Weekly Digest — April 17, 2023

As expected, the Bank of Canada held the key rate at 4.50%. Macklem advised Canadians, “Don’t plan on inflation staying high.” The Bank expects CPI inflation to fall quickly to around 3% in the middle of this year and then decline more gradually to the 2% target by the end of 2024.

Full report here

TREB Data – March

Toronto saw its weakest March sales since the 2009 recession. But tight supply counterbalanced it, boosting median GTA prices by 2.7% m/m.

For data sets on our full report, please see here. We have put together charts for the GTA for; Number of sales, Average price, New listings

Fixed Rate Cuts

TD Bank has been leading the charge this year on pricing, and they stepped up again last week with cuts to their posted rates. While TD prices files based on the current bond yields, this is the first cut we have seen to posted rates in 2023. With a spring cash back promo and end rates in the high 4% range, TD will continue to lead the charge for the Spring market.

On the global side, investors are shorting TD’s stock, and TD is now the most-shorted bank in the world. TD’s 10% stake in Charles Schwab as well as the pending purchase of First Horizon Bank in the US are raising concerns after the collapse of SVB bank. Shareholders are calling for TD to renegotiate the deal, or scrap it entirely.

Loan To Value

Even with the recent struggles of the market, the average loan to value of mortgaged property in Canada remains low. This is why we see such a low default rate year over year. Canadian’s are good at protecting their equity, and the average big bank uninsured mortgage loan to value is still just 53%.

B.C.’s Multi-Unit Legislation

New legislation is to be introduced in BC later this year will allow the rapid building of secondary suites. The new guidelines will allow up to 4 units on a traditional single family detached lot. Will Toronto and other cities in Ontario be next?

Consumer Expectations

Bank of Canada has stated; “Consumers anticipate some relief in the housing market because they believe interest rates may fall earlier than previously expected,”. Below is a consumer report on house pricing trends.

On the inflation front, consumers expectations have also slowed

In the U.S. CPI dove from 6% to 5% last month. Core inflation rose from 5.5% to 5.6% (3-month annualized at 5.1%). The Fed’s favoured underlying inflation gauge, 3-month annualized core services prices excluding shelter, rose from 4% to 4.4%. It needs to drop further to cement a June pause from the Fed. After last week’s report, U.S. futures were still pricing in a 66% chance of one last 25-bps Fed hike on May 3.

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.79%

• 3 year fixed, 30 yr amortization – 4.99%

• 5 year variable, 30 yr amortization – Prime – 0.40% = 6.30%

• 5 year fixed, 25 yr amortization – 4.69%

• 3 year fixed, 25 yr amortization – 4.89%

• 5 year variable, 25 yr amortization – Prime – 0.50% = 6.20%

INSURED

• 5 year fixed, 25 yr amortization – 4.49%

• 4 year fixed, 25 yr amortization – 4.64%

• 3 year fixed, 25 yr amortization – 4.81%

• 5 year variable, 25 yr amortization – Prime – .90% = 5.80%

Fast Facts

• 3 inches – The increase of major league baseball’s bases this year. The hope is that the bigger bases will lead to more stolen base attempts. The Blues are currently 10-6 on the season.

• 27,349 feet – That’s how far below the ocean’s surface researchers filmed a snailfish—the deepest living fish on record.

• 25 – That’s how many extra calories are burned by golfers who carry their clubs for a round of 18 holes, rather than use a push cart. In all, a golfer carrying a 15 pound bag with 14 clubs burned 688 calories, compared to 663 calories for those who use a push cart.