Dominion Lending Best Rate Mortgages

This edition of the Weekly Rate Minder has the latest, best rates for Canadian mortgages. At Dominion Lending Centres, we work on your behalf to find the mortgage that suits your needs. Best of all — our service is free.* It's the selected lender that pays us and YOU get the best rate. *(O.A.C., E.&O.E.) • Our Best National Rates • Explore Mortgage Scenarios with Helpful Calculators on http://www.derekdiener.com

Terms Bank Rates Our Rates 6 Month 3.14% 3.10% 1 YEAR 2.99% 2.69% 2 YEARS 2.94% 2.24% 3 YEARS 3.44% 2.49% 4 YEARS 3.94% 2.59% 5 YEARS 4.79% 2.69% 7 YEARS 6.04% 3.39% 10 YEARS 6.50% 3.84% Rates are subject to change without notice. *OAC E&OE

Prime Rate is 2.85%  Variable rate mortgages from as low as Prime minus 0.65%  Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.” Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you. *O.A.C., E.& O.E.

Canadian Manufacturing Sales

Canadian manufacturing sales fell 1.7 per cent in January, led by an 11.9 per cent decline in petroleum and coal products. However, the unit volume of manufacturing sales fell only 1 per cent, indicating that lower prices were a significant driver of falling dollar volume.  Although sales were down in 14 of 21 manufacturing sub-sectors, sales excluding petroleum and coal products fell just 0.5 per cent. 

In BC, where manufacturing employs close to 170,000 people,  manufacturing sales fell 2.7 cent on a monthly basis in January, but were 2.7 per cent higher year-over-year. BC's diverse range of non-energy exports should translate to its manufacturing and trade sector outperforming other provinces this year, particularly as demand from the US economy ramps up. 

Copyright BCREA - reprinted with permission 

Housing Demand Remained Elevated in February

The British Columbia Real Estate Association (BCREA) reports that a total of 6,661 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in February, up 19.4 per cent from the same month last year. Total sales dollar volume was $4.3 billion, an increase of 24.8 per cent compared to a year ago. The average MLS® residential price in the province rose to $639,405, up 4.5 per cent from the same month last year.

"Consumer demand remained robust in February on the strength of rock bottom interest rates and improving economic conditions," said Cameron Muir, BCREA Chief Economist. "After several years of below-average activity, home sales are now trending above long-term levels."

Total active listings on the market were down 7.5 per cent from a year ago. Fewer homes for sale, combined with elevated consumer demand has the housing market firmly in balanced conditions.

Year-to-date, BC residential sales dollar volume was up 18 per cent to $6.9 billion, compared to the same period last year. Residential unit sales were up 12.4 per cent to 11,038 units, while the average MLS® residential price was up 5.0 per cent at $621,065.

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Canadian Employment

Canadian employment was unchanged in February while the national unemployment rate ticked 0.2 points higher to 6.8 per cent. Total hours worked, which is strongly correlated with economic growth, grew by a modest 0.2 per cent compared to February 2014.  Overall, today's jobs report was good enough that the Bank of Canada may hold off on further easing at its April meeting. As expected,  employment weakness occurred in oil producing provinces, particularly Alberta which lost 14,000 jobs, but other provinces saw significant gains.  Moreover, Weekly wage growth, a key indicator for inflation, held firm along its three month trend of about 2 per cent measured year-over-year. 

In BC, employment declined by 7,000 jobs, erasing the gains from January. Full-time employment fell by 16,500 after rising by 12,800 in January while part-time employment was up 9,600. The provincial unemployment rate rose for the second consecutive month, jumping 0.4 points to 6.0 per cent.

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Canadian housing starts

New home construction in Canada declined 16.4 per cent in February to 156,276 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts of 182,137 units SAAR fell for a sixth consecutive month. 

Housing starts in BC urban centers fell 11.1 per cent on a monthly basis to 22,273 units SAAR.  On a year-over-year basis, housing starts were 5 per cent higher compared to February 2014. Single-detached starts were 11 per cent higher year-over-year while multiple units were up 1 per cent compared to this time last year. 

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were down 11 per cent year-over-year due to a 22 per cent decline in multiple starts. Single-detached starts in Vancouver were 24 per cent higher. In the Victoria CMA, new home construction jumped 162 per cent year-over-year due to a surge in multiple unit starts. Total housing starts in the Kelowna CMA were up 7 per cent year-over-year in February, led by growth of multiple unit starts. Housing starts in the Abbotsford-Mission CMA are rebounding from a poor showing in 2014. Total starts were over 4 times higher year-over-year in February, also led by a jump in multiple unit starts.

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Canadian Building Permits

The value of Canadian building fell 12.9 per cent in January, largely as a result of lower non-residential construction intentions in Alberta, BC and Ontario. 

In BC, lower building permits were registered in both the non-residential and residential sectors. The total value of building permits fell 24.2 per cent to $768 million from over $1 billion in permits in December. Total permits were also down 15.5 per cent year-over-year. Both non-residential and residential permits were lower in January, but most of the decline was a result of a steep decline in non-residential construction intentions. 

Construction intentions were mostly lower in BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA fell 33.4 per cent on a monthly basis and 40.5 per cent year-over-year.The Kelowna CMA was the only BC CMA that posted higher permit values in January, with permit values growing 19.9 per cent from December and 58.6 per cent over January 2013.  In the Victoria CMA, permit activity declined 27.4 per cent on a monthly basis and was 25.9 per cent lower year-over-year. In the Vancouver CMA, permits were down 32.7 per cent on a monthly basis and were 25.9 per cent lower year-over-year.

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Bank of Canada Interest Rate Announcement

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 0.75 per cent. In the press release accompanying the decision, the Bank noted that total CPI inflation has fallen as expected given the significant drop in oil prices, but core inflation has been temporarily boosted by a lower Canadian dollar. Regarding economic growth, the Bank expects the negative impact of lower oil prices to appear in the first half of 2015 before the economy recovers in the second half of the year. Overall, the Bank judges risks to its inflation outlook as balanced and considers the current degree of monetary policy stimulus appropriate.

Stable oil prices and core inflation still trending above the Bank's 2 per cent target seems to have persuaded policymakers that the "insurance" purchased with January's surprise interest rate cut is enough for now. That said, the ultimate impact of lower oil prices has yet to be fully realized and we expect monetary policy to be highly data dependent in coming months. If the Canadian economy experiences significant labour weakness or core inflation starts to trend lower, the Bank may opt to reduce rates at its next meeting in April or possibly early in summer.

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Canadian Economic Growth (Q4)

The Canadian economy grew 2.4 per cent in the fourth quarter of 2014, led by growth in consumer spending and inventory accumulation. Both exports and business investment, two key pillars of the Bank of Canada's hoped for rotation of away from consumption led growth, declined. For all of 2014, Canadian economic growth registered 2.5 per cent, following just 2 per cent growth in 2013.

We expect growth will decelerate slightly in 2015 to about 2.2 per cent, with the first half of the year seeing sub-2 per cent growth, as low oil prices drag investment and employment lower in oil and gas producing provinces.  That outlook includes a further reduction of the Bank of Canada's overnight rate to 0.5 per cent occurring either at the Bank's April meeting or later in the summer.  However, better than anticipated GDP or employment growth and firmer than expected core inflation could keep the Bank from moving on rates any further this year. 

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Strong Growth Expected for Commercial Real Estate Sector in 2015

The BCREA Commercial Leading Indicator (CLI) rose 0.8 index points to 119.8, the fourth consecutive quarterly increase. The continued advance in the CLI trend points to optimism surrounding the economic environment underlying the commercial real estate market.

“Rising consumer confidence combined with a lower value of the loonie and a strengthening US economy helped to push the economic activity component of the CLI higher in the fourth quarter,” said BCREA Economist Brendon Ogmundson. “A stronger provincial economy in 2015 will support increased commercial real estate activity this year.”

The rising trend in the CLI generally points to growth in investment, leasing and other commercial real estate activity two to four quarters ahead. Therefore, the positive increase in the trend component of the CLI for the fourth quarter of 2014 signals positive growth for much of 2015.

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Consumer Price Index February 2015

The Consumer Price Index (CPI)inched higher in January as a result of lower fuel costs. Over the past twelve months the CPI increased just 1 per cent. The Core CPI, which excludes fuel, food and other volatile components, increased 2.4 per cent over the same period. While core inflation was slightly above the Bank of Canada (BoC) target of 2 per cent, inflationary pressures in Canada appear modest at best. In our opinion, the BoC will likely stay in a neutral position regarding interest rates and not change its trend-setting rate at its March 4 announcement.  

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