HIGHLIGHTS OF THE WEEK

Canada

•    Government budget season took the spotlight over the past week as two fiscal heavyweights announced their plans for the coming years – the federal government and Ontario.

•    The federal government delivered a balanced budget as planned heading into an election campaign. It also managed to squeeze in a few new tax and spending measures, despite a more constrained fiscal environment. Meanwhile, Ontario’s budget stayed the course, sticking to last year’s fiscal plan with a  return to balance in 2017-18.

•    The Canadian dollar did continue to gain ground over the past week as oil prices remained firm. We continue to expect oil prices to see another leg down over the coming weeks, as lower prices are required to balance the currently oversupplied market.

United States

•    Overseas developments held the market’s attention this week. The euro zone finance ministers meeting to discuss Greek solvency crisis was heated but fruitless. Meanwhile, renewed airstrikes in Yemen led oil prices to its highest level this year.

•    Incoming U.S. economic data was a mixed bag. Existing home sales rebounded strongly in March, while sales of new homes and durable goods orders disappointed. Meanwhile, the below-expectations  manufacturing PMI print in the Eurozone and China suggested that the global growth remains subdued.

•    Higher oil prices and better-than-expected corporate earnings supported equities. The S&P 500 touched a record high, while the NASDAQ eclipsed its dotcom peak, completing a 15-year long recovery.

Thank you TD Bank for these market insights.

Dominion Lending Centres Chief Economist Dr. Sherry Cooper Cautiously Optimistic After Bank of Canada’s April Rate Policy Announcement

April 15th 2015

Vancouver, BC – Following today’s Bank of Canada’s announcement that it will hold overnight rates steady at 0.75%, Dominion Lending Centres’ Chief Economist, Dr. Sherry Cooper, says the outlook is unclear for the Canadian economy and the prospects for a potential rebound in the second half of 2015 are still uncertain.

The Canadian economy has experienced a substantial slowdown in recent months due to drops in the price of oil, and Dr. Cooper expects that any changes to the nation’s economic performance will likely be a result of an improvement in non-energy sectors emanating from the weakness in the Canadian dollar.

“While March employment in Canada improved substantially, business investment remains disappointing,” added Dr. Cooper. “The Bank of Canada has suggested that we will see a transition towards positive growth in exports and capital spending by non-energy producers—both boosted by the depreciating Canadian dollar, but in the near-term, incoming data will likely confirm continued weakness in the manufacturing sector, particularly in autos, and only modest growth in retail sales.”

Dr. Cooper reiterated her confidence in the Bank of Canada’s monetary policy strategy for 2015, despite the current weakened status of the Canadian economy: “I am cautiously optimistic that the Bank has got it right, but I continue to believe that the risks are on the downside for the economy and inflation.  My forecast for Canadian growth this year is 1.5 percent–below the Bank’s 1.9 percent forecast. Much hinges on the U.S. economy.”

Drawing conclusions: Will new CMHC premiums raise your mortgage payments?
Preet Banerjee
Published Monday, Apr. 06 2015, 11:23 AM EDT

Canada Mortgage and Housing Corporation issues mortgage loan default insurance. The federal housing agency recently announced that as of June 1, 2015, it was boosting the premium rate on highest-risk mortgages. That means borrowers who have a down payment of less than 10 per cent will be paying 15 per cent more.

Full Article from The Globe and Mail

Rates remained unchanged the past week. The spring mortgage rate wars/specials have started.

Make sure you fully explore what product is best suited for individual circumstances. The so called “sticker price” may not be the best deal for you. Always make sure you have someone giving you unbiased advise before making any decisions.

Long term rates remain at historical lows in the mid to upper 2% range.

Variable rates are in the low 2% range.

Next meeting with the Bank is on April 15, 2015

-Cory

P.S. If you, your family, or co-workers require guidance on current market trends, please call me, I am always available to help.

By  Trish Balaberde, Christine Hawkins, Darwyn Sloat – Kelowna Capital News                                              Posted Mar 30, 2015 at 3:00 PM

Ultra-low but, apparently, unstable interest rates have Canadians favouring fixed-rate mortgages over variable by a ratio of nearly 2-to-1.

A new survey, conducted by Nielson, for one of the country?s big banks suggests 57% of homebuyers would pick a fixed-rate mortgage over variable, desiring certainty in their payments. That?s up from 48% last year and 39% in 2011.

The numbers are fairly consistent across the country meaning Toronto and Vancouver are not having a major influence on the results.

The survey also indicates 44% of respondents expect to see interest rates rise in the next 12 moths while 42% expect no change. By comparison, the markets appear to have a stronger expectation rates will rise, calculating a 64% chance of an increase by the end of the year. That, however, is down from a 77% chance calculated immediately following the latest U.S. Fed announcement. The Fed is hinting that it is more prepared to look at rate increases.

Thank you First National for your insight.