Daily Market Update

Poloz gives little away on interest rates
Bank of Canada governor Stephen Poloz gave a speech at Western University yesterday but, although he referred to the recent interest rate cut, he was not giving any clues to the bank's next move. He said that we are in uncertain economic territory and that the recent 0.25 per cent cut was necessary to balance falling inflation with high household debt, both of which are at risk from the lower oil prices. The BoC will announce its decision on interest rates next week (March 4), but Poloz did not give an indication on the current thinking. Many economists are banking on a further 0.25 per cent cut.
Canadians don’t know how in debt they are
Canadians are ignorant of their real level of debt, according to a new poll. The Ipsos Read study for insolvency firm MNP asked people what they thought the average debt-to-income ratio in Canada was. Most opted for 48 per cent, but the actual figure is 162 per cent. Among those who owe more than they earn (technically insolvent), Quebec topped the league with 28 per cent, followed by Atlantic Canada (24 per cent), Alberta, Saskatchewan and Manitoba (23 per cent), Ontario (16 per cent) and British Columbia (14 per cent). Younger Canadians are most likely to be in high levels of debt compared to their income with the situation easing for older age groups. Almost a third of those renting their homes are likely to be technically insolvent along with a similar number of parents. The survey also found that 17 per cent of homeowners would take out a home equity line of credit to finance a large purchase and one in ten would switch their mortgage from fixed to variable. Read the full story.
Calgary Realtors take a long-term view
In the short term a slowdown in the housing market can be worrysome for homeowners and isn’t ideal for Realtors either! Howeve, those who’ve been in the property game for many years often take the long-term view in times of turbulence; activity and prices fluctuate but generally real estate is still a good investment. Don Campbell, senior economist with the Real Estate Investment Network said that forecasting prices in the Calgary area while oil prices are volatile is impossible because no one knows how low they will go and when they might recover. Christine Hegarty of Re/Max Realty Professionals has been a real estate agent in Calgary for almost 25 years and told the Calgary Herald that she’s not panicking because over the longer term the market has performed well. She also points to the low vacancy rate for rentals in the city: “Housing prices should continue to see a slight positive gain. Unless there are reasons for sellers to take a substantial decrease, most would not do so. Why would you want to lose 10 per cent on your real estate value when you can lease out for a premium based on such low vacancy rates?” Read the full story.
Alberta may end up with a surplus after all
Alberta was expected to make a surplus, but economic conditions cast doubt on the ability of finance minister Robin Campbell to end the fiscal year on a high. However, he announced today that he expects a surplus of $465 million for 2014-15 after additional investment income and extra federal cash for flood relief turned the province’s fortunes around. Last month premier Jim Prentice had said there would likely be a deficit of $500 million. 

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  • by Wayne 2015-02-25 10:16:57 AM

    Re Canadians don’t know how in debt they are. The provincial percentages in the Financial Post article are for those who owe more than they own. In your lead-in to the article, you have changed that to those who owe more than they earn. Not to worry though, the source MNP news release is even worse. They say the percentages are debt-to-income ratios in those provinces. Fortunately they included an infographic that appears to show the correct information, and the the FP article uses that information. Epic fail MNP.

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