It’s time for a cheat sheet on this week’s top stories.
canadian real estate
Canada sold by largest foreign investor in history
Canada’s stock market has been left out of the global stock boom. Investors have been unloading their holdings in Canadian stocks rather than buying everything in sight. Now we finally know who is selling: foreign investors. Traditionally, the country has been seen as a safe haven for foreign capital, offering a “flight to safety” that helps boost the local economy. Now they are shorting and withdrawing large amounts of capital. They’re not alone. Domestic investors are also moving their funds overseas as they see fewer domestic opportunities.
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Bank of Canada likely to cut interest rates before the US due to economic downturn
The Canadian and American economies are tightly integrated and tend to move together. As a result, monetary policy is similar, with rate cuts and rate hikes tending to occur in sync. That may no longer be the case as Canada’s heavily indebted households struggle to maintain trade with the country’s largest trading partner. As a result, at least one major bank believes the Bank of Canada (BoC) will be the first to cut rates before the U.S. central bank. However, traders are not entirely on board with the call, pegging the odds at 50-50 for a coin flip.
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Canada’s inflation rate has slowed and is on target, excluding mortgage rates.
If inflation slows further, Canada’s borrowing costs will fall. There’s only one problem he has. Inflation increases when interest costs are taken into account. Currently, mortgage interest rates are the main factor in the overall CPI, and excluding it would reduce it to the target of 2 points. The EU and US economies do not include mortgage rates in their calculations, helping to avoid the circular logic that Canada seems to have introduced on its own. Oops!
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Lawmakers demand investigation into rampant Canadian mortgage fraud at HSBC
A prominent investigative reporter uncovers widespread allegations of mortgage fraud at HSBC Canada. Now, Canadian lawmakers want to know why the government did not mention any of these issues during its review of the bank’s sale to RBC, the country’s largest financial institution. He is now calling for a thorough investigation into the matter and for RBC to set aside $100 million in funding to cover any resulting fines.
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Canada’s mortgage lending continues to slump, as credit card debt soars
Canadians may not be borrowing for their mortgages, but they still owe a lot of money. The annual growth rate of mortgage credit has fallen to its lowest level in 20 years. However, high-interest credit card debt begins to accumulate rapidly. In a country where shelter costs are consuming income much faster than wage growth, borrowing on credit cards may be the only short-term option to make ends meet. If so, this problem will likely get worse before it gets better.
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