Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Mortgage Changes Blur The Line Between Normal & Crisis: CMHC
Canada was warned directly funding its mortgages would be a disaster, but it’s seeking the same impact anyway. The Government of Canada sought advice from the CMHC on directly funding mortgages by selling bonds, back in 2022. The national housing agency warned this would blur the lines between crisis and normal operations. In addition to bad optics, this would reduce investment into the country, as well as drive general borrowing costs much higher for everyone.
Sounds bad? That’s the part they were willing to disclose without redaction. Canada went ahead and started selling Government bonds to fund purchasing mortgage bonds anyway, an indirect approach creating the same problems.
Canadian Anti-Money Laundering Reporting Systems Still Down Post-Hack
Canada’s tough talk on fighting money laundering appears to be just that. FINTRAC, the country’s financial crime intelligence agency, disclosed being hacked at the start of March. While the disclosure stated the hackers only accessed corporate systems, and no data was lost—the agency still doesn’t have all of its systems up and running nearly two months later.
Ontario, BC, and Nova Scotia Real Estate Prices Have Corrected The Most
Canadian real estate prices are still in correction territory, but the declines are largely concentrated in certain regions. The benchmark price of a typical home across Canada was $855,800 in March, down 14.7% (-$126,100) from the peak two years prior. Significant price drops have only been observed in a few provinces though, the three biggest drops being in Ontario (-17.7%), BC (-9.3%), and Nova Scotia (-6.6%).
Toronto Mortgage Delinquency Rate Surges 71% Higher
Canada’s largest real estate market has seen a sharp uptick in mortgage delinquencies. Toronto CMA saw its delinquency rate climb to 0.12% in Q4 2024, the highest level since 2016. While the rate itself may not present much of a concern, the sudden 71% jump in the share of delinquent mortgages over a year might be. It’s a common problem observed after large investor booms, the most notable example being the US Housing Bubble.
Canadian Government Borrowed The Most From Bond Markets Since 2021
Canada is tapping bond markets for cash at an unusually fast rate, according to BoC data. The Government of Canada (BoC) issued $24.5 billion in bonds in March, the largest single month of new issues since 2021. Such large pushes to borrow debt, especially during record outflows from Canada’s capital markets, will apply upward pressure on borrowing costs. Not a great sign when the economy is just off record performance, and the country needs to borrow like it’s in the middle of a crisis. And this is before the new budget that proposes a sharp increase in spending is passed.
