This Week’s Top Stories: A Canadian Banks Warns of Foolproof Recession Sign & New Mortgage Rules

Time for your cheat sheet on this week’s top stories.

Canadian Real Estate

Canada’s Rising Unemployment Is A “Foolproof” Recession Signal: BMO

Canada’s latest employment data shows a “foolproof” recession signal, according to BMO. The rising unemployment rate was written off as an anomaly, due to the population boom. Economists at the bank suggest that’s a mistake, because major population booms have preceded recession multiple times. Rising unemployment has almost certainly been a strong indicator of a coming recession, and dismissing it as an anomaly is a mistake. 

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Canadian Mortgages Get New Guidelines After Mass Risks Materialize 

Canada’s consumer protection regulator has set out new guidelines for banks dealing with risky mortgages. The guideline directs federally regulated financial institutions to proactively identify stressed borrowers, and create a plan to assist them. Suggestions for assistance vary from waiving certain fees, to interest cost relief. While it’s being sold as a feel-good solution for households, it’s likely to be the biggest benefit to overleveraged investors.

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Canadian Real Estate Prices Lose Steam As Inventory Pops Higher

Canadian real estate prices moved higher, but the market is starting to show signs of fatigue. A benchmark composite, or typical, home climbed 0.8% (+$5,700) to reach $760,600 in June. It’s a substantial increase, but the smallest in months. New inventory is rising faster than sales, helping to relieve pressure on prices. As rates continue to rise, further downward pressure on growth is likely to continue. 

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Bank of Canada Sees Elevated Inflation Until 2025, More Uncertainty

Canada’s central bank left a hint showing they expect elevated inflation will linger. The Bank of Canada (BoC) Monetary Policy Report (MPR) shows CPI hitting their 2% target in 2025. That’s a year longer than previous reports had shown, with the central bank noting more uncertainty has appeared.

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