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.

Wow! With a 9% housing price increase over last year, Toronto is now Canada’s first $1 million housing city (at least for detached homes). What does this mean for Torontonians?

Interestingly…This means that most first time home buyers and experienced home buyers in Toronto will have to have $200,000 in savings or gift funds to be able buy a Toronto home. Under the new Government rules homebuyers are required to put a 20% down payment on Million Dollar properties.

What this also means…

Click here to see the 680 News post.

Cory Kline, AMP

Mortgage Planning Since 1998   –  VOTED: Barrie’s Best Mortgage Professional, by the readers of the Barrie Examiner.

Neighbourhood Dominion Lending Centres – Barrie Office

Cell / Text: 705-794-1283

Fax: 1-877-812-6190

cory@ndlc.ca    www.MortgageAndLifestyle.com

 Mortgage Agent, FSCO # M09001239

Brokerage FSCO Lic. # 11764 

APPLY ONLINE -> www.MortgageAndLifestyle.com/how-to-apply-mortgage

The Bank of Canada did not change their Prime Lending Rate at this mornings announcement.

Prime Rate holds at 2.85%

5 Year Qualifying Rate has been reduced to 4.74%

 www.bankofcanada.ca/2015/03/fad-press-release-2015-03-04/

For Immediate Release
March 4, 2015

Vancouver, B.C.- Dr. Sherry Cooper, Chief Economist for Dominion Lending Centres (DLC) was expecting the Bank of Canada to leave interest rates unchanged today in the wake of the surprising rate cut in late January. Governor Stephen Poloz signaled this wait-and-see stance last week, following criticism that his surprise move had destabilized financial markets, thwarting the Bank’s efforts to boost economic activity. “The Bank has become increasingly concerned about the dampening impact of the plunge in oil prices on business capital spending and production in the oil sector—a key component of Canadian economic expansion in the past,” said Dr. Cooper. Recent layoff announcements in the oil patch exacerbate this concern.
 
“For now, core inflation in Canada remains quite low, giving the Bank plenty of leeway to maintain a very accommodative policy stance,” said Dr. Cooper. “However, the weakness in the Canadian dollar will increasingly show through in rising import prices, as so many consumer and business products are imported from the U.S.”
 
The Bank of Canada continues to project that the dampening impact of lower oil prices will be felt in the first half of this year, leaving open the possibility of another rate cut in coming months, maybe as soon as its next meeting on April 15. The hope is that the weaker Canadian dollar will offset the oil price shock by boosting non-energy exports and investment. Lower oil prices have been good for consumers and non-energy businesses that are heavy users of energy.
 
Dr. Cooper believes that with “the U.S. economy leading global economic expansion, the Federal Reserve is poised to hike rates for the first time in nearly eight years, probably by the late-June meeting. This alone will put some further downward pressure on the Canadian dollar. Hence, the Bank of Canada’s caution in cutting rates now; but if non-energy exports and business investment do not follow through, the Bank will cut interest rates further, accepting the Canadian dollar fallout”.
 
“My view is that the Canadian economy will grow at about a 2-1/4 percent pace this year with long-term yields edging higher by yearend. In sum, while mortgage rates might fall a bit further in the next couple of months,” said Dr. Cooper. “They are headed higher by yearend. The rise, however, will be muted. Next year, expect the Bank of Canada to begin to tighten, raising overnight rates very gradually. This, of course, is predicated on a near-term bottoming in oil prices, edging to the $60-to-$65 a barrel range in the next year. As always, central bank action will be data dependent.”

Wishing everyone a very safe and happy holiday season!