Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Banks See Mortgage Delinquencies Hit 2015 Recession Levels
Canadian banks rarely see mortgage delinquencies surge, but they are now. The CBA national arrears rate climbed to 0.27% in January, the highest level since 2017. The banks held 13,422 mortgages in arrears (+20.8% y/y), the most since the 2015 oil recession. As the market faces the longest contraction for total mortgages on record, the impact of each delinquency is amplified.
Canadian Gas Prices See Record Surge, Inflation To Follow: BMO
Canadian gas prices surged 21% in March, the largest growth on record—and that’s bad news for inflation. In a note to investors, BMO Capital Markets warned gas prices will add 0.7 percentage points (ppts) to the Consumer Price Index (CPI). That’s in addition to ending the energy base effect in April, which the Bank of Canada expects to add another 0.7 ppts.
Ontario Mortgage Arrears Rate Tops Canadian Average, A Rare Warning
Ontario mortgage arrears posted an ominous sign, surpassing the national average. Canadian banks reported the province’s arrears rate hit 0.29% in January, 5x the record lows in 2022. The rate is now 2 basis points higher than the national average, an inversion that’s only happened twice before: ahead of the financial crisis, and at the start of the 1990s real estate correction. This event suggests things may get worse before they get better.
Canadian GDP Grew, Mostly An Illusion Due To Inflation Suppression
Canadian real GDP grew 0.1% in January, but there may be a good reason why many people aren’t feeling it. An unusually large number of factors temporarily suppressing CPI trickled into the GDP deflator. As a result, GDP’s razor-thin growth only exists due to these suppressing factors. Just the way mobile phones are measured can account for the entire growth.
Vancouver Real Estate
Vancouver Real Estate Prices Rise As Inventory Hits 13-Year High
Greater Vancouver real estate prices climbed 0.4% in March, the first monthly growth seen in a year. That may sound encouraging, but the rest of the data was not. Existing home sales slipped 2.8% lower than last year, falling 32% below the 10-year average. Meanwhile, inventory hit a 13-year high with 14,774 active listings, the most for the month since 2013. A minor bump in price feels more like noise in the face of falling sales and climbing inventory.
