What’s behind Canada’s economic miracle?

The Globe and Mail- Looking back to last year, it would have been inconceivable to talk about a Canadian economic miracle; however, that is exactly what we have on our hands today.

Unlike the nascent U.S. rebound, the Canadian recovery has occurred with no arithmetic support from inventories, and with a lot less intervention in the form of fiscal stimulus. The National Bureau of Economic Research is still unsure of when (or whether) the recession ended south of the border, but Statistics Canada boldly told us a little more than a week ago that the domestic downturn was officially terminated back in the third quarter of last year.

So, what was the principal factor underpinning this impressive Canadian economic revival, especially in relation to what is happening in the United States? We can answer the question in one word: housing…

What’s behind Canada’s economic miracle? Housing – The Globe and Mail

Report warns of housing bubble threat

The Globe and Mail- Canada’s housing market is looking increasingly like a bubble in the making, Edward Jones said today in a report.

“Canada’s housing market escaped the recent severe downturns in the US and other countries. However, today’s conditions in Canada share some characteristics of those countries prior to their downturns, leading us to take a cautious stance on housing investments,” wrote analysts Kate Warne and Craig Fehr, adding that Canadians should prepare for “the possible impact” of a housing downturn.

An asset bubble forms when cheap money causes speculators to flood into a market, driving prices higher despite weak underlying fundamentals. With unemployment high and the economic recovery on shaky ground, the rapid recovery of Canada’s real estate market has many economists concerned that prices could head lower. Prices have gained almost 20 per cent in the last year, as a lack of inventory and easy access to cheap money has propelled Canadians toward home ownership…

Report warns of housing bubble threat – The Globe and Mail

Mortgage rates on the rise again

Financial Post- A new survey says more than four out of five home buyers feel comfortable with their debt, but another hike in interest rates might get Canadians squirming next time they’re polled.

Canada and Mortgage and Housing Corp. surveyed 2,503 mortgage consumers between Feb. 11 and Feb. 28 and found 81% were comfortable with their current debt levels. However, the survey was done before three successive hikes in interest rates that have pushed the five-year, fixed-rate, closed mortgage from 5.25% to 6.25% in less than a month.

"Rates were low throughout most of the time [of the survey]," said Pierre Serré, CMHC vice-president of insurance products and business development, adding it was unclear whether the 81% figure might fall because of the hike…

Mortgage rates on the rise again

Royal Bank hikes mortgage rates again

Financial Post- Royal Bank of Canada is leading the charge to higher mortgage rates, boosting the cost to new homebuyers for the third time in less than a month.

The country’s biggest bank said Monday it is lifting the rate on most mortgages by 15 basis points.

After hikes of 60 basis points and 25 basis points respectively, Monday’s hike brings the rate on Royal’s five-year closed fixed-rate mortgage to 6.25%.

When Royal hiked rates in late March and earlier this month, the other big banks followed suit soon after.

The banks say they are raising mortgage rates because their own cost of funding is going up ahead of expected rate increases from the Bank of Canada and U.S. Federal Reserve this summer…

Royal Bank hikes mortgage rates again

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