
Charting the Global Economy: US Labor Market Picks Up Steam
The US labor market strengthened in November with pickups in employment and wages, deflating hopes the Federal Reserve will cut interest rates early next year.
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The US labor market strengthened in November with pickups in employment and wages, deflating hopes the Federal Reserve will cut interest rates early next year.
China’s consumer prices fell at the steepest pace in three years while producer costs dropped even further into negative territory, underscoring the challenges facing the economic recovery.
Signa Development Selection AG, one of the major units of the retail and real estate empire founded by Rene Benko, is facing insolvency as a result of a cash crunch within the division.
Private equity’s stewardship of hospitals is again coming under scrutiny with the launch of a new bipartisan Senate investigation.
Some mortgage holders have begun to pare down their spending amid higher borrowing costs, according to a new report from TD, particularly those who renewed their mortgages more recently.
Dec 1, 2017
By Greg Bonnell
Toronto home sales picked up in November as some buyers apparently “rushed” into the market ahead of tough new mortgage rules, but don’t expect prices to take off any time soon.
The Greater Toronto Area’s housing market hit a fever pitch in the spring – with the average price soaring to $920,791 before the province stepped in with a suite of regulations.
Now, the market is facing more regulation: new stress tests from the federal banking regulator.
“Sales overall are down by around 13 per cent [in November], which is actually an improvement compared to the 20- to 30-per-cent declines we were seeing in previous months,” John Pasalis, president and broker of record at Realosophy.com, told BNN in an email.
“This might be a last-minute rush as some buyers rushed to get in before the new OSFI changes are put in place.”
When it comes to price, Pasalis expects a “roughly” two-per-cent year-over-year drop in the Greater Toronto Area.
“Even if prices remain flat going forward, by February-March we should see average prices down by roughly 15 per cent compared to the peak reached in the first quarter of 2017.”
The country’s banking regulator, the Office of the Superintendent of Financial Institutions, has set a Jan. 1 deadline for the big banks to impose tough new mortgage stress tests for all borrowers.
RateHub.ca suggests it could cut a family’s purchasing power by up to 21 per cent.
READ MORE: TORONTO HOUSING
OSFI made clear it expects the banks it regulates to comply, where possible, with the “principles and expectations set out” as of October 17 – the date the changes were announced.
Still, industry observers feel there would be opportunities for buyers to avoid the new stress test before the new year because lenders simply wouldn’t move that quickly.
That’s led to speculation some buyers in pricier markets such as Toronto and Vancouver would jump into the market ahead of the deadline.
This week, the country’s largest bank -- RBC -- told analysts it has seen a “little bit of pull forward this fall,” when it comes to its mortgage business.
Bank executives said some customers were “surprisingly aware of exactly what the stress test is about and have decided to move more quickly.”
Lauren Haw, CEO of Zoocasa, says they have “felt this return of buyer urgency all month.”
“Some of this increase in activity can be attributed to buyers looking to get ahead of the mortgage changes in January,” Haw told BNN in an email, adding others are wading into the market after waiting for a “sharp price decline” that didn’t come.
RBC told analysts it expects “mortgage growth to slightly moderate to the mid-single digits” as the housing industry “digests the changing regulatory landscape.”
When it comes to the stress tests, Haw says the impact could be muted by the fact that “most buyers” do not push the mortgage loan amount to their “absolute maximum.”
“There are buyers that spend the absolute maximum, but most commonly do not.”