
Core Inflation Gauges Are Falling in US and Euro Zone
Policymakers on each side of the Atlantic are likely to take comfort this week from a slowdown taking hold in key underlying measures of consumer-price growth.
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Policymakers on each side of the Atlantic are likely to take comfort this week from a slowdown taking hold in key underlying measures of consumer-price growth.
Singapore became the biggest investor in Japan’s real estate sector this year, lured by the yen’s weakness and growing demand in logistics and hospitality industries, according to Knight Frank LLP.
Bond investors face the crucial decision of just how much risk to take in Treasuries with 10-year yields at the highest in more than a decade and the Federal Reserve signaling it’s almost done raising rates.
Apollo Global Management Inc.’s James Zelter is “skeptical” of an economic soft landing. Ares Management LLC co-founder Michael Arougheti is concerned about the risk of a fiscal accident. Defaults will rise in coming years as riskier debt comes due for refinancing, according to Joshua Easterly of Sixth Street Partners LLC and hedge fund manager Hamza Lemssouguer.
German Chancellor Olaf Scholz used a campaign stop in Bavaria as an opportunity to defend the recent interest rate hikes by the European Central Bank, telling homeowners they shouldn’t have a problem with 4% rates.
Apr 8, 2021
Bloomberg News
,(Bloomberg) -- Canada’s bank regulator is proposing to tighten mortgage qualification rules to make it more difficult for home buyers to secure financing, a move aimed at easing financial stability risks stemming from a booming real estate market.
The Office of the Superintendent of Financial Institutions said it will set up a new benchmark interest rate used to determine whether people will qualify for an uninsured mortgage to a minimum rate of 5.25%. The current threshold, based on posted rates of the country’s six largest lenders, is at 4.79%.
“Sound residential mortgage underwriting is always important for the safety and stability of financial institutions,” Jeremy Rudin, head of the Ottawa-based agency, said in a statement. “Today it is more important than ever.”
The move comes amid a surge in housing prices that’s raising concern among policy makers and economists. Cheap mortgages and new remote-working conditions have spurred a frenzy of demand for more spacious homes, with house hunters bidding up prices across the country.
The Canadian Real Estate Association calculates prices are up 17% nationally over the past 12 months. Twelve major markets -- or about one quarter of the total -- have posted price gains of more than 30%.
OSFI said housing market conditions “have the potential to put lenders at increased financial risk,” forcing regulators to take “proactive action.” The regulator said it will revisit the calibration of the qualifying rate at least once a year to ensure it remains appropriate. The plan is to implement the changes on June 1, after consultations.
The move impacts the uninsured mortgage space that is overseen by OSFI. The federal government is in charge of mortgage qualification for insured mortgages. There was no indication in the statement that the government planned to follow the move, and requests for comment from the finance department weren’t immediately returned.
One unintended consequence could be to temporarily accelerate the market as buyers rush in before the changes are implemented.
“We may well see an even hotter spring housing market as a consequence to OSFI’s move,” Derek Holt, an economist at Bank of Nova Scotia, said by email. “We’ll get more pulled-forward demand.”
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