Lower rates dominate most Canadians’ mortgage shopping preferences

Credit & Debt DAZADA DIAMOND 31 Jan

Lower rates dominate most Canadians’ mortgage shopping preferences

Lower rates dominate most CanadiansA majority of Canadians looking for mortgages would opt for non-traditional mortgage channels – for instance, through online – if it means that they would get lower rates, according to a new survey.

In its latest study, Rates.ca found that while 72% of Canadian mortgage shoppers admitted that they still get mortgages in person, nearly one in five respondents would prefer to get mortgages “without talking to people on the phone or in person.”

Another 45% would consider getting mortgages online if it would lead to lower rates, with savings of at least 0.05% to 0.20%.

“Just as we saw with online stock brokerages a few decades ago, a growing segment of borrowers is willing to make their own mortgage decisions online without a banker’s advice,” Rates.ca mortgage editor Rob McLister stated in the survey’s news release.

Fully 75% of respondents consider the best possible rate the most important consideration in getting mortgages, with 47% saying that this factor is their “number one mortgage goal.” Moreover, only 23% said that the lender’s brand name is a factor when considering great rates.

This trend is fuelled by a nagging fear among many Canadians about getting a mortgage in the first place, if the results of a recent analysis by Zillow and Ipsos are any indication.

As much as 92% of those polled by the survey said that they expect at least one barrier to getting their desired homes.

The greatest worries stem from the mortgage process, with 56% saying that qualifying for a mortgage is this barrier. The figure goes up to 64% for those who recently purchased a residential property, stemming from possible changes to mortgage regulations and how said shifts will affect their eventual payments.

  • https://www.mortgagebrokernews.ca/news/alternative-lending/lower-rates-dominate-most-canadians-mortgage-shopping-preferences-325236.aspx?utm_source=GA&utm_medium=20200121&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Are Changes to the Stress Test Qualifying Rate Coming?

Banks & Bank of Canada DAZADA DIAMOND 30 Jan

Are Changes to the Stress Test Qualifying Rate Coming?

The use of Canada’s benchmark rate in administering the mortgage stress test is currently under review, according to an official with the Office of the Superintendent of Financial Institutions (OSFI).

In a speech to the C.D. Howe Institute, Ben Gully Assistant Superintendent, Regulation Sector, said the use of the benchmark qualifying rate as the floor of Guideline B-20 stress testing for uninsured mortgages is “not playing the role that we intended.”

Uninsured mortgages (those with less than 20% down payment) are currently stress-tested on the higher of the borrower’s contract rate plus 200 bps, or the benchmark rate, which is currently 5.19%.

“For many years, our data showed the difference between the benchmark rate and the average contract rate was about 2%. This provided a healthy buffer,” Gully said. “However, the difference between the average contract rate and the benchmark has been widening more recently, suggesting that the benchmark is less responsive to market changes than when it was first proposed.”

Indeed, fixed mortgage rates have been on a downward trajectory since the beginning of 2019.

mortgage stress testWhat likely won’t be changing is OSFI’s use of the contract rate plus 200 basis points for stress testing uninsured mortgages. “This helps borrowers and lenders manage a sudden change in circumstances such as an income loss, increased interest rates, and/or additional expenses,” Gully said. “This will therefore remain a key part of OSFI’s guideline B-20.”

Gully added that “while we are aware of contrary opinions, “institutions, markets and borrowers have all come to see the value of a qualifying rate even if there remains debate about the appropriate level of responsiveness.”

“It’s an interesting acknowledgement [by OSFI] that the BoC posted rate is now possibly too stringent a test given our market rates,” Paul Taylor, President and CEO of Mortgage Professionals Canada told CMT. “This is very encouraging for the marketplace and own lobby efforts.”

In his speech, Gully also provided OSFI’s take on other aspects of the mortgage industry.

On renewals…

For mortgage renewals, existing lenders don’t typically re-underwrite the loan if the borrower is current with their payments. “OSFI sees this as a reasonable practice…” Gully said. “However, we do expect lenders to update their risk analysis throughout the life of the loan.”

“We will continue to look at this issue closely through regular reporting on rates for new originations and renewals,” he added. “If we see outliers, then we will follow up directly with lenders to understand why this is happening and what they are doing about it.”


OSFI recognizes that combined loan products, such as HELOCs, “can make adding more risk easy for borrowers,” Gully said, adding that, “OSFI is concerned that some lenders may be taking on more risk than they bargained for with these open-ended commitments.”

The problem, he noted, is that loan products such as HELOCs can conceal increasing debt loads while payments remain the same.

“This can make assessing credit quality more difficult for lenders,” he said. “We are working with the Bank of Canada to collect data to assess the potential vulnerabilities of these products as well as the larger market and economic issues.”

  • https://www.canadianmortgagetrends.com/2020/01/are-changes-to-the-stress-test-qualifying-rate-coming/

Financial anxiety is apparent across all levels of Canadian society

Credit & Debt DAZADA DIAMOND 29 Jan

Financial anxiety is apparent across all levels of Canadian society

Financial anxiety is apparent across all levels of Canadian societyIn Canada, social class and demographics do not correlate with financial stress, according to new data from the Canadian Payroll Association.

The new “Learning about Financial Well-Being in Canada” study found that around 50% of those polled who have households incomes lower than $50,000 were financially stressed. In the same vein, 20% of those with household incomes of at least $150,000 reported that they still wrestle with financial anxiety.

“Despite what may seem obvious or logical, how much one earns does not necessarily correlate to financial wellness,” the CPA stated in its news release of the study.

“Similarly, preconceptions about millennials struggling to make their way in the world and feeling financial stress as a consequence proved to be inaccurate. Fifty per cent of those who are financially stressed are over the age of 40 — 25% of whom have reached the half-century mark.”

This level of cautiousness makes sense when considering that strong growth in insolvency levels will likely persist in 2020, according to the Canadian Association of Insolvency and Restructuring Professionals.

Figures from the Office of the Superintendent of Bankruptcy showed that in the year ending November 2019, the number of Canadians that fell into insolvency grew by 8.9% annually, for a total of 135,983 individuals.

CAIRP warned that the OSB data is painting a dim picture of the months ahead, considering that such trends feed upon themselves in a vicious cycle.

“The OSB stats show just the tip of the iceberg when it comes to the number of people struggling with debt in the country,” CAIRP executive board member André Bolduc stated. “Most people wait until they have reached their breaking point before seeking help. By that point, it’s much harder to dig your way out.”

  • https://www.mortgagebrokernews.ca/news/financial-anxiety-is-apparent-across-all-levels-of-canadian-society-325234.aspx?utm_source=GA&utm_medium=20200121&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Condo buyers facing rising costs, challenging affordability

Real Estate DAZADA DIAMOND 28 Jan

Condo buyers facing rising costs, challenging affordability

Condo buyers facing rising costs, challenging affordabilityA 26-storey condominium in Abbotsford, BC has been rocked by astronomical increases to its insurance premiums—a 780% increase from its rates last year.

BFL, which insures the aforementioned Mahogany Tower, raised the property’s rates from $66,000 in 2019 to $588,000 in 2020.

Mike Pauls, president of the building’s strata council, said that the increase will affect condo owners in the form of a one-time tax of $3,000 per unit. This does not include the additional monthly costs of $600. The insurer explained that the increase was due to fewer insurance entrepreneurs willing to share the risk of insuring the high-rise building, which is valued at $79 million. The insurer has since offered a lower premium of $241,000—but with reduced coverage.

Condo insurance prices all over Canada are experiencing significant leaps in rates thanks to severe weather events in recent years. Industry stakeholders and experts cautioned that if this issue persists, the costs may soon be unsustainable.

As single family home prices continue to rise in much of the country, condos have stepped up as the more affordable option, and that demand shows no sign of slowing anytime soon. Affordability has always been an issue for homebuyers, but investors are also becoming concerned as to how this will impact their bottom line. Pauline Tonkin, mortgage advisor with DLC’s Blue Tree Mortgage in Vancouver, has been contacted by both buyers and investors regarding the issue.

“I definitely see that it is going to be an issue,” she said. “In conjunction with the mortgage rule changes and rates, there are so many factors that we have to review for clients to make it affordable, and strata fees are a number that’s included in the debt servicing ratio. So if that goes up, it automatically reduces their ability to qualify. The more it goes up, the more it impacts them.”

Climate-related weather events are driving up insurance premiums for condominium owners across Canada. A condo complex in Ottawa found that its insurance premiums had climbed by 730% because of wind and fire damage. Some Alberta condos are facing insurance premiums of up to 700%. And Tony Gioventu, executive director of the Condominium Homeowners Association, said that condos in British Columbia are facing premium hikes up to 300%.

Not all condo corporations, however are seeing these huge increases. Rob de Pruis is the director of consumer and industry relations, Western region, for the Insurance Bureau of Canada and he says that claims frequency, repair and maintenance procedures and schedules, changes in coverage, and increase in replacement cost all play into evaluating costs.

“We do see a number of areas, especially in B.C., where the rebuild costs on these properties have been growing fairly significantly over the last couple of years,” he said. “Every property is assessed on its individual risk merits. Anything that the corporation can be doing and unit owners can be doing to reduce that risk and prevent claims is going to be very helpful over the long term.”

Strata unit owners are being advised that if their strata corporation is faced with a substantial increase in insurance rates, the cost will be reflected in the annual budget that determines annual strata fees, according to the Insurance Brokers Association of B.C. (IBABC).

If the deductible is dramatically increased to $100,000, for example, any claims under that new limit aren’t covered by insurance and, subject to bylaws, each owner is likely responsible for damages to their strata lot with the strata corporation responsible for common property.

“The result is many of the repair and replacement costs that have been covered by the policy of insurance taken out by the strata corporation will now be downloaded onto the affected owners in the event of a claim,” IBABC writes in a memo addressing the issue.

“Unfortunately, a large swath of the population is never going to be able to afford a detached house, so they’re going to be in a condo one way or another,” said Iain Macfadyen, a mortgage broker in Vancouver.

For those people who are right at their financial limit, it will bring their budget down, but Macfadyen said it’s also the feeling is that a strata fee is simply lost money, whereas people feel as if they’re getting more from a mortgage payment.

It’s unclear how much of an impact this will have on affordability and demand for buyers, investors, and even builders is unclear. Tonkin says that these increases don’t’ just affect buyer qualification now, but the affordability of the property in the future.

“We may not see too much of a hit right away, but it’s going to come, and I really think it’s about after they move in. [Buyers] need to really need to be aware of including that in their budget, and that’s where working with good mortgage professionals will go through that with them.”

Like other financial instruments such as interest rates, insurance rates are constantly being revised in reaction to market forces and emerging trends. This is the current scenario with commercial insurance in general and strata building insurance in particular, according to the IBABC.

  • https://www.mortgagebrokernews.ca/news/condo-buyers-facing-rising-costs-challenging-affordability-324823.aspx?utm_source=GA&utm_medium=20200113&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

New report envisions a path for longer-term mortgages

Latest News & Economy DAZADA DIAMOND 27 Jan

New report envisions a path for longer-term mortgages

New report envisions a path for longer-term mortgagesIncreasing the length of mortgage terms isn’t just about allowing consumers greater choice; it could have the added benefit of enhancing financial stability, writes Michael K. Feldman in the latest report from the C.D. Howe Institute, an independent not-for-profit research organization.

The idea of longer-term amortizations got a lot of attention in the lead-up to last fall’s federal election. PC Candidate Andrew Scheer was particularly vocal about his intent to raise amortizations for first-time homebuyers, along with various real estate boards. Lengthening mortgage terms would also have a big impact on consumers as well as the overall economy.

Feldman first waded into the conversation regarding longer-term mortgages in 2018. He has since been joined by Bank of Canada Governor Stephen Poloz, whose remarks to the Canadian Credit Union Association in 2019 noted three ways that more variety in mortgage durations would contribute to a safer financial system: if more borrowers had longer-term mortgages, they wouldn’t face the risk of having to renew at higher interest rates as often; homeowners would have the potential to build more equity within a single term, giving them more options upon renewal; and fewer borrowers would be renewing their mortgages in any given year.

Feldman adds that longer-term mortgages act as a protection in the event of systemic instability.

“A significant downturn in the real estate market could result in the insolvency of some mortgage lenders, particularly unregulated lenders. If this were to happen, borrowers from these lenders may not be able to renew their mortgages if their lenders were being liquidated and may not be able to refinance their mortgages due to the downturn in the real estate market,” Feldman writes. “This would lead to additional defaulted mortgages, which could further depress the real estate market. This risk decreases with more longer-term mortgages because there will be fewer renewals throughout the amortization term.”

There are, however, some regulatory obstacles that stand in the way of longer mortgage terms becoming commonplace in Canada, and one of those is demand.

The government would have to provide incentives to both borrowers and lenders to jump-start this demand, and/or make some regulatory changes. Feldman writes that these changes could include revising the stress-test for longer-term mortgages.

“Since the main purpose of the stress test is to predict the ability of borrowers to continue to service their mortgages if they must renew at maturity at a higher interest rate, it would be logical to loosen the stress test for borrowers willing to fix their rates for terms longer than five years. For example, if the stress test for a 10-year mortgage was set at the contract rate plus one percent (or zero percent) without any reference to a “Bank of Canada 10-year mortgage rate” (in recognition of the added refinancing flexibility after 10 years compared to five years), then borrowers could qualify for larger mortgages by opting for 10-year mortgages. This would encourage them to seek out longer-term mortgages and require lenders to offer competitive rates to retain market share.”

Other changes include amending the Interest Act to reduce the pricing premium that a lender would have to charge for its reinvestment risk on mortgages up to 10 years and reducing that risk in general by giving borrowers a short-term redemption period; increasing covered bond limits, and developing a private residential mortgage-backed securities market.

Limiting mortgages to five-year terms is thought to have grown out of a 19th-century statute that allowed the borrower to pay off the mortgage with a set penalty of no more than three months’ interest any time after five years following the initial date of the mortgage. The practice then evolved to where borrowers could renew their mortgage for another five years after the initial five-year period, with that renewal date becoming the new date of the mortgage. As long as the lender provided borrowers the opportunity to “redeem” the mortgage once every five years, they could prevent borrowers from prepaying the mortgage in full during the rest of the term without penalty.

As a result of this evolution, lenders can avoid reinvestment risks associated with prepayments by offering mortgages and renewals with terms no longer than five years, Feldman writes. From a borrower perspective, however, if there were increased desire for 10-year mortgages and increased competition from lenders to meet the demand, the cost of prepayment penalties would be reduced.

The majority of regulated financial institutions in Canada fund most of their uninsured residential mortgages by accepting deposits, including GICs that are insured by the CDIC. The CDIC, however, may only insure deposits having a term of five years or less. This limit posts a challenge for issuing longer-term mortgages from institutions that rely on these deposits.

This hurdle, however, may soon be removed. The federal government amended the CDIC Act to eliminate the five-year term limit on insured deposits, which comes into effect on April 3rd, 2020. This, Feldman believes, should make it easier for federally regulated financial institutions to fund longer-term mortgages—in theory.

“This will depend upon the retail demand for longer-term deposits,” he writes. “In a flat yield curve environment, as we have now, one would expect that most retail demand would be for shorter-term deposits; however, once the yield curve reverts to a more common rising curve, a demand for longer-term deposits may develop.”

Ultimately, Feldman writes, the current five-year term is “too well-entrenched to be overcome organically” and that the federal government will have to modify certain rules and create policies and programs in order to change the status quo.

  • https://www.mortgagebrokernews.ca/news/new-report-envisions-a-path-for-longerterm-mortgages-325212.aspx?utm_source=GA&utm_medium=20200121&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Is housing better now than ever before? Hindsight is 2020

Latest News & Economy DAZADA DIAMOND 24 Jan

Is housing better now than ever before? Hindsight is 2020

Is housing better now than ever before? Hindsight is 2020When it comes to discerning long-term trends, it can be hard to see the forest for the trees. Altus Group has just released a snapshot of the proverbial forest with its latest report: Hindsight is 2020: How the 2010s Stack Up in Canada’s Housing History.

One of the most notable finds was that lower mortgage rates did not improve homeownership affordability in the 2010s. Affordability, Altus Group finds, is a composite of three factors: house prices, interest rates, and income. Interest rates over the past decade are the lowest that they’ve been in generations—the average posted five-year mortgage rate was highest in the 1980s at 13.6%, and in the 2010s it was 5.1%. This potential benefit was offset, however, by higher home prices both in absolute terms and in relation to average family income.

The average home price in the 1960s was $136,000 in today’s dollar compared to $308,000 in the 2000s and $428,000 in the 2010s; as a result, annual mortgage payments in relationship to income has crept up. In the 1960s, the annual mortgage payment was 16% of the average family income, compared to 20% in the 2000s and 23% in the 2010s.

“Of course, other factors also would have come into play that differentiated access to homeownership in different decades, including the extent of rate discounting and changes in various mortgage-related policies,” the report reads.

Total housing starts in Canada during the 2010s is virtually identical to the previous decade. Housing starts reached 201,000 units on an average, tying for the second-best decade ever recorded, after the 1970s. The decade saw its lowest housing starts in 2013, with just under 188,000 units. The highest starts of the decade were recorded in 2017 at 220,000 units.

“In general, the 2010s were not a very volatile period for annual total housing starts at the Canada-wide level,” the report reads. “In fact, it was the least volatile of any of the past six decades for annual total housing starts.”

Although the overall number of housing starts didn’t change much from the first decade of the century to the next, the composition of those housing stars differed dramatically. In the 2000s, just under three-quarters of housing starts were single-family homes, including detached and semi-detached homes, rowhouses, and townhouses. In the 2010s that proportion had dropped to just over half. Instead, the 2010s ended up being the strongest decade ever for apartment starts, with around 92,000 apartment units being started and heavily focusing on condominium apartments. This is more than in the 1970s, which saw robust activity in purpose-built rental construction.

Population growth is fuelling much of Canada’s overall growth, and while a growing population typically indicates a need for more housing, total population growth alone is not an accurate predictor of housing starts. In fact, the number of housing starts has “fluctuated widely” since 1960.

Other factors, such as age of the population and changes in household formation growth factor into changing housing needs, and household formation growth in particular being influenced by overall economic conditions and housing affordability.

Housing starts were the highest in British Columbia, but Manitoba and Saskatchewan were also regions that saw starts that were both above the long-term average as well as being higher in the 2010s than they were in the 2000s.

  • https://www.mortgagebrokernews.ca/news/is-housing-better-now-than-ever-before-hindsight-is-2020-324884.aspx?utm_source=GA&utm_medium=20200114&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Which Canadian cities are people moving to right now?

Real Estate DAZADA DIAMOND 23 Jan

Which Canadian cities are people moving to right now?

Which Canadian cities are people moving to right now?A new report reveals the cities that are seeing the strongest immigration currently; and those that are seeing the most exits.

U-Haul’s migration trends report for 2019 shows that North Vancouver, BC, is the No.1 U-Haul Canadian Growth City, posting the largest net gain of one-way U-Haul trucks entering the city versus leaving it during the past calendar year.

Along with Vancouver, BC has a further three cities on the list: Salmon Arm, Merritt and Victoria.

“Every community in Metro Vancouver feels the pressures associated with regional growth,” stated Michelle Benson, U-Haul Company of Vancouver & Vancouver Island president. “Vancouver is booming, but many people are priced out of the city. That gives North Vancouver the opportunity to attract new residents.”

The number of one-way U-Haul truck rentals arriving in North Vancouver jumped almost 30% from 2018 levels with departures up almost 20%. Arrivals accounted for 55% of all one-way U-Haul traffic through North Vancouver in 2019.

“Vancouver is rated as one of the top cities to live in, so every nearby city is growing,” added Jennifer Anstett, U-Haul Area District Vice President. “North Vancouver is enjoying the trend of people moving toward the West Coast and all it has to offer.”

The rest of the top five are all in Ontario – Trenton, Saint Thomas, Brockville and North Bay – and the province boasts 19 of the top 25 cities.


* Ranking from Top 25 U-Haul Canadian Growth Cities of 2018 in parentheses, if applicable. 

  • https://www.mortgagebrokernews.ca/archived/which-canadian-cities-are-people-moving-to-right-now-324729.aspx?utm_source=GA&utm_medium=20200109&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Canadians are slowly growing their trust in alt lenders

Banks & Bank of Canada DAZADA DIAMOND 22 Jan

Canadians are slowly growing their trust in alt lenders

Canadians are slowly growing their trust in alt lendersCanada’s alternative lending industry has been growing steadily but there us still some way to go before it has trust levels that match traditional lenders.

A new study from online financing directory Smarter Loans shows that the industry continues to mature and approval from Canadian consumers in 2019 rose to 3.5 stars out of a possible 5, up from 3.2 stars in 2018.

Personal loan consumers prefer FinTech loan providers but according to the data, Canadians are still more likely to seek a mortgage or business loan from a traditional financial institution, such as a bank.

Almost 70% of respondents strongly agreed that they are well informed about lending options open to them and that online applications are fast and easy to complete. They also believe that borrowing from online lenders is safe and that their fees are transparent.

But 30% of consumers approached a traditional lender first, slightly more than in 2018. The same share of respondents said that they don’t feel the online borrowing experience felt entirely safe and want more transparency on fees and terms.

Most consumers consider between 3 and 9 lenders before making their decisions.

  • https://www.mortgagebrokernews.ca/archived/canadians-are-slowly-growing-their-trust-in-alt-lenders-324666.aspx?utm_source=GA&utm_medium=20200108&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Canadian CRE set to perform well overall in 2020

Real Estate DAZADA DIAMOND 21 Jan

Canadian CRE set to perform well overall in 2020

Canadian CRE set to perform well overall in 2020This year should be a good one for Canada’s commercial real estate sector with overall strong performance.

The 2020 Commercial Real Estate Sentiment Survey from Devencore and Transwestern Commercial Services surveyed brokers and analysts across 43 North American offices to gain insights for the Canadian and US markets in 2020.

South of the border, there is some concern regarding political outcomes, especially the presidential election; but overall expectation is positive driven by the e-commerce industry’s demand for industrial space.

There is also expectation that medical offices will help the office sector in the US to outperform the market.

Meanwhile, offices are expected to perform well in Canada with just over half of respondents predict leasing velocity and tenant prospects will pick up during 2020, with 86% expecting stronger rent growth over the year, especially in industries such as tech and the service sector.

“Similar to the U.S., Canadian commercial real estate markets also are expected to perform well in 2020, with mild concerns stemming from political and trade impacts as well as rising construction costs,” said Jean Laurin, President and CEO of Devencore. “Our economy is healthy and job growth is steady. With the exception of certain regions, major Canadian provinces like Ontario, British Columbia and Quebec all show robust conditions.”

For the industrial sector, Quebec and Ontario residents are renewing amid tight availability, while those in Alberta have more choice and are choosing quality. However, 64% of respondents expect overall industrial asking rents to rise due to limited availability in select markets.

Land costs are also expected to rise as the availability of prime sites continues to decrease. In this environment, the attraction for industrial investment by the capital markets remains high.

  • https://www.mortgagebrokernews.ca/archived/canadian-cre-set-to-perform-well-overall-in-2020-324832.aspx?utm_source=GA&utm_medium=20200113&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Experts say no recession this year but Canadians are not convinced

Latest News & Economy DAZADA DIAMOND 20 Jan

Experts say no recession this year but Canadians are not convinced

Experts say no recession this year but Canadians are not convincedMany economists are saying that a recession is unlikely in 2020 but try convincing the Canadian public that all is well.

A survey for Bloomberg News by Nanos Research has found that 55% of Canadians believe that a recession is at least somewhat likely this year with 33% saying it is unlikely and 12% unsure.

The experts say that 2020 should bring growth, albeit a modest 1.6%, about the same as 2019. The US economy is seen slowing to 1.8% growth from 2.3% in 2019.

But Canadian consumers are fearful of a downturn, especially those holding the largest debt burden; and with consumer spending a key driver of the economy, the concerns of the Canadian public could become a self-fulfilling prophecy.

“Canada’s expansion will be lackluster in 2020, with drags from debt-laden consumers, global trade risks and lingering business uncertainty,” said Andrew Husby, Bloomberg Economics. “The open economy is not immune to slower growth in the U.S. or broader global manufacturing malaise. A solid labor market and incremental policy stimulus should prevent a slowdown from turning into something worse.”

  • https://www.mortgagebrokernews.ca/archived/experts-say-no-recession-this-year-but-canadians-are-not-convinced-324727.aspx?utm_source=GA&utm_medium=20200109&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619