{"id":9363,"date":"2018-06-02T10:10:12","date_gmt":"2018-06-02T17:10:12","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=9363"},"modified":"2018-06-02T08:48:37","modified_gmt":"2018-06-02T15:48:37","slug":"how-the-housing-market-played-a-role-this-week","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/06\/how-the-housing-market-played-a-role-this-week\/","title":{"rendered":"How The Housing Market Played A Role This Week?"},"content":{"rendered":"

The Canadian economy grew just 1.3% in the first quarter of 2018, as consumer spending and the housing market continued to under perform.<\/p>\n

But that wasn\u2019t the only story linking the economy to the housing market. The Bank of Canada chose to forgo an interest rate hike, as home sales continue to adjust to regulatory changes, and falling mortgage credit could take a bite out of the economy in the second half of the year.<\/p>\n

For a closer look at how the housing market and the economy were intertwined in the news this week, BuzzBuzzNews has rounded up the latest industry commentary to keep you in the know.<\/p>\n

Interest rates are likely on their way up …..<\/strong><\/p>\n

On Wednesday, the Bank of Canada chose to maintain the 1.25% overnight rate, citing a soft housing market. But that doesn\u2019t mean another hike isn\u2019t on its way, according to BMO senior economist Benjamin Reitzes.<\/p>\n

\u201cWhile the softness in housing was mentioned, policymakers expect \u2018housing activity will pick up\u2019 supported by solid income growth,\u201d he writes. \u201cWe\u2019ll get some city home sales data for May next week, and we\u2019ll see if they\u2019re consistent with the BoC\u2019s view.\u201d<\/p>\n

Reitzes predicts the next hike could come as soon as July, followed by a second rate increase in October.<\/p>\n

….. despite falling mortgage credit<\/strong><\/p>\n

Last week, Canada\u2019s major banks reported that they expect their mortgage applications to be cut by 50% in the second half of 2018, as a new mortgage stress test makes it increasingly difficult for would-be homebuyers to qualify for a mortgage.<\/p>\n

In fact, mortgage credit hasn\u2019t been this low since 2001, according to a new report from Capital Economics.<\/p>\n

\u201cRising interest rates and the recent tightening of mortgage lending standards are now having a marked impact on mortgage lending, with the three-month-on-three-month annualised growth rate of mortgage credit falling to a 17-year low in April,\u201d reads the report.<\/p>\n

What does that mean for the Canadian economy? The more homeowners are spending on their mortgage payments, the less they\u2019ll be able to put towards consumer spending, which has been a major boon to the economy for years.<\/p>\n

A lack of exports could be pushing housing prices skyward<\/strong><\/p>\n

For years, the Canadian housing market has been a boon to its economy. Many have speculated that historically low interest rates have allowed more Canadians than ever before to invest in real estate, pushing prices skyward.<\/p>\n

But according to a report from the CIBC economics team, prices might not have risen so high if Canadian exports had performed better over the past decade.<\/p>\n

\u201cHad Canada achieved more success abroad, and attracted more business capital spending on new capacity in export sectors, interest rate settings could have been higher and fiscal policy less stimulative,\u201d they write. \u201cThat would have meant less upward pressure on housing prices and household debt, and more progress on reducing what are still some problematic provincial debt burdens.\u201d<\/p>\n

It’s Been A Big Week for The Canadian Economy – Here’s How The Housing Market Played A Role<\/a> by Sarah Niedoba | Buzz Buzz Home<\/p>\n","protected":false},"excerpt":{"rendered":"

The Canadian economy grew just 1.3% in the first quarter of 2018, as consumer spending and the housing market continued to under perform. 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