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Latest in Mortgage News: Financial experts see less risk of an imminent recession

A recent survey of financial experts reveals a shift in recession expectations, showing a decrease in the likelihood of an imminent economic downturn. However, there is growing uncertainty regarding the timing and degree of anticipated Bank of Canada interest rate cuts.

Canada recession outlook

A recent survey of financial experts reveals a shift in recession expectations, showing a decrease in the likelihood of an imminent economic downturn. However, there is growing uncertainty regarding the timing and degree of anticipated Bank of Canada interest rate cuts.

That’s according to the Bank of Canada’s latest quarterly Market Participants Survey, which consists of a questionnaire sent to 27 influential financial market participants.

Based on the median of results, the respondents believe there is a 35% chance of the economy being in recession in the next six months, down from 48% in the previous quarter. However, expectations that the country could be in recession in 6 to 12 months remained unchanged at 40%.

The experts also now see real GDP growth of 1% in 2024, up from 0.8% in the Q4 survey.

A greater number of respondents have also reeled in their Bank of Canada rate-cut expectations. The consensus is for the overnight target rate to fall from its current level of 5.00% to 4.00% by the end of 2024, unchanged from the previous survey. However, in Q4, a quarter of respondents—the 25th percentile—believed the benchmark rate would fall to 3.50%. As of Q1, the 25th percentile has risen to 4.00%.

The consensus is then for the overnight rate to fall to 3.00% by the end of 2025.

A greater number of experts also believe the balance of risks for the path of the policy rate is skewed to a higher path—44.% of respondents in Q1, up from 18.5% in Q4.



HomeEquity Bank President and CEO Steven Ranson to retire

HomeEquity Bank has announced that its President and CEO Steven Ranson will be retiring this summer after 27 years at the helm.

Ranson joined the bank in 1997, when it had just 36 employees and $100 million in mortgages under its administration. He’s overseen growth since then that has brought HomeEquity to over 300 employees and a mortgage portfolio of nearly $8 billion.

“We have achieved what I set out to achieve many years ago; to establish reverse mortgages and HomeEquity Bank as a respected choice for older Canadians,” Ranson said in a statement. “I feel confident that this is the right time to pass the torch to a new leader who will continue to build on our long track record of success.”

Katherine Dudtschak will be taking over the role as president and CEO as of July 1. Dudtschak was previously the Executive Vice-President of Regional Banking at RBC where she led a team of over 25,000 advisors. Prior to that, she was CEO of RBC’s Caribbean bank where she oversaw the operations in 19 countries.


Ourboro surpasses 100 co-invested homes

Toronto-based Ourboro, which provides access to homeownership through co-ownership, announced it has surpassed the milestone of 100 co-invested homes.

The company co-invests up to $250,000 towards a buyer’s down payment in exchange for a share in the future value of the home.

The company said it has seen a 220% increase in total homes purchased in the Greater Toronto Area and has received over 1,000 qualified applications in the past year.

Its total investments are nearing $15 million, which has helped buyers purchase over $80 million worth of real estate to date.


Mortgage arrears holding steady

Canada’s national arrears rate was unchanged in January, according to data from the Canadian Bankers Association.

The arrears rate, which tracks mortgages that are behind payments by three months or more, was 0.18%, unchanged from December. That works out to just 9,247 mortgages in arrears out of a total of over 5.03 million.

Despite trending upwards from a low of 0.14% in 2022, the national average arrears rate remains well below the highs seen during the pandemic, when it reached a peak of 0.27% in June 2020.

The rate of delinquencies is highest in Saskatchewan (0.60%; +0.01% month-over-month) and Alberta (0.33%; unchanged), and lowest in British Columbia (0.15%; +0.01%) and Ontario (0.13%; +0.01%).


1.3 million more homes needed by 2030, says PBO

Canada needs an additional 1.3 million homes by 2030 to close the housing gap, according to a report from The Parliamentary Budget Officer (PBO).

The report, which doesn’t take into consideration recent measures announced in the 2024 budget to bolster housing supply, found that a total of 3.1 million housing units will be needed between now and 2030.

Comparatively, the Canada Mortgage and Housing Corporation (CMHC) estimates that Canada’s housing supply gap—the number of additional homes needed on top of baseline projections—stands at 3.5 million homes by 2030. CIBC’s Ben Tal has said that number could even be as high as five million.

Despite its more conservative estimates, the PBO acknowledges the challenges in achieving the level of housing construction needed to return the vacany rate to its long-term historical average.

The housing gap “translates into 436,000 units completed annually, on average, over 2024 to 2030,” wrote Yves Giroux, PBO. “This pace of housing completion would represent an increase of 80% above the record level of completions in 2023, sustained for 7 years.”

Actual 2023 housing starts in centres of 10,000 population and over were down 7%, totalling 223,513 units recorded, down from 240,590 in 2022.

As part of its 2024 budget, the federal government released its Canada Housing Plan, which promises to boost new housing supply by a total of 3.87 million additional homes through 2031.

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Last modified: April 24, 2024

Steve Huebl is a graduate of Ryerson University's School of Journalism and has been with Canadian Mortgage Trends and reporting on the mortgage industry since 2009. His past work experience includes The Toronto Star, The Calgary Herald, the Sarnia Observer and Canadian Economic Press. Born and raised in Toronto, he now calls Montreal home.

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