Tag Archives: Bank of Canda

Canadian Housing Market at Tipping Point

According to economists at the Bank of Nova Scotia, Canada will soon boast a more than 70 percent homeownership rate. The question now is whether or not the nation’s housing market has reached the tipping point (the United States is believed to have cracked the same 70 percent threshold just before the housing bubble burst in 2008).

Growing concern over Canada’s seemingly out-of-control housing market has already prompted Ottawa to crack down on mortgage rules. These restrictions, which include limiting amortizations to 25 years, are designed to disuade cash-strapped Canadians from taking on mortgage debt that they can’t afford. What’s more, the Office of the Superintendent of Financial Institutions has also implemented new rules that will tighten up lending regulations at financial institutions. Continue reading →

Loophole May Make Credit Unions the Better Mortgage Option

New mortgage guidelines aimed at Canada’s sizzling real estate market might not be as ironclad as Finance Minister Mark Carney may have hoped. That’s because credit unions, which are provincially regulated, are not under the jurisdiction of the Office of the Superintendent of Financial Institutions (OSFI). This loophole may provide community credit unions with an important competitive advantage and borrowers with an attractive alternative to traditional lending sources. Continue reading →

Consumer Debt Hits A New High

A report released this morning by TransUnion shows that, despite repeated warnings, Canadians are back on the borrowing bandwagon, pushing consumer debt to a new record high.

According to the report, the average Canadian’s non-mortgage debt hit $26,221 in the second quarter of 2012, up $192 from the previous quarter. This is the highest per person debt level since the credit bureau started tracking this type of data back in 2004.

The increase in average debt spanned the country, although Saskatchewan reported a slight dip on a quarterly basis and Alberta recorded a decreased annual debt growth. Continue reading →

Carney and the Rate Game

Higher rates have been on Bank of Canada Governor Mark Carney’s mind this week. Carey signalled the chance of tighter policy on three separate occasions this week, even after keeping the key lending rate at 1.0 percent. however, Carney’s insistance that rates are on their way up sets Canada apart from other central banks that continue to look for ways to stimulate their economics amid the European debt crisis, a struggling U.S. market, and disappointing growth in China.

According to official transcripts from Carney’s interview with the BBC in London on Wednesday, the Bank of Canada feels that Canada is “in a very different place than the major crisis economies, such as the U.K.”. According to Carney, Canada’s economy is almost back to full capacity, “the labour market’s been growing, we’re growing above – we had been growing above trend, and the extent to which we continue to grow above trend, we may withdraw some of the monetary policy stimulus.” Continue reading →

Understanding Amortization

A shorter amortization period can help you pay off your mortgage faster and save you money. Obvious? Perhaps. So why are more and more people choosing to stretch their amortization as long as possible? The recent changes to Canadian mortgage regulations that limit amortization periods to 25-years have caused a bit of tension across the country as families scramble to manage increased payments.

However, at the end of the day, this restriction will go a long way to improving the pocketbooks of families from coast-to-coast. It wasn’t long ago that home hunters strove for shorter amortization periods in order to pay off their mortgage as soon as possible. As mortgage rules relaxed, so too did our dedication to frugality. Continue reading →