Bank of Canada

2022 - 6 - 10

Post cover — Image courtesy of "Canadian Underwriter"

Bank of Canada says economy can handle higher interest rates (Canadian Underwriter)

High household debt and elevated housing prices have become bigger vulnerabilities in the past year, but the economy can still handle the rising interest ...

The financial review noted that Canada’s banking industry could weather a downturn in both the housing market and overall economy. He said the bank may need to “move more quickly, may need to take a larger step” to avoid inflation becoming entrenched. Higher mortgage servicing costs mean less money to spend elsewhere which could have a negative hit on the overall economy, the report noted. However, those with variable-rate mortgages would face even larger increases with a median increase of $720 or 44 per cent in their monthly payment at renewal. “Our primary focus is getting inflation back to target. He said that while the housing market is an important part of the economy, and the bank is watching the dynamics closely, the bank needs to slow demand in the economy and bring it in line with supply.The bank has indicated, and Macklem repeated Thursday, that it may have to move its key interest rate to upwards of three per cent to bring inflation back on target.

Young people who bought homes at market top could be sacrificed ... (CBC.ca)

Again this time, as Bank of Canada governor Tiff Macklem and his chief deputy, Carolyn Rogers, laid out their most ominous scenarios at Thursday's news ...

"We are watching it closely, but our focus ultimately is on the whole economy and in getting inflation back to target." The central bankers reminded us that, in theory, the most recent buyers had a financial pad since "stress test" rules required buyers to have the financial capacity to pay a lot more than mortgage lenders were asking. Even rapper Cardi B and billionaire Elon Musk have weighed in with predictions of a recession, Canadian Business reports. With jobs numbers on Friday predicted to remain strong, that seems far away, but things can change in a period of rising rates. Nothing prevented them from spending it on the inevitable necessities that come with a new home. But due to the absolute necessity of fighting inflation with rising interest rates, people who got in at the peak may be in trouble, especially if they lose their jobs.

Bank of Canada says prime lending rate could hit 4.5% by 2026 : My ... (MY PG NOW)

The Bank of Canada stated people who borrowed heavily to buy a home when mortgage rates were low last year could see their monthly payments increase by up ...

Crypto regulation efforts need to keep pace with market growth ... (Regina Leader-Post)

OTTAWA — The number of Canadians who own cryptoassets is growing rapidly and efforts to regulate the sector need to start keeping pace, a senior Bank of ...

“Like any asset that’s jumping around in price, people see an opportunity for quick gains,” said Rogers. “Our concern is they may not understand the risks. The share of Canadians who own bitcoin more than doubled to 13% in 2021 from 5% in 2020. “This is an area that is still small, but it’s growing really rapidly.

Canadians could expect 30% higher mortgage payments by 2026 ... (True North)

An increasingly inaccessible housing market and higher levels of household debt will play a contributing factor, the BOC's Financial System Review noted. “Even ...

A total of 1.4 million Canadians are included in that group. Meanwhile, 37% of Canadians are renting. The BOC warns that a large portion of the inflated housing costs are based on debt with one in five households saying they are “highly indebted” or have a debt to income ratio of 350% or larger.

Canada's housing frenzy was the party of all parties. Get ready for a ... (The Globe and Mail)

With the Bank of Canada rapidly raising its policy interest rate to corral inflation, the potential pain for indebted buyers is a growing risk to the ...

A homeowner, who lives in their home and faces a loss on paper but can pay the mortgage, is probably okay. The Bank of Canada, in its dry verbiage, says that “investors can amplify house price cycles.” That means on the way up – and on the way down. An investor with diminishing equity in their first home and rising mortgage payments on the second is another story. Some kind of reckoning is likely, if inflation shoots higher (the May figure arrives June 22) and the central bank aggressively ratchets up its policy rate. The most exposed are the 35 per cent of households that own a home with a mortgage. The second top risk is “elevated house prices.” None of this is new; back in 2014 the bank put Canadians’ debt as the top worry and housing “imbalances” in second. The good news is many of your neighbours are insulated against price fluctuations: 28 per cent of households own their home outright. In the last mini-mania, the level of overstretched mortgages peaked at 19.8 per cent. It was a rager, and no one called the cops. A surge of demand arrived with the pandemic. And now, it’s the morning after. Decades of restrictions against building, as the population grew, fed a mounting scarcity.