Weekly Mortgage News for July 17, 2009

This weeks top stories include how Canadian businesses see the light at the end of the tunnel, how Canadian housing made a huge comeback and how the myth of inflation being below zero has come true.

Canadian businesses see the light

A poll by the Bank of Canada (BoC) suggests that faster sales growth is expected by over 61% of senior managers. The results of the Business Outlook Survey reflect a dramatic shift in opinion form the two previous quarter’s surveys. 100 companies were surveyed and 30% predicted that sales would increase at a faster pace in the year ahead. Opinions on future sales were positive in the month of June for the first time since the 3rd quarter of 2008. 40% of companies stated that they intend to add workers over the next 12 months. These reports are positive signs that the worst of the recession may be over and that the economy may be set for the modest recovery that Finance Minister Jim Flaherty has been going on about. One third of respondents to the survey said that credit was tighter in the previous three months as a similar survey of financial institutions showed that banks continue to implement stricter conditions on their loans. This ongoing tightening is attributed to deteriorating conditions in industries most affected by the recession such as auto and export. The BoC’s latest data is suggesting that inflation expectations are contained and that there is little pressure to change the overnight lending rate from the current low of 0.25%. Hopefully this will be the case. What do you think?

Read the full article here
Read the follow up here

Canadian housing makes a huge comeback

Toronto’s existing home market had better than expected results in June and surprised many economists. There was an increase of 27% in sales for the month only to be outdone by Vancouver and Calgary. With more balanced market conditions there has been an end to the grip that buyers had on the market over the last eight months. Vancouver had the most impressive rebound with sales up 76% from June the previous year. Although the market is beginning to balance, bidding wars are still in effect with 50% of housing selling in multiple offers. Calgary was second place for the size of increase in sales with a 28% jump from June of last year to June of this year. These numbers are showing an increase in competition within the first time home buyer community. Toronto was in third place with 10 955 units sold in June and came quite close to the previous record of 11 146 unit sold in May of 2007. With inventory down 30% from June of last year and fewer listings creating a lower supply of available homes the result has been multiple offers in the metro area’s. ReMax Canada states that the strongest demand is for homes between $300 000 and $600 000. I can attest to this as I have been trying to purchase a home for the last month and have been outbid on all attempts made towards a purchase. I guess I will have to wait a few months until everything balances out and the market is more leveled. What do you think I should do?

Read the full article here

Inflation below zero

New information to be released today will be strange to see for most. Statistics Canada’s newest data will show that our annual inflation rate is below zero. Even more strange is that prices are consistently rising when compared to what they were the month before. The negative inflation was triggered by the high gas prices seen last June and not by where they stand today. Inflation below zero is something that has been a myth since 1994 back when Ottawa decided to slash tobacco taxes in an effort to stop the illegal cigarette smuggling trade. Economists are stepping up to say that there is only a minor chance of deflation and that means an extension to the current drop in prices that we are experiencing. Although the government has spent billions in stimulus and economic conditions are expecting to improve in the near future our up and coming problem should be to ensure that inflation doesn’t go haywire. What do you think?

Read the full article here