Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Bank Regulator To Limit Mortgage Leverage Ahead of Rate Cuts
Canada’s federal banking watchdog is taking aim at mortgage risks ahead of rate cuts. OSFI has notified banks they’ll be required to reel in the amount of leverage at the portfolio level. The portfolio will be required to have a maximum loan volume of 4.5x income of the borrowers. The regulator stated the goal isn’t to direct clientele, but to reel in risk ahead of future rate cuts. It’s believed the new requirements will be made official by year end or early next year.
Canada Is Falling Behind Due To Lack of Productivity Crisis: Bank of Canada
One of Canada’s top bankers wants the country to take note of its productivity crisis. Bank of Canada (BoC) Deputy Governor Carolyn Rogers warned the country’s productivity has been stagnant for years. She was even quick to point out this isn’t a new problem, but one that’s been occurring for years. Focus on non-productive investment (i.e. real estate debt, etc.) has diverted capital from productive areas, such as innovation and technology to scale output. As a consequence, the country is falling behind and becoming less competitive, a problem she urges policymakers to work on before it’s too late.
Canadian 2024 GDP Growth Already Matches 2023, Driven By Public Sector
Recession? What recession? The Canadian economy has seen real (inflation-adjusted) output surge at a breakneck speed in 2024. Real GDP growth in the first two months of 2024 has been equivalent to all 12 months of last year. Before you consider the recession canceled, it’s important to note the special circumstances that boosted the growth. Temporary worker suspensions delayed some output at the end of last year into the start of this year.
Canadian Boomer Retirement Crisis Or Karma? It’s Past Peak Either Way: BMO
The CEO of Blackrock warned the US is facing a retirement crisis, but the numbers may disagree. BMO Capital Markets suggested looking at Canada to see what’s in store, where the share of Baby Boomers in the workforce is even higher. The number of people retiring has been roughly consistent since 2016, and the share of the workforce peaked back in 2021. To put it bluntly, the demographic issue everyone is now scrambling to fix is already past its peak.
