That means Canadian inflation measures are influenced by both the rise in mortgage costs as the Bank of Canada aggressively raises rates and by the resulting slowdown in theWhile inflation was still 6.3 per cent in December, price pressures in Canada are expected to lose momentum thanks to base effects and continued cooling in the Canadian real estate market, which features shorter-duration mortgages than the U.S. and a higher share of variable-rate home loans.
Those differences are one reason economists say the Bank of Canada — which said it intends to pause its tightening campaign — won’t have to raise borrowing costs as high as the U.S. Federal Reserve. “One way Canada actually stands out from a lot of other countries is that when the Bank of Canada raises interest rates, there’s a temporary boost to inflation because of this mortgage interest rate effect,” Stephen Brown, an economist at Capital Economics, said by phone.The U.S. calculates housing inflation using owners’ equivalent rent, or the price a property owner would have to pay to rent to live there.
Shelter has been a major driver of Canadian inflation in recent months, and was up seven per cent in December. The mortgage interest and rent sub-indexes saw year-over-year jumps of 18 per cent and 5.8 per cent, respectively. But with rates now on hold, Brown expects mortgage interest costs to peak before dropping sharply in the second half of this year. Other inflation inputs, such as commissions on home sales, are already easing.
That doesn't explain why the prices in places like Halifax have doubled in just two years. To be honest, I am tired of the lies.
Banning foreign buyers from Russia and China didn’t help?
Yeah right. It is very evident…
If Canada isnt committed to either tripling the amount of new houses built per year, or scaling back immigration by half or more, the prices will just shoot back up once rates go down.
Depending if I wearing depends
What would cool inflation would be the elimination of the fuel carbon tax! High gas, diesel and home oil has a direct effect on cost of groceries, etc.
Where in the Bank of Canada's inflation basket are house prices captured? If it is, how much weight is it given? EconguyRosie
Rapidly cooling? It is definitively DOA!
Translation. Rapdily Cooling Housing Market = people cant afford shit in terms of housing.
If we didn't raise demand with mass immigration I wonder if the title of this article would have been 'canadas house market crash'
'But with rates now on hold, Brown expects mortgage interest costs to peak before dropping sharply in the second half of this year.' Huge flaw: Canada's interest rate policy will mirror US or you will have a 65 cent dollar which means more inflation.
Been keeping on an eye on list prices on the low end housing. All the interest rate changes did nothing. Suddenly this month ive seen a sudden 25% drop. The bloodbath is coming.
What happens when all these new home owners who bought homes at rediculously high prices realize their home is worth half what they paid and their mortgage is the same? Plus their interest rates are going to go up to boot. Good times. We tried to warn you.
When inflation cools people will rush out to purchase real estate quickly perpetuating the whole loop and putting us right back into a lack of affordability. It's ridiculous that in a year's time, my house is 400,00 more than it was 2 years ago. I couldn't buy my own house today
On the backs of homeowners and renters. Thanks bankofcanada JustinTrudeau
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