Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canada has the highest mortgage default risk of any advanced economy. Mortgage debt surged across the world, as low rates stimulated housing markets in virtually every country. Now that rates are returning to normal, home prices are falling and default risk is rising. The IMF’s latest research found Canada to be at the highest risk, since it has a perfect storm of debt, frothy valuations, and floating rate mortgages.
The US banking liquidity crisis crushed global bond yields in March, as fears of a financial crisis materialized. Those fears are proving to be unfounded, and now bond yields are surging higher—taking mortgage rates with them, especially in Canada. Since home prices are so closely linked with financing, rising yields can prevent home price growth… or even cause them to, gasp, fall.
Canada’s reputation as an easy place for immigrants has attracted millions of temporary resident applications. To help with the influx, it’s turning to artificial intelligence to help issue visas and keep applications in order. Enlisting tech is a great way to offset a lack of human processing power. However, if applications are coming in at a pace humans can’t process, it’s going to be nearly impossible to build adequate shelter for the influx.
A new class action suit suggests TD, Canada’s second largest bank, has a money laundering problem. Earlier this year, TD called off the multi-billion dollar acquisition of an American bank, over an inability to secure a firm approval timeline. Now Robbins LLP, a shareholders rights firm, is suing the bank, claiming TD failed to disclose its weak anti-money laundering processes, knowing it presented a risk to the deal closing.