China Home Sales Keep Falling as Top Officials Pledge Support
China’s home sales continued to fall in April, underscoring why top policymakers are stepping up efforts to revive the market.
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China’s home sales continued to fall in April, underscoring why top policymakers are stepping up efforts to revive the market.
China’s ruling Communist Party vowed to explore new measures to tackle a protracted housing crisis, which remains the biggest drag on the nation’s economy, and hinted at possible rate cuts ahead.
Distressed Korean builder Taeyoung Engineering & Construction Co. won support from creditors to begin restructuring its debt, after it had rattled local markets at the start of the year.
Britain’s housing-market recovery continued into March as mortgage approvals rose for a sixth month, Bank of England figures show.
A major state-owned landlord in Shanghai is offering to sell most of its office buildings for at least 30 billion yuan ($4.1 billion), people familiar said, underscoring the severity of the city’s commercial property downturn.
Mar 1, 2021
BNN Bloomberg
,CIBC Deputy Chief Economist Benjamin Tal said many Canadians aren’t prepared for a shock to their mortgage rates as a result of volatility in the bond market.
In an interview Monday, Tal warned that upward pressure on rates could catch Canadian mortgage-holders flat-footed, even though underlying rates remain near historic lows.
“It’s all about the speed at which rates are rising. And, if we see another 30-, 40-, 50-basis-point increase in rates, that will be translated directly into mortgage rates in Canada. I would be very concerned,” he said, “because this market is not ready for a brief 100-basis-point increase in mortgage rates, by any stretch of the imagination. So, we have to be really careful when it comes to the housing market.”
The typical mortgage rate is closely tied to the yield on five-year government bonds, as most home loans carry a five-year duration. Yields on a Canadian government five-year bond have more than doubled over the course of the last month, rising to 0.83 per cent in a surge that has not been seen since 2010.
That upward rate momentum has prompted a pair of Canadian lenders - TD Canada Trust and Bank of Nova Scotia - to hike their five-year fixed rates, according to mortgage-tracker RateSpy.com. The posted five-year fixed rates at the Big Six Canadian lenders range between 4.59 and 4.79 per cent, with TD advertising the lowest lending rate of the group.
Further exacerbating the potential issue is that the fate of the Canadian bond market - and by extension, mortgage rates - is largely outside the control of domestic forces. Canada can be buffeted by developments south of the border, with the Bank of Canada estimating American macroeconomic news alone could account for more than 25 per cent of the variation in longer-term yields.
Tal said that outsized impact of American developments should garner plenty of caution when it comes to mortgage-market developments on this side of the border.
“We are price-takers. We cannot control the five or the 10-year rate,” he said.