Weekly Digest

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November 6th, 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 5 realtors who have already qualified.

Trump Wins Second Term

Donald Trump swept key swings states including Pennsylvania, Wisconsin, and Georgia to win the election as the 47th president of the United States. He is the first person to do so for non-consecutive terms in 120 years.

Republicans also took control of the Senate and appear on track to retain their hold over the House of Representatives.

There is an expectation to introduce proposed immigration curbs and tariffs via executive action in the second quarter of next year. Given the slowdown in illegal immigration over the past few months, those curbs may have a slightly smaller impact on the economy than previously believed. At the same time, Trump has also been doubling down on his tariff threats recently, particularly his threats aimed at Mexico.

Why It Matters For Canada

• Trump’s election introduces the threat of across-the-board tariffs that could hit Canada hard.

• Trump’s promise of 10% tariffs on all imports into the U.S. would subtract $7 billion from Canada’s GDP and cost around 20,000 jobs, according to analysis by BDC.

• Alberta, Manitoba, Ontario, and New Brunswick — provinces where U.S. trade accounts for a significant portion of GDP — would be hit particularly hard, according to the Canadian Chamber of Commerce.

Impact to Interest Rates and Bond Yields

USA

• The most important bond yield in the world, the U.S. 10-year, is at a 4-month high. It’s now seen an 85 basis point surge since September’s bottom

• A Republican sweep of the federal government looks likely, boosting chances that Trump can make his policies law. That’s bound to drive up U.S. debt and inflation, investors think.

CAN

• The 5 year bond is up 10 basis points over night.

Canadian GDP

Earlier interest rate cuts are yet to have much effect on the Canadian economy, which remains trapped in a period of stagnant growth. Making matters worse, any boost to the economy from lower borrowing costs next year will be countered by a decline in population, as new immigration slow downs soon take effect. GDP growth will continue to soften to 1.5% in 2025 and 1.7% in 2026.

Population Control

Trudeau has finally implemented a plan to moderate immigration levels. The government has stated Canada will lose population over the next two years (0.2%). Last year, our population grew by 3.2% (1,270,000) which is about the size of Calgary.

This means GDP growth is likely to remain subdued in the next couple of years and raises serious questions about the outlook for residential investment. A likely contraction in the labour force presents some upside risks to wage growth further ahead. With the unemployment rate being high, we suspect the more immediate impact will be to weigh on rents and pull-down CPI shelter inflation.

Implementation Plan?

There are two parts to the government’s new targets

• A – Cuts to the existing targets for permanent residents

• B – Targets for temporary residents.

The government was previously targeting 500,000 permanent residents in both 2025 and 2026, up from 485,000 this year, but has downgraded those to 395,000 in 2025 and 380,000 in 2026. A new target of 365,000 in 2027 was also announced. The most striking part of the plan is that the target for temporary residents to fall to 5% of the population, from 7.3% (three million) currently. The government expects the number of temporary residents to plunge by 445,000, in 2025 and 2026, equivalent to declines of 15% and 17%, respectively. As a result, the government expects the population to fall by 0.2% in both 2025 and 2026.

That would be the first decline in Canada’s history.

December 11th – Bank of Canada Rate Announcement

BMO Economics on cut size:
“The BoC isn’t necessarily keen on another 50 bps in December, which was our takeaway from Governor Macklem’s remarks,” the bank says.

Markets agree, with OIS now pricing in a 92% chance of a 25 bps cut at the BoC’s next December 11 meeting.

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

• $10 – The amount Cochrane, ON, is selling plots of land for in order to encourage housing development.

• 33% – Share of farming jobs in Canada that are expected to be automated in the next decade. The shift would automate around 100,000 jobs.

• $23,000 – The drop in average GTA condo prices last quarter, from $716,479 in Q3-2023 to $692,672 in Q3-2024.

• $205K – The median mortgage debt for current borrowers in 2023, down from $219,500 in 2019.

• 162,000 – Vehicles sold in Canada last month, an 8.8% jump from a year ago and nearly on par with 2019 sales. Yearly auto sales are now on track to hit a five-year high.