Housing weakness expected to be a drag on growth

Financial Post- Canada’s housing market helped lift the economy in the early part of the recovery but will now act as a drag on growth, with starts falling for two straight quarters and expected to continue to fall in the months ahead, economists say.

Canada Mortgage and Housing reported Friday housing starts declined 1.5 per cent in September from the previous month, bringing the seasonally adjusted annual rate to 186,400 units in September.

Analysts had called for a bigger drop in starts, to 179,000.

Starts have now fallen for four of the past five months, leading to two straight quarters of overcall declines.

"After helping to support the rebound in real GDP growth over the last year, residential investment is likely to be a drag on economic growth through the second half of this year," said Diana Petramala, an economist at TD Economics…

Housing weakness expected to be a drag on growth

Five-Year Yields Hit Highest Since October 2008: Canada Credit – BusinessWeek

Bloomberg- Canada’s five-year bond yields rose to the highest level since October 2008 as banks hedged mortgages and the nation’s fixed-income market caught up to declines in U.S. Treasuries.

Canada’s home buyers are stepping up borrowing as they seek to beat pending changes to mortgage regulations and increases in interest rates. Banks that issue mortgages protect their balance sheet by selling similar-maturity securities in the secondary bond market or by making swap transactions.

“Banks are hedging seasonal mortgage flows, which is weighing on the five-year sector,” said Mohammed Ahmed, a rates strategist at Canadian Imperial Bank of Commerce in Toronto. “Banks are receiving a fixed-rate asset and to hedge that, they typically pay the fixed-rate in swaps, or sell cash bonds…”

Five-Year Yields Hit Highest Since October 2008: Canada Credit – BusinessWeek

Home prices rise less than expected – The Globe and Mail

The Globe and Mail- New house prices are 3.1% lower than last year, led by declines in Western cities such as Edmonton and Victoria…

Home prices rise less than expected – The Globe and Mail

Housing market ‘correction is behind us’: price index

Times Colonist-OTTAWA — Home prices in Canada rose 1.6% in July, the third straight monthly increase after eight consecutive declines, according to the Teranet-National Bank house price index…

Housing market ‘correction is behind us’: price index

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