“While these depressed levels may signal an attractive entry point, we believe caution and patience remain the appropriate strategy heading into [second-quarter] results and likely for the remainder of the year,” Jaeme Gloyn, an analyst with National Bank of Canada Financial Markets, said in a note on Tuesday.
He said the regulatory backdrop for mortgage companies “remains unfavourable for the foreseeable future” since Canada’s banking regulator has announced plans to cap loan-to-value thresholds for reverse mortgages and readvanceable mortgages, and could announce further measures to safeguard against potential housing market vulnerabilities.“In the near term, we believe the rapid increase in mortgage rates will most visibly transmit through reduced mortgage origination volumes,” Gloyn said.
“While these fundamental strengths do NOT provide EQB with immunity, the company is more favourably positioned to manage through the above-noted risks in our view,” he said. First National reported Tuesday mortgage origination volumes for single-family properties fell 10 per cent to $6.8 billion in its latest quarterly results due to lower housing activity. Although it noted single-family mortgage originations were well above pre-pandemic levels.
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