Dominion Lending Mortgage Rates

Canadian Monthly GDP Growth

The Canadian economy bounced back from a flood and labour unrest induced 0.5 per cent decline in June to grow 0.6 per cent in July. Growth was led by those industries hardest hit in the previous month, including construction, manufacturing and oil and gas. 

The rebound in July's economic growth provides some momentum for the economy in the third quarter. Our tracking estimate currently  puts third quarter Canadian economic growth at roughly 2 per cent. However, growth in the third and fourth quarter may be challenged by yet another manufactured debt crisis in the United States as well as the impact of higher long-term interest rates. While the latter have moderated significantly since the US Federal Reserve opted not to slow its quantitative easing, rates could rise quickly if US economic data exceeds expectations. Our forecast for the Canadian economy in 2013 remains at 1.6 per cent real GDP growth.  

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Mortgage Rates

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.

Canadian Retail Sales

Canadian retail sales rose 0.6 per cent in July on a monthly basis and were 3 per cent higher year-over-year. Retail sale were led by higher sales at gas stations, which grew 3.2 per cent, the largest increase among the 11 retail sub-sectors.  Given today's data release, third quarter GDP growth is likely tracking in a range close to 2 per cent.

Retail sales in BC posted dipped 0.1 per cent from June to July but were 2.1 per cent higher year-over-year. Following an anemic sub-2 per cent growth in 2012, BC retail sales have grown just 0.6 per cent year-to-date in 2013.  

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Teck plan includes Nelson area

By Greg Nesteroff - Nelson Star

A remediation plan by Teck Trail operation will extend as far north as Grohman Narrows even though there is no sign of smelter-related contamination in the area.

It’s part of the company’s response to an assessment that found vegetation risks can’t be ruled out on 7,900 hectares of the lower Columbia valley.

“It’s not that those 7,900 hectares are contaminated,” Nelson-based ecological consultant Marlene Machmer said. “It’s that based on looking at the vegetation one cannot say there were no effects from the smelter emissions.”

The potentially affected lands stretch from Genelle south to the US border and represent 18.5 per cent of the total area of interest, which extends as far north as Castlegar.

Under BC contaminated site regulations, Teck has to come up with a remediation plan for that area. But Machmer says the company wants to develop a more comprehensive plan that almost reaches Nelson.

“Teck’s rationale for looking at the larger area is that there are a number of opportunities within the broader landscape for restoration, enhancement, and conservation,” she said. “The expanded area is not necessarily being looked at for remediation, but for opportunities.”

The wider area allows the company more flexibility to offset impacts in certain locations by restoring others. However, Teck is still discussing with the Ministry of Environment what a potential offset is worth.

“If we develop a two-acre wetland in a location which is prime habitat, what would an offset be based on the value of that wetland? We don’t know yet,” company biologist Dave DeRosa said.

He cited the example of a new mine whose footprint is offset with enhanced or protected lands elsewhere. “That’s what this program is about. We want to bring what was potentially impacted back to a state where we’ve caused no net loss in the valley.”

Specific projects haven’t been named but may include improving soil conditions and habitat preservation.

DeRosa said no Teck contaminants are known to exist at Grohman Narrows or in the Nelson area, but the company has land holdings along the Kootenay River which might prove useful to the overall plan. Other private landowners will also likely be involved.

Machmer and DeRosa appeared before the Regional District of Central Kootenay board Thursday.

Mortgage Rates

Canadian Consumer Price Inflation

Canadian inflation registered 1.1 per cent in the twelve months to August, a slight deceleration from July's rate of 1.3 per cent. Core inflation, which strips out the most volatile components of the CPI, such as food and energy prices, increased 1.3 per cent in August. Consumer prices in BC actually fell 0.1 per cent in the 12 months to August largely as a result of the elimination of the HST. 

Given that inflation continues to run well below the Bank of Canada's 2 per cent target, we expect very little urgency from the Bank of Canada in raising interest rates. Our expectation remains that the Bank will begin withdrawing monetary stimulus in late 2014 or early 2015. 

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US Housing Starts

US housing starts rose close to 1 per cent in August to a seasonally adjusted annual rate (SAAR) of 891,000 units. Housing starts had reached a multi-year high of 1.02 million (SAAR) in March but have slowed to a less than 900,000 SAAR pace since then. Slower construction activity is likely a result of rising US mortgage rates and a slowdown in job-growth in recent months.

Although US new home construction has slowed of late, it is still well above the historical lows seen since the 2008 financial crisis. This has translated to a significant boost to the BC economy, as exports of BC wood products (representing about a fifth of all BC exports) have risen 30 per cent this year. 

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CREA Updates Resale Housing Forecast

CREA’s previous two forecasts anticipated that national sales activity in 2013 would improve following the slow start to the year, buoyed by the continuation of low interest rates amid a constructive economic backdrop and the return of buyers who deferred purchase decisions or were otherwise sidelined in the wake of tighter mortgage rules and lending guidelines implemented last year.

National sales have improved more quickly than anticipated. This likely reflects the transient influence of buyers with pre-approved financing making purchases before their lower pre-approved rates expire, particularly in some of Canada’s most active and expensive housing markets.

“Real estate markets can be very different depending on the region and community due to local factors,” said Laura Leyser, CREA President. “For that reason, buyers and sellers should talk to their REALTOR® about the housing market outlook where they live or might like to.”

CREA’s forecast for national sales activity has been rebalanced with a modest upward revision this year to reflect stronger than expected sales for the year-to-date. CREA’s previous forecast for national sales in 2014 remains little changed.

Sales are forecast to reach 449,900 units in 2013. This represents a decline of one per cent from last year and marks the sixth consecutive year for which activity will have held to within short reach of 450,000 units.

The upward revision to activity in British Columbia accounts for nearly half of the small upward revision to national activity this year. The forecast for sales across the Prairies has also been raised. British Columbia and Alberta are the only provinces where CREA annual sales are forecast to rise above levels last year.

In 2014, national activity is forecast to reach to 465,600 units, a rebound of 3.5 per cent, and in line with its 10-year-average. The forecast increase reflects a gradual strengthening of sales activity alongside further economic, job, and income growth combined with only slightly higher mortgage interest rates.

British Columbia is still forecast to post the strongest sales increase in 2014 (+6.7%) compared to a weak result in 2013. Most other provinces are forecast to post gains in the range between two and four per cent.

Average prices have also remained firmer than expected due to a rise in the share of national sales among larger and pricier markets compared to last year.

The national average home price is projected to rise by 3.6 per cent to $376,300 in 2013, with gains strongest and in the range between four and five per cent in Prairie provinces and around six per cent in Newfoundland and Labrador. Average price growth in British Columbia and Ontario is expected to come in just under the national increase, advance by less than one per cent in Quebec and New Brunswick, and recede by less than one per cent in Nova Scotia.

“The environment for home prices in Quebec, New Brunswick, and Nova Scotia will likely be shaped by ample inventory levels relative to sales,” said Gregory Klump, CREA’s Chief Economist. “The balance between the two indicates that buyers have an abundance of listings from which to choose in those provinces, which could keep pricing prospects in check until sales draw down inventories.”

The national average price is forecast to edge up a further 1.7 per cent in 2014 to $382,800. Alberta is forecast to see the biggest average price increase in 2014 (3.4 per cent), with gains in Saskatchewan, Manitoba, and Newfoundland and Labrador running just ahead of overall consumer price inflation. Average prices in Quebec and New Brunswick are expected to remain stable in 2014, with other provinces eking out gains ranging from 0.5 to 1.5 per cent.

 

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Canadian home sales up in August

According to statistics released today by The Canadian Real Estate Association (CREA), national home sales posted a month-over-month increase in August 2013.

Highlights:

·         National home sales rose 2.8% from July to August.

·         Actual (not seasonally adjusted) activity came in 11.1% above levels in August 2012.

·         The number of newly listed homes was up 1.8% from July to August.

·         The Canadian housing market has tightened but remains in balanced territory.

·         The national average sale price rose 8.1% on a year-over-year basis in August.

·         The MLS® Home Price Index (HPI) rose 2.9% year-over-year in August.

The number of home sales processed through the MLS® Systems of Canadian real estate Boards and Associations and other co-operative listing systems rose 2.8 per cent on a month-over-month basis in August 2013. The number of local markets where sales improved on a month-over-month basis ran roughly even with those where activity edged lower in August, with increases in major urban centres tipping the balance.

“All real estate is truly local, but sometimes sales trends can change similarly in a large number of markets at the same time due to factors that can affect all markets across Canada,” said CREA President Laura Leyser. “The recent hike in fixed mortgage rates is one example of an influence that affects all markets, but it’s just one of many things that shape housing market trends. Your local REALTOR® remains the best resource for understanding what’s driving the housing market where you live or might like to.”

Actual (not seasonally adjusted) activity came in 11.1 per cent ahead of levels reported in August 2012 to run roughly in line with its 10-year average. Sales were up on a year-over-year basis in about two-thirds of local markets, led by double-digit gains in Vancouver Island, Victoria, Greater Vancouver, the Fraser Valley, Calgary, Edmonton and Greater Toronto.

“Sales activity dropped sharply around this time last year in the wake of tightened mortgage rules and has improved since then, so a sizeable year-over-year increase this August was expected,” said Gregory Klump, CREA’s Chief Economist. “Buyers who put off purchase decisions or who were otherwise sidelined by tighter mortgage rules and lending guidelines implemented last year were anticipated to return to the housing market. That said, the upward trend and levels for activity in recent months has been steeper than expected, but that may not last.”

“Recent increases to fixed mortgage rates caused sales to be pulled forward as buyers with pre-approved financing at lower rates jumped into the market sooner than they might have otherwise,” Klump added. “That pool of homebuyers has largely evaporated so demand may soften over the fourth quarter. The outsized year-over-year gains may persist, however, due to weak sales toward the end of last year.”

Some 325,180 homes have traded hands across the country so far this year. That stands 2.9 per cent below levels recorded in the first eight months of 2012. Notwithstanding the recent upward trend in demand, CREA still expects the 2013 annual sales figure to come in below the 2012 figure.

The number of newly listed homes rose 1.8 per cent on a month-over-month basis in August. Slightly more than half of all local markets recorded gains. As with sales activity, that list includes many of Canada’s most active housing markets.

With sales activity having risen by slightly more than new listings in August, the national sales-to-new listings ratio edged up to 54.6 per cent compared to 54.1 per cent in July. While the national housing market has firmed slightly in recent months, it remains firmly rooted in balanced market territory where it has been since early 2010.

Based on a sales-to-new listings ratio of between 40 to 60 per cent, a record 73 per cent of all local markets were in balanced market territory in August.

The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity. There were 5.9 months of inventory at the national level at the end of August, down from 6.1 months one month earlier. As with the sales-to-new listings ratio, the current months of inventory measure marks a slightly firmer but still well balanced market.

The actual (not seasonally adjusted) national average price for homes sold in August 2013 was $378,369, an increase of 8.1 per cent from the same month last year. Year-over-year average price gains in recent months reflect outsized sales declines last year among some of Canada’s larger and more expensive markets as a proportion of national activity. For example, Greater Vancouver’s long-term (10 year) average proportion of national activity is 7.4 per cent on an unadjusted basis but it had fallen to 4.6 per cent in August 2012. Since then, it has rebounded and now stands at 6.3 per cent - its second-highest level in the past year.

If Greater Toronto and Greater Vancouver are removed from the national average price calculation, the year-over-year increase is cut from 8.1 per cent to 4.8 per cent. A better gauge of what’s going on with prices is the MLS® Home Price Index (MLS® HPI), which is not affected by changes in the mix of sales the way that average price is.

The Aggregate Composite MLS® HPI rose 2.92 per cent compared to August 2012, up from 2.66 per cent in July. That said, year-over-year growth in the price index has slowed since late 2011 and has ranged between two and three per cent for the past seven months.

Year-over-year price growth picked up among all property types tracked by the index. One-storey and two-storey single family homes saw year-over-year price gains of 3.45 per cent and 3.61 per cent respectively in August. Year-over-year price growth for townhouse/row and apartment units remains more modest, with these segments recording gains of 1.85 per cent and 1.25 per cent respectively in August.

Year-over-year price growth in the MLS® HPI was mixed across the markets tracked by the index.

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