This Week’s Top Stories: Canada Spends 75% of Its Deficit To Prop Up Mortgages & Cuts Immigration

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

Canadian Real Estate

Canada Is Spending 75% of Its Forecast Deficit To Prop Up Mortgages

The Government of Canada (GoC) plans to spend a whopping $30 billion to support its mortgage market this year. March marked the second month of its buying spree, spending roughly 75% of the money they anticipate they’ll need to borrow. While this will help with cheaper mortgages in the short run, it’s a move typically reserved for a crisis. A country borrowing money to float its own capital markets is a dangerous signal to global capital, who is already taking their money out of the country.

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Canada To Cut Temporary Resident Target 20% After More Than Doubling

Canada will be setting its first-ever temporary resident cap. These residents include those on temporary work permits and student visas, and represent 2.5 million people—about 6.2% of the total population. It’s been the primary driver behind Canada’s explosive growth, as well as its home prices. Over the next 3 years that share will be limited to 5% of the population, potentially leading to a huge shift in how people assess the country for growth. 

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Canadian Credit Card Debt Climbed 3x The Rate of Mortgages

Canadians are still borrowing—just not mortgage credit. The latest data from the Bank of Canada (BoC) shows annual growth for mortgage credit advanced at the slowest pace since 2001. At the same time, non-mortgage credit was ratcheting higher with credit cards and HELOC debt seeing an acceleration. 

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Canada Ranks 11th In OECD For Life Satisfaction…But Its Young Adults Disagree

Most Canadians are satisfied with life in the country—as long as they’re seniors. The country’s national statistics agency released the results of its Life Satisfaction survey, based on an international survey standard. The national score ranked 11th across the OECD, a 38-member group of Western economies. Breaking it down by age gave a very different picture though, with the majority of young adults not ranking as satisfied. 

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Canadian Inflation Cools As Demand Drops, Much Weaker Than US

Canadian inflation is being tamed, primarily due to cell phone and internet bills. Seriously. This is according to the latest CPI report that showed household demand cooling. This has generally led to softening demand, and slowing price growth. It’s the exact opposite of the US, where inflation is ramping up as households still feel euphoric amidst a wealth boom. Analysts generally expect Canada’s central bank will need to diverge from the US and cut rates ahead of the US to bolster demand. However, there’s the inflationary risk of a weaker loonie, since virtually all commodities are priced in US dollars.

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Canadian Home Sales Pulled Back, But Market Close To Bottom: BMO

Canadian existing home sales pulled back but the market may be close to the bottom, according to BMO. Despite the pullback and more inventory, exuberant buyers helped prevent prices from falling. This was most likely driven by their belief that lower rates will stimulate demand and push home prices higher soon. While BMO doesn’t see rate cuts in the next few weeks, they also see enough pent up demand returning to the market at the first sign of cheaper financing. Whether it’s enough to absorb liquidating investors remains to be seen.

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