Time for your cheat sheet on this week’s most important stories.
Canadian Real Estate
Canadians Are Deferring Mortgage Payments At 2x The Rate Of Americans
Canadians are taking advantage of mortgage payment deferrals at a much higher rate than Americans. Canadian banks have about 16% of mortgages on payment deferral, a steady climb since the end of March. American banks are reporting 7.8% of mortgages are on payment deferrals now, down from the peak of almost 9% in June. Both governments worked with banks to provide deferral programs, but the rate is twice as high in Canada. Canadian deferrals are also still rising, while the US is seeing it ease.
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Another Canadian Real Estate Headwind: International Students Told To Delay Plans
Canadian real estate markets benefit from a large flow of international students, but that’s on hold. Canada had 642,480 international students as of December 31, 2019. In the second quarter of Q2 2020, there were only 49,595 permits issued, down 40.54% from the year before. Due to pandemic related travel restrictions, the government has also told international students not to come to Canada.
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Canadian Home Equity Debt Is Finally Grinding To A Halt
Canadians have been borrowing a lot of home equity loans, helping to boost consumption. However, that’s changing during the pandemic. The balance of home equity reached $305.78 billion in May, down 0.64% from the month before. This is an increase of just 1.53% from the same month last year. On one hand, households are slowing the amount of debt they carry. This helps to lower risk exposure for households during a downturn. On the other hand, home equity fueled such a significant amount of spending, this will make it more difficult for the economy to bounce back.
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Canadian Investment In Residential Home Construction Drops Over 21%
Canadian investment in residential home construction has made a sharp drop during the pandemic. Investment came in at $7.53 billion in May, down 21.4% from the same month last year. This is the lowest number for the month of April in at least 10 years – as long as Stat Can has been tracking it. With demand delayed on several fronts, any bumps to this number are likely to be temporary.
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Teranet-National Bank: Canadian Real Estate Prices See Slowest June In 17 Years
A big six bank and Canada’s largest land registry operator are seeing the beginning of a slowdown. National Bank of Canada noted home prices increased 0.69% in June, but when seasonally adjusted are 0.1% lower. This is the first decline on a seasonally adjusted basis in 11 months. The unadjusted number is half the average increase for the months of June, and the smallest increase in 17 months.
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