interest rate remains unchanged.
That could signal the end of the era of cheap borrowing that has encouraged many Canadians to take on houses they may not have been able to otherwise afford.
Many economists had expected the housing market to cool off much more than it has in the past year.
Last year, it had been anticipated that the Bank of Canada to begin raising its key interest rate by the middle of 2011 but that didn’t happen, which has also propped up home sales longer than anticipated.
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Contact the Jeffrey Team for more information – 416-388-1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
—————————————————————————————————–
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Canadian real estate “defies logic” in 2011 with growth
Canadian Real Estate Wealth
Canada’s real estate market surpassed expectations in 2011, despite global economic concerns, according to a year-end report by Re/Max.
The Re/Max Housing Market Outlook 2012 report said unit sales nationally will be up 3% this year, and the average price of $363,000 will be a 7% gain from the end of last year.
“European debt crisis? Economic jitters worldwide? Someone forgot to tell the Canadian housing market,” said Christine Martysiewicz, a public relations director of Re/Max Ontario Atlantic Canada.
The reason for the strength of Canada’s market in 2011 was the stability of the national economy, said the report.
The Re/Max report examined trends in 26 markets across the country, and 80% of those locations, 23 or 26, are expected to see average price growth for 2011. Similarly, 22 of 26 markets are expected to see price growth in 2012 in average home prices.
But the overall results will level out more next year, with sales predicted to rise 1% and the average price expected to be up 2% by the end of 2012.
In 2011, the largest average price gain was not surprisingly in Vancouver, up 16%, followed by 7% gains in Toronto, Hamilton-Burlington, and Regina. The largest gains predicted in 2012 by Re/Max are for Regina, up 8%, followed by 5% gains in Greater Toronto, Halifax-Dartmouth, and St. John’s.
“Canadians seem intent on buying now, before rising prices and interest rates set in,” said Martysiewicz.
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Contact the Jeffrey Team for more information – 416−388−1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.
———————————————————————————————————————
Related posts:
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