Jobless Rates Hits 22-Month High–Led by Losses in Finance and Real Estate Employment

General Jon Muir 1 Dec

Jobless Rates Hits 22-Month High–Led by Losses in Finance and Real Estate Employment

Today’s StatsCanada Labour Force Survey for November was a mixed bag. Total employment gains were stronger than expected. However, the rising unemployment rate and drop in hours worked were signs of mounting economic weakness, especially in the financial and real estate sectors.

Employment in Canada rose by 24.9K in November 2023, following a 17.5K rise in October and above forecasts of 15K. Employment went up in manufacturing (+28K) and construction (+16K). On the other hand, there were declines in wholesale and retail trade (-27K) and finance, insurance, real estate, rental and leasing (-18K). November marks the fourth consecutive month of job gains. Still, the Bank of Canada noted in its October meeting that “recent job gains have been below labour force growth and job vacancies have continued to ease,” suggesting a slowdown in labour demand. The monthly employment gain averaged 39K so far this year, while monthly population growth has averaged 80.8K.

Jobless Rates Hits 22-Month High–Led by Losses in Finance and Real Estate Employment

Rapid population growth–driven by Canada’s open-door policy–has boosted economic activity. Despite dramatic tightening by the Bank of Canada, labour markets remain resilient. While yesterday’s GDP release showed a 1.1% decline in growth in the third quarter, housing, government spending and private consumption added to growth. More recent data for Q4 suggest a pick-up in overall activity. Today’s employment data shows stronger-than-expected jobs gains in November.

In other data released last week, Canadian retail sales also surprised on the high side. Consumers splurged in September and October, a surprise resurgence in spending even as high interest rates restrict household budgets. Retail receipts rose 0.8% in October. That’s the biggest jump since April and followed an unexpected 0.6% increase in September, which far exceeded the median estimate of a flat reading in a Bloomberg survey of economists.

The unemployment rate increased for the second consecutive month, continuing its upward trend since April. The unemployment rate rose 0.1 percentage points to 5.8% in November, bringing the cumulative increase since April 2023 to 0.8 percentage points. Compared with a year earlier, unemployed people in November were more likely to have been laid off from their previous job, reflecting more difficult economic and labour market conditions in 2023 compared with 2022.

Jobless Rates Hits 22-Month High–Led by Losses in Finance and Real Estate Employment

In construction, employment increased by 16K (+1.0%) in November, building on an increase of 23K (+1.5%) in October. While employment declined in construction through the spring and summer of 2023, gains in October and November brought employment levels to within 15,000 of the peak reached in January 2023. According to the most recent data on building construction, investment in building construction, mainly residential building construction, trended down for most of 2023 before partially rebounding in August and September.

Employment declined by 27K (-0.9%) in wholesale and retail trade in November, adding to a drop of 22K (-0.7%) in October. As of November, employment in the industry was at its lowest since December 2022.

Employment in finance, insurance, real estate, rental and leasing fell by 18K (-1.3%) in November. Since July, employment in this industry has declined by 63K (-4.4%), the steepest decrease of any sector over the period.

Wage growth was steady at +4.8% y/y, still well above what the Bank of Canada targets, given the productivity decline.

On the soft side, hours worked fell 0.7% despite a significant rise in full-time employment. That’s the largest monthly drop since early 2022 and doesn’t bode well for GDP growth in the month after the surprise strength in October’s flash estimate released yesterday.

Bottom Line

Last week, Governor Tiff Macklem said interest rates may be restrictive enough to restore price stability. He added that more downward pressure on inflation is in the pipeline, with the economy expected to remain weak for the next few quarters.

All the relevant data are in now for the Bank of Canada decision next Wednesday, December 6th. The Bank should maintain its pause and suggest that monetary easing may commence in the coming months depending on a continued decline in inflation. Right now, markets are forecasting the first rate cut in April 2024. That would certainly make for a robust spring housing market. I expect a 200 basis point drop in the overnight rate by the end of 2024 to 3.0%. This would imply a commensurate decline in VRMs. Fixed mortgage rates have already begun to drop owing to the sharp decline in mid-term bond yields. An acceleration in the drop in fixed mortgage rates is likely next year, as the spread between FMRs and market yields is still historically high.

Jobless Rates Hits 22-Month High–Led by Losses in Finance and Real Estate Employment

Questions? Comments? Reach out:

📲 705-606-2727

📧 jmuir@dominionlending.ca; jon@jonmuirmortgages.ca

💻 https://jonmuirmortgages.ca

🌎 https://g.page/r/CXZmhubK7M5xEAE

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.

License #: 10145

92 Caplan Ave #609, Barrie, ON L4N 9J2

Jobless Rates Hits 22-Month High–Led by Losses in Finance and Real Estate Employment

Good News On the Inflation Front Suggests Policy Rates Have Peaked

General Jon Muir 21 Nov

Good News On the Inflation Front Suggests Policy Rates Have Peaked

Today’s inflation report showed a continued improvement, mainly due to falling year-over-year (y/y) gasoline prices. The October Consumer Price Index (CPI) rose 3.1% y/y, down from the 3.8% rise in September. There were no surprises here, so markets moved little on the news. Excluding gasoline, the CPI rose 3.6% in October, compared to 3.7% the month before.
The most significant contributors to inflation remain mortgage interest costs, food purchased at stores, and rent.

Good News On the Inflation Front Suggests Policy Rates Have Peaked

Canadians continued to feel the impact of rising rent prices, which grew faster (y/y) in October (+8.2%) than in September (+7.3%). The national increase reflected acceleration across most provinces. The most significant increases in rent prices were seen in Nova Scotia (+14.6%), Alberta (+9.9%), British Columbia (+9.1%) and Quebec (+9.1%).
Property taxes and other special charges, priced annually in October, rose 4.9% yearly, compared with a 3.6% increase in October 2022. The national increase in October 2023 was the largest since October 1992, with homeowners paying more in all but one province, as municipalities required larger budgets to cover rising costs. Property taxes in Manitoba (-0.3%) declined for the third consecutive year, mainly due to reduced provincial education tax.

While goods prices decelerated by -1.6% as prices at the pump fell, prices for services rose 4.6% last month, primarily driven by higher prices for travel tours, rent and property taxes.

While grocery prices remained elevated, they also continued their trend of slower year-over-year growth, with a 5.4% increase in October following a 5.8% gain in September. While deceleration continued to be broad-based, fresh vegetables (+5.0%) contributed the most to the slowdown.

Good News On the Inflation Front Suggests Policy Rates Have Peaked

Excluding food and energy, inflation fell to 2.7% in October, down a tick from the September reading. Two other inflation measures closely tracked by the Bank of Canada–the so-called trim and median core rates–also eased, averaging 3.6% from an upwardly revised 3.8% a month earlier.

Good News On the Inflation Front Suggests Policy Rates Have Peaked

Bottom Line

According to Bloomberg calculations, another critical measure, a three-month moving average of underlying price pressures, fell to an annualized pace of 2.96% from 3.67% a month earlier. It’s an important metric because Bank of Canada Governor Tiff Macklem has said policymakers are tracking it closely to understand inflation trends.

Today’s news shows that tighter monetary policy is working to bring down the inflation rate. In its Monetary Policy Report last month, the Bank of Canada expected the CPI to average 3.5% through mid-2024. Cutting its economic forecast, the Bank forecasted it would hit its 2% inflation target in the second half of 2025.

Given today’s data and the likely significant slowdown in Q3 GDP growth, released on November 30, and the Labour Force Survey for November the following day, policy rates have peaked. Governor Tiff Macklem will give a speech on the cost of high inflation in New Brunswick tomorrow, and the subsequent decision date for the Governing Council is December 6th. The Bank’s inflation-chopping rhetoric may be relatively hawkish, but the expectation of rate cuts could spur the spring housing market.

The economists at BMO have pointed out that “three provinces now have an inflation rate below 2%, while only three are above 3%, so much of the country is already seeing serious signs of stabilization. (Unfortunately, the two largest provinces have the fastest inflation rates—Quebec at 4.2% and Ontario at 3.3%).” There is no need for the Bank to raise rates again, and they could begin to cut interest rates in the second quarter of next year.

Good News On the Inflation Front Suggests Policy Rates Have Peaked

Questions? Comments? Reach out:

📲 705-606-2727

📧 jmuir@dominionlending.ca; jon@jonmuirmortgages.ca

💻 https://jonmuirmortgages.ca

🌎 https://g.page/r/CXZmhubK7M5xEAE

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.

License #: 10145

92 Caplan Ave #609, Barrie, ON L4N 9J2

Good News On the Inflation Front Suggests Policy Rates Have Peaked

Home Sales Plummet In October

General Jon Muir 15 Nov

Home Sales Plummet In October

Housing affordability is the number-one issue causing the significant decline in housing activity, adding to PM Justin Trudeau’s political problems. With the growing impact of unaffordable housing and the slowing labour market, activity in the real estate market should remain subdued for the rest of this year.

Home sales dropped 5.6% month-over-month (m/m) in October–the fourth consecutive monthly decline and the sharpest slowdown since June 2022. Sales fell in 9 of the ten provinces, notably in P.E.I. (-15.3%), Alberta (-8.3%), B.C. (-6.9%), Ontario (-5.5%), and Quebec (-5.1%), while rising 2.2% in New Brunswick.

Home Sales Plummet In October

The actual (not seasonally adjusted) number of transactions in October 2023 was 0.9% above October 2022.

However, we have high hopes for the spring season as long as the Bank of Canada continues its rate pause. Record population growth has increased pent-up demand for housing and fixed mortgage rates have been falling owing to the US-led rally in bond markets.

New Listings

Sellers move to the sidelines as well. Following the September surge in new listings, newly listed homes fell 2.3% m/m in October, the first decline since March.

With sales falling by more than new listings in October, the national sales-to-new listings ratio eased to 49.5% — a 10-year low. The highest level for this measure was 67.9%, recorded in April. The long-term average for this measure is 55.1%.

There were 4.1 months of inventory on a national basis at the end of October 2023, up a full month from its low of 3.1 months in May. That said, it remains below its long-term average of nearly five months of inventory.

Home Sales Plummet In October

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) declined by 0.8% m/m in October 2023. While price declines are still mainly an Ontario phenomenon, home prices are now starting to soften in parts of British Columbia. The Aggregate Composite MLS® HPI was up 1.1% on a year-over-year basis.

Bottom Line

The Bank of Canada policymakers are set to meet on December 6th. There is another inflation report next Tuesday, November 21, the third quarter GDP is released on November 30 and the jobs report on December 1. We expect these data will support the Bank’s rate pause. In the meantime, the rally in 5-year Government of Canada bond yields has lowered fixed-rate mortgage yields.

US inflation, reported this week for October, came in weaker than expected, lowering longer-term yields even further. While I do not expect the Bank of Canada to cut interest rates until the middle of next year, the marked rally in market-driven rates is a welcome development for potential buyers.

Home Sales Plummet In October

Questions? Comments? Reach out:

📲 705-606-2727

📧 jmuir@dominionlending.ca; jon@jonmuirmortgages.ca

💻 https://jonmuirmortgages.ca

🌎 https://g.page/r/CXZmhubK7M5xEAE

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.

License #: 10145

92 Caplan Ave #609, Barrie, ON L4N 9J2

Home Sales Plummet In October

WEAK OCTOBER JOBS TAKES BOC RATE HIKES OFF THE TABLE

General Jon Muir 4 Nov

Weak October Jobs Take BOC Rate Hikes Off The Table

Today’s StatsCanada Labour Force Survey for October was weak across the board. Total job gains were meagre, full-time jobs fell, hours worked were flat, wage inflation eased (a bit), and the unemployment rate rose.

Employment changed little in October, up only 17,500 (0.1%), after rising 64,000 in September and 40,000 in August. The employment rate—the proportion of the working-age population with a job—fell 0.1 percentage points to 61.9% in October, as the population aged 15 and older increased by 85,000 (+0.3%).

Most notably, the unemployment rate rose 0.2 percentage points to 5.7%–its fourth monthly increase in six months and its highest level in 21 months, adding evidence to a weakening economy. The latest monthly GDP figures released earlier this week point to a flat to negative growth rate for the third quarter this year. Final data will be released later this month, but today’s numbers suggest that the overnight policy rate at 5.0% has peaked.

Weak October Jobs Take BOC Rate Hikes Off The Table

The pace of employment gains is running below labour force growth from record population increases. It indicates that labour demand is cooling while supply is catching up quickly. The Bank of Canada expects the economy to move into modest excess supply in the fourth quarter, helping to reduce consumer price inflation.

Weak October Jobs Take BOC Rate Hikes Off The Table

As unemployment has increased and job vacancies have decreased in recent months, the labour force participation rate—the proportion of the population aged 15 and older that was either employed or looking for work—has remained relatively high. The participation rate in October (65.6%) was unchanged from the previous month and up 0.2 percentage points on a year-over-year basis.

The most significant job gains were in construction, rising by 23,000, more than offsetting a decline of 18,000 in September. The most economically sensitive sectors posted job losses. These included manufacturing, wholesale and retail trade, finance, insurance, real estate, and rental and leasing, as well as accommodation and food services.

Wage inflation continues to be troubling for the central bank. On a year-over-year basis, average hourly wages rose 4.8% in October, following an increase of 5.0% in September.

Weak October Jobs Take BOC Rate Hikes Off The Table

Bottom Line

The Bank of Canada meets once again on December 6th. Before then, we will see another CPI inflation report on November 21, Q3 GDP on November 30 and the November Labour Force Survey on December 1. Given the Bank’s general reluctance to hike rates just before the holiday season, the Bank of Canada will remain on the sidelines.

Judging by today’s weaker-than-expected employment report in the US as well, the Fed will also hold their pause for the remainder of this year.

Rate relief, however, is still many months away. The central banks will want to see inflation at 2% with the belief that it will remain there before they begin to cut interest rates. That will happen, but probably not before next summer. According to Bloomberg News, “Traders in overnight swaps brought forward their expectations for when the Bank of Canada will start loosening policy, and are now betting policymakers will cut interest rates by 25 basis points in July, from September a day ago.”

Weak October Jobs Take BOC Rate Hikes Off The Table

Questions? Comments? Reach out:
—
📲 705-606-2727
📧 jmuir@dominionlending.ca
💻 https://jonmuirmortgages.ca
🌎 Google Business Page

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.
License #: 10145
92 Caplan Ave #609, Barrie, ON L4N 9J2

Weak October Jobs Take BOC Rate Hikes Off The Table

HAWKISH HOLD BY THE BANK OF CANADA

General Jon Muir 25 Oct

Hawkish Hold By The Bank Of Canada

The Bank of Canada today held its target for the overnight rate at 5%, as was widely expected. The central bank continues to normalize its balance sheet through quantitative tightening, reducing its Government of Canada bonds holdings.

The Monetary Policy Report (MPR) detailed a slowdown in global economic growth “as past increases in policy rates and the recent surge in global bond yields weigh on demand.” Continued increases in longer-date bond yields reflect the stronger-than-expected growth in the US, where the Q3 economic growth rate, released tomorrow, is expected to be a whopping 5%. Ten-year yields in the US have risen to nearly 5%, boosting fixed mortgage rates in Canada.

Oil prices are higher than was assumed in the July MPR, and the war in Israel and Gaza is a new source of geopolitical uncertainty.

Hawkish Hold By The Bank Of Canada

The Governing Council said that past increases in interest rates are slowing economic activity in Canada and relieving price pressures. “Consumption has been subdued, with softer demand for housing, durable goods and many services. Weaker demand and higher borrowing costs are weighing on business investment. The surge in Canada’s population is easing labour market pressures in some sectors while adding to housing demand and consumption.

In the labour market, recent job gains have been below labour force growth, and job vacancies have continued to ease. However, the labour market remains on the tight side, and wage pressures persist. Overall, a range of indicators suggest that supply and demand in the economy are now approaching balance.”

Hawkish Hold By The Bank Of Canada

Economic growth in Canada averaged 1% over the past year, and the Bank forecasts it will continue to be weak for the next year before increasing in late 2024 and through 2025. The Bank is not forecasting a recession over this period. “The near-term weakness in growth reflects both the broadening impact of past increases in interest rates and slower foreign demand. The subsequent pickup is driven by household spending as well as stronger exports and business investment in response to improving foreign demand.

Hawkish Hold By The Bank Of Canada

Spending by governments contributes materially to growth over the forecast horizon. Overall, the Bank expects the Canadian economy to grow by 1.2% this year, 0.9% in 2024 and 2.5% in 2025.”

The central bank highlighted the volatility of CPI inflation in recent months–at 2.8% in June,k 4.0% in August and 3.8% in September. “Higher interest rates are moderating inflation in many goods that people buy on credit, and this is spreading to services. Food inflation is easing from very high rates. However, in addition to elevated mortgage interest costs, inflation in rent and other housing costs remains high.

Hawkish Hold By The Bank Of Canada

Near-term inflation expectations and corporate pricing behaviour are normalizing only gradually, and wages are still growing around 4% to 5%. The Bank’s preferred measures of core inflation show little downward momentum.”

In today’s MPR, CPI is expected to average about 3.5% through the middle of next year before gradually falling to the 2% target level in 2025. “Inflation returns to target about the same time as in the July projection, but the near-term path is higher because of energy prices and ongoing persistence in core inflation.”

The hawkish tone of the final paragraph of today’s press release is noteworthy. The Bank does not want to boost interest-sensitive spending, such as housing and durable goods purchases, by assuring markets that its next move will be a rate cut. Instead, the Bank said, “Governing Council is concerned that progress towards price stability is slow and inflationary risks have increased, and is prepared to raise the policy rate further if needed. The Governing Council wants to see downward momentum in core inflation. It continues to be focused on the balance between demand and supply in the economy, inflation expectations, wage growth and corporate pricing behaviour. The Bank remains resolute in its commitment to restoring price stability for Canadians.”

Bottom Line

Hawkish Hold By The Bank Of Canada

Nothing was surprising in today’s report. The slowdown in economic activity since late last year has dramatically reduced excess demand. The output gap–the difference between the actual growth in GDP and its potential growth at full employment–is essentially closed, suggesting that demand pressures have been easing. They had previously expected the output gap to close in early 2024.

Of concern to the Bank is that inflation remains above their 2% target in the face of increased global risks of higher inflation. Upside risks to inflation include elevated inflation expectations of households and businesses, growing extreme weather events, and heightened geopolitical uncertainties including the Israel-Hamas war.

Price gains in energy and shelter — upward pressures on inflation — are “anticipated to be partially offset by the easing of excess demand, weaker pressure from input costs and further disinflation in globally traded goods,” the Bank said.

Hawkish Hold By The Bank Of Canada

“Ongoing excess supply in the economy moderates price inflation, helps ease inflation expectations and encourages businesses to gradually return to more normal pricing behaviour.”

Canada’s households are more indebted, on average, than their US counterparts and their shorter-duration mortgages roll over faster. That makes the Canadian economy more sensitive to higher rates and is one reason the Bank of Canada first declared a pause in January, well before the US Federal Reserve. The central bank’s next decision is due Dec. 6, after two releases of jobs data, October inflation numbers and third-quarter gross domestic product figures. I expect the Bank to pause rate hikes for the next six to nine months. When they finally begin to ease monetary policy, they will do so gradually, taking the overnight rate down to roughly 4% by the end of next year.

Hawkish Hold By The Bank Of Canada

Questions? Comments? Reach out:
—
📲 705-606-2727
📧 jmuir@dominionlending.ca
💻 https://jonmuirmortgages.ca
🌎 Google Business Page

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.
License #: 10145
92 Caplan Ave #609, Barrie, ON L4N 9J2

Hawkish Hold By The Bank Of Canada

INFLATION FRONT SUGGESTS POLICY RATES HAVE PEAKED

General Jon Muir 17 Oct

Inflation Front Suggests Policy Rates Have Peaked

Today’s inflation report for September was considerably better than expected, ending the three-month rise in inflation. Not only did the headline inflation rate fall, but so did the core measures of inflation on a year-over-year basis and a three-month moving average basis. This, in combination with the weak Business Outlook Survey released yesterday, suggests that the overnight policy rate at 5% may be the peak in rates. While I do not expect the Bank to begin cutting rates until the middle of next year, the worst of the tightening cycle may well be over.

Offsetting the deceleration in the all-items CPI was a year-over-year increase in gasoline prices, which rose faster in September (+7.5%) compared with August (+0.8%) due to a base-year effect. Excluding gasoline, the CPI rose 3.7% in September, following a 4.1% increase in August. Looking ahead to the October inflation report, the base effect for headline CPI is favourable, as CPI surged in October 2022.

Inflation Front Suggests Policy Rates Have Peaked

Gasoline prices are down about 7% so far this month. Given the war in the Middle East, however, there is no guarantee that this will hold, but if it does, the October headline CPI could move into the low-3% range.

On a monthly basis, the CPI fell 0.1% in September after a 0.4% gain in August. The monthly slowdown was mainly driven by lower month-over-month prices for gasoline (-1.3%) in September. Goods inflation fell 0.3% from a month earlier, the first time since December 2022, and grew 3.6% from a year ago versus 3.7% in August. Services inflation was unchanged from August, the first time it hasn’t grown on a monthly basis since November 2021, while the rate slowed to 3.9% on a yearly basis, from 4.3% in August.

Yesterday’s Survey of Consumer Expectations showed that perceptions of current inflation remain well above actual inflation. One reason is the very visible level of grocery and gasoline prices. Food inflation–though still elevated–decelerated to 5.9% last month, and CPI excluding food and energy fell to a cycle-low 2.8%. Large monthly gains in September 2022, when grocery prices increased at the fastest pace in 41 years, fell out of the 12-month movements and put downward pressure on the indexes.

Inflation Front Suggests Policy Rates Have Peaked

Prices for durable goods rose at a slower pace year over year in September (+0.4%) compared with August (+1.4%). The purchase of new passenger vehicles index contributed the most to the slowdown, rising 1.7% year over year in September, following a 3.1% gain in August. The deceleration in the price of new passenger vehicles was partly attributable to improved inventory levels compared with a year ago.

Additionally, furniture prices (-4.6%) and household appliances (-2.3%) continued to decline year-over-year in September, contributing to the slowdown in durable goods. Consumers paid less on a year-over-year basis for air transportation (-21.1 %) in September, coinciding with a gradual increase in airline flights over the previous 12 months.

Other measures of core inflation followed by the Bank of Canada also decelerated.

Bottom Line

According to Bloomberg News calculations, “A three-month moving average of underlying price pressures that Governor Tiff Macklem has flagged as key to policymakers’ thinking fell to an annualized pace of 3.67%, from 4.29% a month earlier.” While this is still well above the Bank’s 2% target, the global economy is slowing, the Canadian and US economies are slowing, and with any luck at all, the Bank of Canada might see inflation move to within its target range next year.

However, the central bank will be cautious, refraining from rate cuts until the middle of next year. The full impact of rate hikes has yet to be felt. The next move by the Bank of Canada could be a rate cut, but not until next year.

Inflation Front Suggests Policy Rates Have Peaked

Questions? Comments? Reach out:
—
📲 705-606-2727
📧 jmuir@dominionlending.ca
💻 https://jonmuirmortgages.ca
🌎 Google Business Page

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.
License #: 10145
92 Caplan Ave #609, Barrie, ON L4N 9J2

Inflation Front Suggests Policy Rates Have Peaked

INCREASING MORTGAGE RATES AND HOUSING IN SEPTEMBER

General Jon Muir 13 Oct

Increasing Mortgage Rates And Housing In September

Mortgage rates continued to rise in September after BoC tightening and one of the largest bond selloffs in history. Yields have retraced some of their rise more recently, but demand for new and existing homes has slowed. According to data released by the Canadian Real Estate Association, national home sales declined 1.9% m/m in September, its third consecutive monthly decline. At least September’s drop was about half as large as in August, dominated by weakness in the Greater Vancouver and the Greater Toronto Area. Sales gains were posted in Edmonton, Montreal and the Kitchener-Waterloo region.

The actual (not seasonally adjusted) number of transactions in September 2023 came in 1.9% above September 2022, but that was far less than the growth in the Canadian population over that period.

The CREA updated its forecast for home sales activity and average home prices for the remainder of this year and next. They commented that the national sales-to-new listings ratio has fallen from nearly 70% to 50% in the past five months, slowing the price rally in April and May.

Increasing Mortgage Rates And Housing In September

The CREA has cut its forecast for sales and prices, reflecting the marked slowdown in Ontario and BC. The expected rebound in activity next year has also been muted as interest rates remain higher for longer than initially expected.

New Listings

The big news in this report was the surge in new listings as sellers finally come off the sidelines. The number of newly listed homes climbed 6.3% m/m in September, posting a 35% cumulative increase from a twenty-year low since March. New listings are trending near average levels now.

With sales continuing to trend lower and new listings posting another sizeable gain in September, the national sales-to-new listings ratio eased to 51.4% compared to 55.7% in August and a recent peak of 67.8% in April. It was the first time that this measure has fallen below its long-term average of 55.2% since January.

There were 3.7 months of inventory nationally at the end of September 2023, up from 3.5 months in August and its recent low of 3.1 months in June. That said, it remains below levels recorded through the second half of 2022 and well below its long-term average of about five months.

Increasing Mortgage Rates And Housing In September

Home Prices

The Aggregate Composite MLS® Home Price Index (HPI) edged down 0.3% m/m in September 2023— the first decline since March.

That said, the slight dip in prices at the national level in September was entirely the result of trends in Ontario. Prices are still rising across other provinces, albeit more slowly than they were. Incoming data over the next few months will determine whether Ontario is an outlier or just the first province to show the softening price trends expected to play out in at least some other parts of the country, given where interest rates are.

Increasing Mortgage Rates And Housing In September

The Aggregate Composite MLS® HPI was up 1.1% y/y. While prices have generally been leveling off in recent months and even dipped nationally and in Ontario in September, year-over-year comparisons will likely continue to rise slightly in the months ahead because of the base effect of declining prices in the second half of last year.

Bottom Line

The Bank of Canada policymakers are set to meet on October 25, weighing the strong wage growth and employment gains against next Tuesday’s September inflation report. The US inflation data, released this week, was only a touch higher than expected. The Canadian information will unlikely disrupt the central bank’s pause in rate hikes.

The unexpected Israeli war will disrupt the global economy again, which could cause supply chain concerns if it lasts long enough. Oil prices and technology (semiconductor chips and other tech-related products) could be impacted. With so much uncertainty and a marked third-quarter economic data slowdown, the BoC will likely remain on the sidelines.

Increasing Mortgage Rates And Housing In September

Questions? Comments? Reach out:
—
📲 705-606-2727
📧 jmuir@dominionlending.ca
💻 https://jonmuirmortgages.ca
🌎 Google Business Page

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.
License #: 10145
92 Caplan Ave #609, Barrie, ON L4N 9J2

Increasing Mortgage Rates And Housing In September

ANOTHER STRONG JOBS REPORT TESTS BOC PATIENCE

General Jon Muir 6 Oct

Another Strong Jobs Report Tests BOC Patience

Canadian employment rose by a whopping 63,800 in September, tripling market expectations. The underlying data put the strong job growth into perspective. Most of the gains in overall employment were in part-time work, and total hours worked declined by 0.2%. Moreover, the unemployment rate held steady for the third consecutive month at 5.5% due to a surge in the labour force.

The country’s population rose by 2.9% in the year ending July 1, one of the world’s fastest growth rates, bringing the number of residents to 40.1 million. The jump was driven by the largest recorded increase in temporary residents in data going back to 1971. Many of these temporary workers, foreign students and immigrants will opt to remain in Canada, increasing the pressure on Canadian housing markets. The number of non-permanent residents in Canada — including people on work or study permits and refugees — is now 2.2 million, or more than 5% of the total.

Another Strong Jobs Report Tests BOC Patience

Even more notable for the Bank of Canada was the continued upward pressure on wages. Average hourly earnings increased by 5.0% y/y last month. Workers are pressing for higher wages in many sectors as increases in compensation have yet to keep up with inflation. Key unions, such as auto and health care employees, are striking in the US. The favourable deal cut after the writers’ strike portends broadening labour market unrest.

Policymakers will continue scrutinizing incoming economic data to determine if the current interest rates are sufficiently high to return inflation to 2%. They are particularly concerned about substantial wage gains perpetuating wage-price spiralling.

Bottom Line

The Bank of Canada will maintain its tightening bias when it meets again on October 25th. Today’s report will not likely trigger another rate hike but will keep the central bank on edge.

The recent rise in market-driven interest rates, particularly at the longer end of the yield curve, reflects the strength in the U.S. economy and continued jitters about inflation and the chaos in Congress. Today’s employment report in the U.S. was very strong.

The U.S. jobs data are consistent with a meaningful acceleration in U.S. GDP growth in the third quarter. U.S. bond yields are at the upper end of their one-year trading range, and Canadian government bond yields generally follow U.S. trends. The Fed is widely expected to raise rates at least one or two more times.

Another Strong Jobs Report Tests BOC Patience

Questions? Comments? Reach out:
—
📲 705-606-2727
📧 jmuir@dominionlending.ca
💻 https://jonmuirmortgages.ca
🌎 Google Business Page

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.
License #: 10145
92 Caplan Ave #609, Barrie, ON L4N 9J2

Another Strong Jobs Report Tests BOC Patience

THE ADVANTAGES OF USING A MORTGAGE AGENT

General Jon Muir 26 Sep

The Advantages of Using a Mortgage Agent

When it comes to securing a mortgage for your dream home, navigating the labyrinth of options, lenders, and terms can be a daunting task. This is where a mortgage broker steps in as your trusted ally, simplifying the process and ensuring you make the best financial decisions. In this blog post, we’ll delve into the compelling reasons why you should consider using a mortgage broker.

1. Access to a Wide Range of Options: Mortgage professionals have access to a vast network of lenders, including traditional banks, credit unions, and private lenders. This access opens up a world of mortgage options, giving you the opportunity to find a loan that perfectly suits your unique financial situation and goals.

2. Expert Guidance and Advice: Navigating the intricacies of the mortgage landscape can be overwhelming, especially if you’re unfamiliar with the terminology and procedures. Mortgage agents are seasoned professionals who understand the market inside out. They can provide expert guidance, answer your questions, and ensure you’re well-informed throughout the process.

3. Time and Effort Savings: Imagine having to individually approach multiple lenders, fill out numerous applications, and compare offers. A mortgage broker streamlines this process by doing the legwork for you. They present you with a curated selection of mortgage options that align with your requirements, saving you valuable time and effort.

4. Tailored Solutions: No two homebuyers are the same, and your financial circumstances are unique. A mortgage broker takes the time to understand your needs, financial situation, and long-term goals. With this information, they can recommend mortgage solutions that cater to your specific needs, ensuring you make a well-informed decision.

5. Negotiation Power: Mortgage brokers possess excellent negotiation skills honed through their experience. They negotiate on your behalf to secure competitive interest rates, terms, and conditions. This can result in significant savings over the life of your mortgage.

6. Problem-Solving Champions: Encountering obstacles during the mortgage process is not uncommon. However, mortgage brokers are well-equipped to navigate these challenges. Whether it’s credit issues or complex financial situations, they work tirelessly to find solutions that keep your homeownership dreams on track.

7. Cost-Efficiency: Contrary to popular belief, enlisting a mortgage broker’s services might not necessarily lead to higher costs. Many brokers are compensated by the lender, meaning their assistance comes at little or no cost to you. Plus, the financial benefits they secure for you often outweigh any nominal fees.

8. Long-Term Relationships: A reputable mortgage broker is invested in building long-term relationships with their clients. They’re not solely focused on the transaction; they aim to be your trusted advisor for all your future mortgage needs.

In conclusion, a mortgage broker is a seasoned guide who leads you through the labyrinth of mortgage options, offers, and processes. Their expertise, access to a diverse range of lenders, and dedication to your best interests make them an invaluable partner in your journey to homeownership. When considering a mortgage, the question isn’t “Why use a mortgage broker?” but rather, “Why not?” Embrace the advantages and empower yourself to make informed and confident choices.

Questions? Comments? Reach out:
—
📲 705-606-2727
📧 jmuir@dominionlending.ca
💻 https://jonmuirmortgages.ca
🌎 Google Business Page

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.
License #: 10145
92 Caplan Ave #609, Barrie, ON L4N 9J2

The Advantages of Using a Mortgage Broker

AUGUST INFLATION HOTTER THAN EXPECTED

General Jon Muir 19 Sep

August Inflation Hotter Than Expected

Canada’s inflation rate accelerated more than expected for the second consecutive month, mainly driven by higher gasoline prices. This will not be a one-month wonder as gasoline prices rose further in September.

The consumer price index increased 4.0% in August from one year ago, the fastest pace since April, after a 3.3% rise in July. That’s faster than the median estimate of 3.8% in a Bloomberg survey of economists. Monthly, the index rose 0.4%, double expectations. Excluding gasoline, the CPI rose 4.1% in August, matching the 4.1% increase in July.

Canadian inflation is no longer trending downward, presenting problems for the Bank of Canada. The BoC’s preferred 3-month core measure rose by a whole percentage point to 4.5%. The incoming data highlight the challenges in this phase of the inflation fight.

In addition to facing higher energy prices, Canadians paid more for rent and mortgage interest in August. Moderating the all-items CPI were declines in prices for travel-related services and a minor increase in food prices compared with the previous month.

August Inflation Hotter Than Expected

The CPI was up 0.4% in August, following a 0.6% gain in July. The monthly slowdown was mainly driven by travel tours (-6.4%) and air transportation (-6.9%), as prices fell month over month following the peak of summer travel demand in July.

Even more troubling was the rise in core inflation, which filters out components with extreme price fluctuations and is followed closely by the central bank. The so-called trim and median core rates also rose, averaging 4% from an upwardly revised 3.75% last month, exceeding the 3.7% pace expected by economists.

According to Bloomberg calculations, a three-month moving average of the measures that Governor Tiff Macklem has flagged as key to his team’s thinking rose by a full percentage point to an annualized pace of 4.49%.

August Inflation Hotter Than Expected

Shelter prices were up 6.0% on a year-over-year basis in August after increasing 5.1% in July. The rent index led to faster shelter price growth, which rose 6.5% year over year nationally after a 5.5% gain in July. A higher interest rate environment may create barriers to homeownership and put upward pressure on the index. While rent prices accelerated in eight provinces, those with the fastest price growth were Newfoundland and Labrador (+8.4%), Alberta (+6.5%), Nova Scotia (+9.5%) and Manitoba (+6.1%).

The mortgage interest cost index also contributed to the acceleration in shelter prices, rising slightly faster in August (+30.9%) compared with July (+30.6%).

Although year-over-year price growth for groceries slowed in August, price levels remained elevated. On a year-over-year basis, prices for food purchased from stores rose 6.9% in August compared with an 8.5% increase in July.

Bottom Line

Roughly 50% of the prices in the CPI are growing more than 5%, which is still very concerning for the Bank of Canada. Market rates moved up meaningfully on the news. With the 5-year government bond yield well above 4%, fixed mortgage rates will increase this week. The odds of another 25 bps rate hike this fall have risen, but there is still another employment report and the September CPI release before the next announcement date on October 25th.

Gasoline prices in September thus far have already risen to 10% above year-ago levels, so September inflation is likely also high. The additional problem for the Bank of Canada is that core inflation measures have also risen and will likely remain sticky on the high side. This has increased the odds of another rate hike this year.

Mitigating the Bank’s inflation concerns is the slowdown in economic activity. Employment growth has slowed as the jobless rate rose to 5.5% and job vacancies fell. Excess demand has also fallen. Financial strains in the household, financial and business sectors are emerging as delinquency rates on non-mortgage debt have soared. A pause in BoC rate hikes is warranted, but if the economy starts to pick up again or core inflation continues to hold steady or rise, additional rate hikes cannot be ruled out.

August Inflation Hotter Than Expected

Questions? Comments? Reach out:
—
📲 705-606-2727
📧 jmuir@dominionlending.ca
💻 https://jonmuirmortgages.ca
🌎 Google Business Page

Dominion Lending Centers – The Mortgage Source. Independently Owned and Operated.
License #: 10145
92 Caplan Ave #609, Barrie, ON L4N 9J2

August Inflation Hotter Than Expected

«1 234 5…10…»Last »