Weekly Digest

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December 3rd, 2024

Partner Trip for 2025

April (Spring) 2025, our annual realtor trip will be held in Nashville, Tennessee.

Qualifying is easy. Send $1,500,000 in total closed mortgage business to automatically qualify.

To date, we have 7 realtors who have already qualified.

Tariff Threats

Countries generally use tariffs to protect domestic industries by raising the cost of imports. This encourages consumption of locally produced goods. Tariffs also provide a source of government revenue. Domestic businesses that rely on foreign inputs to produce their own goods may face higher costs, and retaliatory tariffs can harm exporting industries. Ultimately, consumers usually bear the brunt of the costs through higher prices.

In line with this view, markets have largely shrugged off the tariff threats announced by Donald Trump last week. The Canadian stock market has marched higher, while the Canadian dollar has pared back some of its losses following the announcement. Still, the Loonie remains near multi-year lows, reflecting stronger U.S. economic growth and expectations that U.S. interest rates will eventually settle at higher levels than in Canada.

Needless to say, a 25% tariff would be economically devastating for Canada. It also runs counter to America’s best interests. After all, nothing fixes inflation quite like making everything more expensive…

Whats Happening This Week?

New jobs numbers.

Both Canadian and U.S. employment data for October arrive this week and forecasters expect to see a continued divergence of the two economies. Unemployment is likely to rise in Canada from its current mark of 6.50% as the pace of job growth fails to keep up with the growing population. This will be the last major data release before the Bank of Canada’s interest rate decision on the 11th, which was complicated by a worse-than-expected GDP report for the third quarter that put a half-point rate cut back on the table.

Rates

With yields reversing lower last week, there’s less pressure on fixed spreads (for now at least). Still, we have noticed deep discounts on fixed rates disappear.

Canadian traders are pricing in four, 0.25% BoC cuts through the end of next year. Here are the next-meeting odds:

• For the Bank of Canada meeting on Dec. 11:

  • 50bps cut: 45% chance

  • 25bps cut: 55% chance

• For the Federal Reserve meeting on Dec. 12:

  • 25bps cut: 62% chance

  • No change: 38% chance

Mortgage Market Share

It’s a perfect storm for the non-big 5 bank channel. These lenders typically dominate the insured lending space and are generally only competitive on 5 year mortgage terms.

1. Consumer term selection is being dominated by short term fixed rates

2. Insured lending mortgage origination is at all time lows

Many lenders are hoping for a business uptick once the new insured lending guidelines take effect on December 15th. This will certainly help brokers and realtors in the GTA and GVA.

October Home Sales

Ontario home sales saw a substantial increase of 14% month-over-month and an

increase of over 34% on a year-over-year basis. However, sales remain lower, at 12%

below the 10-year monthly average.

Market Returns

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.34%

• 3 year fixed, 30 yr amortization – 4.44%

• 2 year fixed, 30 yr amortization – 6.00%

• 5 year variable, 30 yr amortization – Prime – 0.70% = 5.25%

• 5 year fixed, 25 yr amortization – 4.29%

• 3 year fixed, 25 yr amortization – 4.44%

• 2 year fixed, 25 yr amortization – 5.95%

• 5 year variable, 25 yr amortization – Prime – 0.80% = 5.15%

INSURED

• 5 year fixed, 25 yr amortization – 4.29%

• 4 year fixed, 25 yr amortization – 4.39%

• 3 year fixed, 25 yr amortization – 4.24%

• 5 year variable, 25 yr amortization – Prime – .95% = 5.00%

Fast Facts

• 240,761 – The number of housing starts in October, marking an 8% annual rise. Even so, starts remain “well below” what is needed to restore affordability in Canada’s urban centres.

• 35% – The percentage of Canadian renters searching for more than two weeks for their rental as of November, down from 57% as of March.

• 60%  – The year-over-year decline in GTA new home sales in October, with 765 transactions recorded. The pre-construction market continues to face many challenges.