9 Aug

Canadian Unemployment Rate in July Falls to 6.3 percent–Lowest in Nearly Eight Years

General

Posted by: John Dunford

Canada’s red-hot jobs market took a breather in July, posting employment gains of 10,900, up just 0.1 percent following much stronger job gains since late last year. As the labour force participation rate edged downward, the jobless rate fell 0.2 percentage points to 6.3 percent, its best reading in almost nine years. Canada’s economy remains strong, causing the Bank of Canada to raise interest rates last month for the first time in seven years and we believe that another rate hike is likely later this year despite still muted inflation. According to Bloomberg News,”traders were pricing in 64 percent odds of a Bank of Canada interest rate increase in October” following the release of this morning’s employment report, “versus 60 percent yesterday”.

In recent weeks, the Canadian dollar has risen sharply and borrowing rates have increased significantly. Canada’s economy is now the strongest in the G7, posting growth of 3.7 percent in the first quarter, likely followed by a whopping 4 percent gain in the second quarter. Consumer spending, business investment, exports and residential construction all contributed to the strength in the first half.

With the Canadian dollar near 80 cents U.S. and a slowdown in home resales–particularly in the Greater Toronto Area–growth in the second half is likely to come in at about 2-1/4 percent, still above the potential long-term pace estimated by the Bank of Canada at about 1-3/4 percent. Indeed, in a separate release today, the government reported that exports fell 4.3 percent in June due mainly to lower exports of unwrought gold and energy products. In consequence, Canada’s merchandise trade balance posted a $3.6 billion deficit in June, a sharp increase from May.

Ontario and Manitoba enjoyed hiring gains, while employment declined in Alberta, Newfoundland and Labrador as well as in Prince Edward Island (see Table below). Nevertheless, Alberta’s job market is still in recovery mode as payrolls in the province increased by 35,000 (+1.5 percent) compared to year-earlier levels, led by gains in natural resources.

July saw continued job strength in the retail and wholesale trade sectors as well as in information, culture and recreation. Manufacturing gains were notable as well.

Hours worked increased sharply in the past year, a reliable indicator of rising incomes, as employment shifted from part-time to full-time jobs. However, wage rates continue to rise only modestly, up 1.3 percent in July, unchanged from the prior month, but still better than the record-low gain of 0.7 percent in April.

31 Jul

Too Much Tightening?

General

Posted by: John Dunford

One big bank is sounding the alarm about recent and future mortgage policies.

“Let’s be clear. A soft landing that eases Ontario and BC house prices and mortgage growth would be welcome news for macroeconomic stability,” CIBC Chief Economist Avery Shenfeld said in his latest report. “But nobody can be too sure of what kind of landing we’re now in. Better to carefully phase in further changes in rates and regulatory policy to avoid piling on to a market that might be facing a less-than-soft retreat.”

It seems policymakers are embracing a more aggressive approach when it comes to mortgage and rate policies, however.

The Bank of Canada recently increased its benchmark overnight rate to ¾% and is expected to implement an additional rate hike later this year.

OSFI, meanwhile, is planning to tweak lending rules in such a way to make qualifying more difficult for many Canadians.

Both of these followed aggressive mortgage changes last year both nationally and provincially – in both Ontario and Vancouver.

“Let’s count the ways, for example, that various forces are working to contain what had been an overly heated housing market. Rising mortgage rates don’t look all that threatening just yet,” Shenfield said. “But OSFI is discussing a step that will bring uninsured buyers (those with properties over $1 million, or with 20% or more equity) into a much tighter regime that would effectively tack on 2% to the rate used to calculate how much debt they can get.

“Smaller mortgages reduce all buyers’ ability to bid up prices. Markets are still digesting Ontario government moves aimed at foreign buyers. And even a hint that demand could be softening has had a psychological effect in calming the bidding frenzy in that province.”

Shenfield suggests the combination of government policy and the market’s response could result in a piling on of stress on the economy.

“That’s a question that needs looking at in Canada, where monetary policy, the foreign exchange market’s response, and regulatory changes could produce too much of a slowing in areas of the economy that had been driving growth,” he said.

25 Jul

Experts Split on Interest Rate Rises

General

Posted by: John Dunford

Further interest rate rises may or may not be on the cards in 2017 with no expert consensus as yet.

Following the increase on July 12, Bank of Canada governor Stephen Poloz said that further rates would depend on data. The latest retail figures, released by StatsCan last week along with rising inflation have some calling for another rate rise before 2017 ends.

TD Securities’ Fred Demers told Bloomberg that an interest rate hike in October “is a very likely scenario,”

while Benjamin Reitzes of BMO Capital Markets added: “October is still a very reasonable call for the bank.”

CIBC economist Avery Shenfeld is less certain due to the current rise of the loonie, even without support from commodities. He says that the BoC should make clear its policy if the Canadian dollar keeps rising.

“Better for the Bank of Canada to send a signal to markets soon that rate hikes could be deferred if the Canadian dollar extends its run,” Shenfeld wrote in a new report. He added that Governor Poloz could give that assurance following September’s expected hold-steady on interest rates.

Shenfeld also expresses concern about the impact of policy on the housing market, which is already slowing.

“A soft landing that eases Ontario and BC house prices and mortgage growth would be welcome news for macroeconomic stability,” Shefeld says. “But nobody can be too sure of what kind of landing we’re now in.

Better to carefully phase in further changes in rates and regulatory policy to avoid piling on to a market that might be facing a less-than-soft retreat.”

13 Jul

Bank of Canada Turns the Tide

General

Posted by: John Dunford

For the first time in seven years, the Bank of Canada announced today that it was hiking its key overnight rate by a quarter percentage point (25 basis points) bringing it to 0.75 percent as the economy has staged a broadly based economic expansion this year. In a break from tradition, the Bank has taken this action even though inflation remains well below its target rate of 2 percent. Indeed, inflation has hit its lowest level since 1999. The consumer price index (CPI), released in late June, rose only 1.3 percent in May from a year ago, down from an annual pace of 1.6 percent in April. Both Governor Poloz and Senior Deputy Governor Wilkins have emphasized that the Bank must begin to hike rates pre-emptively due to the lagged effect of monetary tightening.

Measures of annual core inflation, a key indicator tracked by the Bank of Canada, which excludes volatile components such as food and energy, fell to its lowest in almost two decades. The average of the central bank’s three core measures declined to 1.3 percent, its lowest level since March 1999. The Bank has recently played down sluggish inflation numbers, suggesting they reflect the lagged effects of past excess capacity. Incoming inflation figures have been well below the Bank’s forecasts and will likely remain low for some time as oil prices are wobbling downward and wage inflation is a mere 1.3 percent–just keeping up with core inflation.

Last Friday’s continued strong employment report for June cinched the rate-hike. Employment rose a hefty 45,300, lifting the 12-month gain to a whopping 350,000 and trimming the jobless rate to match the cycle low of 6.5%. What’s more, total hours worked surged in the second quarter at the fastest rate since 2003. GDP climbed an impressive 3.3% year-over-year in April, while record levels of exports and imports suggest activity stayed on track in May, and further record highs for auto sales suggest consumers kept right on spending in June. Spending strength is yet another sign that after two years of lagging behind, Canada’s overall growth rate has come bouncing back in the past year to surpass the U.S. pace. The Bank now expects the output gap to close around year end.

Markets have been expecting this move for some time, as monetary policymakers have publicly stated that the 2015 interest-rate cuts appear to have done their job. Governor Stephen Poloz has said that the Canadian economy enjoyed “surprisingly” strong growth in the first three months of this year and that he expects the growth pace to remain above potential (estimated at 1-3/4 percent), setting the stage for this rate hike. In response, Canadian bond yields have moved higher, the Canadian dollar has surged anew, and the big Canadian banks raised mortgage rates by roughly 20 basis points last week in anticipation of this move. The 5-year Government of Canada bond yield has surged nearly 50 basis points in the past month. Indeed, 10-year government yields are up to roughly 1.9 percent, their highest yield in more than two years. The Canadian dollar surged to above 77.5 cents, the strongest level in 10 months, up more than 6 percent from the lows in early May. Stalling oil prices may reverse some of the loonie’s recent gain.

The big banks will also raise their prime rates, driving up the cost of variable rate mortgages, other loans and lines of credit tied to the benchmark rate. While the banks shaved their response to the interest rate cuts to less than the 25 basis points decline when monetary policy was easing, it is likely now that banks will adjust lending rates to close to the full 25 basis point increase. This asymmetric response is consistent with the desire of regulators to slow the growth in household debt.

Housing is one crucial component of the Canadian economy, and it has slowed meaningfully at the national level, in line with the central bank’s expectations. Prices and sales have declined in the Greater Toronto Area and surrounding municipalities since the Ontario Fair Housing Plan announcement in late April. However, housing activity has gained momentum in Montreal and Ottawa, while Alberta stabilizes and Vancouver posted a modest bounceback from the swoon following its August 2016 imposition of a foreign buyers’ tax. The underlying strength in many housing markets is the reason why policymakers are proposing new rules to tighten mortgage lending. This time OSFI–the regulator of financial institutions–is proposing that banks stress test non-insured borrowers at two percentage points above the contract rate. This despite the fact that non-insured borrowers are putting at least 20 percent down on their home purchase. A small BoC rate hike would reinforce the multi-faceted steps to calm the broader housing market.

The Bank has repeatedly stated that “macroprudential and other policy measures have contributed to more sustainable debt profiles,” even though household debt-to-income levels have hit a record high (see chart).

Uncertainties, of course, persist–particularly on the trade side as NAFTA is renegotiated in fewer than 90 days. The U.S. has already imposed duties on softwood lumber, and President Trump’s rhetoric remains hostile, threatening U.S. import duties on steel and other products. These uncertainties notwithstanding, I expect another Bank of Canada rate hike in the fourth quarter. The Federal Reserve will also likely increase rates in Q4. Look for a slow crawl upward in interest rates from both central banks in 2018.

2 Jul

Canada’s GDP Grows for a Sixth Month, Adding to Rate-Hike Pressure

General

Posted by: John Dunford

Canada’s economy grew for a sixth consecutive month with gains in a majority of industries, underlining the central bank’s view a durable recovery from an oil shock is emerging.

Gross domestic product grew 0.2 percent in April, Statistics Canada said Friday from Ottawa, matching the median forecast in a Bloomberg survey of economists.

Highlights

  • Fourteen out of 20 sectors grew on the month, led by a 2.7 percent gain in mining and a 1 percent rise in transportation and warehousing
  •  The expansion over the last 12 months of 3.3 percent is the fastest since June 2014
  •  Canada’s booming housing market showed some signs of cooling in April, when Ontario introduced measures to constrain the Toronto market. Residential construction fell for the first timein six monthswith a 0.9 percent decline, and activity by agents and brokers fell 0.6 percent

Big Picture

Canada’s dollar and bond yields jumped this week on comments from Governor Stephen Poloz suggesting he favors raising his 0.5 percent interest rate, with investors betting that could come as early as the central bank’s July 12 meeting. Poloz and his deputies cited gains that are broadening to include more industries and regions, even those most hurt by the fall in crude prices to below $50 a barrel. A Bank of Canada survey of business confidence is due for release later Friday morning, which may further bolster the case for tightening.

Economist Reaction

Jimmy Jean, a strategist in the fixed-income group at Desjardins Capital Markets in Montreal, changed his forecast Friday morning to predict a rate increase in July. “Given the persistence of the messaging, the motives provided for the change in tone, the ongoing strength of the data and the market’s repricing, the logical culmination of recent developments is a decision to begin rolling back the 2015 cuts right away,” he wrote in a research note.

Doug Porter, Bank of Montreal chief economist: The GDP report “maintains a now lengthy run of Canadian data matching or topping expectations, and forecasts for 2017 growth just keep climbing. … There’s nothing here to dissuade the Bank of Canada from looking to start removing some of the stimulus, likely starting just next month.”

CIBC World Markets Chief Economist Avery Shenfeld: Canada’s economy is on pace for annualized growth of about 2.5 percent in the second quarter, “more than enough to justify the recent change in tone from the Bank of Canada.”

 

Other Details

  • Service-industry production increased 0.3 percent while goods production was flat, Statistics Canada said.
  •  Manufacturing dropped 0.9 percent in April, undoing a 1 percent gain the previous month.
  •  The energy industry showed mixed results, including a 0.8 percent setback in oil and gas extraction after a fire at an upgrader in Alberta in March. Support services for mining and energy companies jumped 11 percent.
  •  Retail trade grew 0.5 percent in April, as did the wholesaling industry.
16 May

Loonie, Bank Bonds Drop as Moody’s Downgrades Canada Lenders

General

Posted by: John Dunford

Canada’s dollar and bank bonds declined after Moody’s Investors Service downgraded the nation’s banks for the first time in more than four years, signaling that soaring household debt combined with runaway housing prices leave the lenders more vulnerable to losses.

The ratings firm lowered the long-term debt and deposit ratings one level on Toronto-Dominion Bank, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada and Royal Bank of Canada Wednesday. The move left TD with a long-term debt rating of Aa2, the third-highest level. Moody’s lowered the other five to A1, the fifth-highest. The outlook is still negative on all six lenders.

The yield on Royal Bank of Canada’s U.S. dollar bond due January 2026 added nine basis points to 3.92 percent on Thursday, the steepest increase in almost two months, while the rate on Toronto-Dominion Bank’s note due in September 2031 rose five basis points, according to data compiled by Bloomberg. An index of Canadian bank shares fell 0.8 percent.

“It’s never a good thing when there’s a wide-scale downgrade within a country,” said Andrew Torres, founding partner and chief investment officer at Toronto-based Lawrence Park Asset Management. “Even though you can’t ignore the move Moody’s made overnight, I don’t think it’s the sign of an impending banking crisis in Canada.”

Loonie Falls

The downgrade of the Canadian banks follows a recent run on deposits at alternative mortgage lender Home Capital Group Inc. that has sparked concern over a broader slowdown in the nation’s real estate market as Canadians are taking on higher levels of household debt. The firm’s struggles have taken a toll on Canada’s biggest financial institutions, which have seen stocks slide on concern about contagion.

The Canadian dollar weakened 0.3 percent to 1.3694 per U.S. dollar at 12:23 p.m. in Toronto, paring a decline of as much as 0.8 percent earlier in the day. The currency is down 1.9 percent this year, the worst performer among Group-of-10 peers.

The downgrade adds to other negative factors weighing on the loonie such as concerns over U.S. trade protectionism and lower oil prices, said Vassili Serebriakov, a New York-based foreign-exchange strategist at Credit Agricole SA. He expects the Canadian dollar to slip further to 1.40 per the greenback in the third quarter.

“We are not heading for a major housing bust I believe, but these concerns are not going away,” he said.

Untested Strength

In its statement, Moody’s pointed to ballooning private-sector debt that amounted to 185 percent of Canada’s gross domestic product at the end of last year. House prices have climbed despite efforts by policy makers to cool the market, it said Wednesday. Prices in Toronto and Vancouver have soared on the backs of strong economies, limited supply and foreign demand that’s sparking some speculative buying in the two markets. Toronto prices jumped 25 percent in April from the year earlier.

“Expanding levels of private-sector debt could weaken asset quality in the future,” David Beattie, a Moody’s senior vice president, said in the statement. “Continued growth in Canadian consumer debt and elevated housing prices leaves consumers, and Canadian banks, more vulnerable to downside risks facing the Canadian economy than in the past.”

Home prices in Toronto and the surrounding cities are gaining at a 30 percent annual pace, prompting provincial leaders to impose a foreign buyers tax and other measures last month to cool what they called dangerous speculation.

Canadian household debt climbed to a record relative to disposable income in the fourth quarter, another sign of strain from a long housing boom. Credit-market debt such as mortgages increased to 167.3 percent of after-tax income in the October-to-December period from 166.8 percent in the prior three months. Still, Canada’s consumer confidence is at the highest since at least 2009.

Bank Buffer

“There’s a lot of debt in the developed world overall, Canada is not a particular place where things have gone crazy and people are up to their ears in debt more than anywhere else,” said Steve Belisle, portfolio manager with Manulife Asset Management in Montreal, who oversees about C$3 billion including bank stocks. “Debt is a problem for the developed world globally, not for Canada specifically.”

Spokesmen for the six banks declined to comment on the Moody’s downgrade.

“We do note that the Canadian banks maintain strong buffers in terms of capital and liquidity,” Moody’s said in its statement Wednesday. “However, the resilience of household balance sheets, and consequently bank portfolios, to a serious economic downturn has not been tested at these levels of private sector indebtedness.”

Moody’s also cited high housing prices and consumer debt when it cut five of the banks in January of 2013. That decision cost Toronto-Dominion its Aaa grade.

Government Statement

“Canadians can continue to be confident in their banks, and in their financial sector which is sound and well capitalized, and has proven its resilience time and time again including the 2008 financial crisis,” Annie Donolo, a spokeswoman for Canada Finance Minister Bill Morneau, said in an emailed statement. “Canada’s big six banks have strong capital and liquidity, supported by their reliable profitability, and have consistently generated returns above the global average. Canada has a strong regulatory framework in place for oversight of federally regulated financial institutions.”

The downgrades aren’t likely to have a big impact on bond prices, according to RBC Capital Markets. Toronto-Dominion Bank’s widely traded March 2022 deposit note has a yield spread of about 75.9 basis points over government debt.

“The banks are 50 percent of the bond market. Do you think guys are going to wake up and sell them today?” Mark Wisniewski, a credit hedge-fund manager for Sprott Asset Management LP, said by phone from Toronto. “What are they going to buy?”

6 Mar

Bank Of Canada Holds Interest Rate, Warns Of ‘Significant Uncertainties’

General

Posted by: John Dunford

OTTAWA – The Bank of Canada is holding its trend-setting interest rate at 0.5 per cent but it’s keeping a watchful eye on “significant uncertainties” that it warns could alter the economy’s improving trajectory.

The central bank’s scheduled rate announcement Wednesday arrived as Canada tries to assess the direction of U.S. economic policy under President Donald Trump and the potential fallout from any changes he may bring.

The bank has said some U.S. proposals, which include tax cuts, a border tax and protectionist policies, would have “material consequences” for Canadian investment and exports.

In an unusually short statement Wednesday, the Bank of Canada used slightly stronger language when referring to U.S. uncertainties than it did in the news release that accompanied its last rate announcement on Jan. 18.

At that time, two days before Trump’s inauguration, the bank indicated that “uncertainty about the global outlook is undiminished, particularly with respect to policies in the United States.”

On Wednesday, the statement did not specifically mention the U.S. uncertainty.

“The bank’s governing council remains attentive to the impact of significant uncertainties weighing on the outlook,” the release said.

In explaining the decision by governor Stephen Poloz’s council to stick with the current interest rate, the bank said that improvements seen in recent data releases have been consistent with its projections.

The central bank also expects growth in the fourth quarter of 2016 _ as measured by real gross domestic product _ might come in slightly stronger than predicted because of recent consumption and housing data releases. Statistics Canada is scheduled to release those GDP figures Thursday.

On the downside, however, the bank said Canadian exports continue to face competitiveness challenges while the job market has seen weaker growth in wages and hours worked.

For inflation, the bank said it’s looking past January’s surprisingly robust headline figure of 2.1 per cent. It said the number was a result of a temporary jump caused by higher energy prices that were largely tied to the implementation of carbon-pricing policies in Ontario and Alberta.

The Bank of Canada was widely expected to leave its benchmark interest rate untouched Wednesday, particularly with so much uncertainty surrounding the policy direction of the country’s largest trading partner.

Analysts were hoping to learn more about the bank’s thinking when it comes to potential U.S. policy changes, but the brief statement offered few details.

The Bank of Canada has yet to factor in the full range of economic policies expected under Trump.

In January, the bank cautioned that its outlook only accounted for the possible effects of the expected U.S. fiscal boost.

On the positive side, it said at the time that fiscal expansion in the U.S. would be a positive for Canada through increased foreign demand. But it added that Trump’s vow to cut corporate taxes would threaten Canadian competitiveness.

Trump has also pushed for the renegotiation of the North American Free Trade Agreement, though he has said the changes to the deal would only involve “tweaking.”

The U.S. proposals have created significant concerns within Corporate Canada and for the federal government.

On Wednesday, Finance Minister Bill Morneau will meet his new U.S. counterpart, Treasury Secretary Steven Mnuchin, for the first time. Morneau and the federal government have been trying to figure out Trump’s plans and how they may affect Canada.

17 Feb

Big Bank Increasingly Bearish

General

Posted by: John Dunford

Well, this may be the first time in recent memory a big bank economist has used the feared B-word in relation to real estate.

Bubble.

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“Let’s drop the pretence. The Toronto housing market—and the many cities surrounding it—are in a housing bubble,” Doug Porter, chief economist for BMO Bank said in his latest report. “Everyone may have a slightly different definition of what a bubble is, but most can agree it’s when prices become dangerously detached from economic fundamentals and start rising strongly simply because people believe they will keep rising strongly, encouraging more buying.”

It gets worse.

Porter is comparing Toronto’s current real estate plight to the crash experienced in the ’80s.

“Prices in Greater Toronto are now up a fiery 22.6% from a year ago, the fastest increase since the late 1980s—a period pretty much everyone can agree was a true bubble—and a cool 21 percentage points faster than inflation and/or wage growth,” he said. “And, the ratio of sales to new listings was a towering 93.5 in the region last month adjusted for seasonality (and was above 100 in Hamilton, Kitchener and the Niagara Region).”

A normal sales to new listings range, according to Porter, is 40-60, with anything above considered a seller’s market.

Across Ontario, months of inventory has fallen below 1.8 when above five is considered the norm.

“The data simply reinforce an obvious message that has very much been in place for many months now, and by all accounts is still going strong as we speak—the market is far too hot for comfort,” Porter said.

As for Porter’s opponents, he shoots down their number argument – that there is a supply shortage contributing to the hot market.

“But we would remind that housing starts in Toronto and Vancouver have been chugging along at almost 70,000 units per year recently, an all-time high, while overall Canadian starts are above demographic demand at 200,000 units in the past year,” he said. “And, we are seeing near-20% price gains in Toronto condo prices, where supply constraints are not a major issue.”

So, are we currently in a housing bubble in Toronto?

The scary thing is that you never know until it pops.

“Toronto and any city that is remotely within commuting distance are overheating, and perhaps dangerously so,” Porter said.

7 Feb

Association Provides Government With Housing Recommendations

General

Posted by: John Dunford

The industry has provided its recommendations to the government committee that is studying the Canadian real estate market and the issues facing it.

The Canadian Mortgage Brokers Association sent a letter to the Standing Committee of Finance, advocating for changes that would lessen the burden on Canadians wanting to purchase homes.

“It goes without saying that people have to live somewhere: if they are not able to purchase housing, they must rent.  In doing so, they are no longer paying down a mortgage on their appreciating asset, but instead that of their landlord,” CMBA said in the letter, which was obtained by MortgageBrokerNews.ca. “However, most Federal Government policies, such as latest crop of federal mortgage rules, which are intended to promote economic stability by curbing consumer debt, only have only a singular, narrow focus on the economy.

“These policies fail to consider that housing affordability problems impact both lower and middle income households, renters, first time buyers, and even established home owners.”

Indeed, industry players have argued many of the recent mortgage rule changes have made it harder for first-time buyers to break into the market.
The association provided the government with nine recommendations, all aimed at helping Canadians more easily purchase a home.

They include;

  • Exempting fixed-rate five (or greater) mortgage borrowers from having to qualify at the Bank of Canada’s benchmark rateyear
  • Permitting amortizations for first-time buyers30 year
  • Allowing borrowers with a LTV of 80% or less to amortize up to 30 years
  • Exempting insured mortgage with amounts of $499,000 or less from having to qualify the BoC benchmark rateat
  • Modifying the benchmark rate to include the averages of all federally regulated lenders, not just the big banks
  • Finding ways for government to remove excessive red tape relating to housing development
  • Reducing high ratio insurance premiums so that they are revenue neutral
  • Having the government focus more on the impact of unsecured debt
  • Ensuring lenders of unsecured credit qualify borrowers on income and debt ratios and not just credit scores                                                                                                          
1 Feb

Mortgage Changes Have Hit First-Timers Genworth Chief Tells Lawmakers

General

Posted by: John Dunford

Recent changes to mortgage regulations have negatively impacted first-time buyers and there should be a pause on further measures, the CEO of Genworth said Monday.

Stuart Levings was appearing as a witness at the Standing Committee of the Finance Department as part of its study of the Canadian Real Estate Market and Home Ownership.

He said that the changes made to date “largely targeted aspiring first-time buyers, making it harder for them to gain a foothold in the housing market today.” This group, Mr Levings said, was not the problem and added that insured first-time buyers are the “most tightly regulated, rigorously underwritten borrowers in the market today.”

The Genworth chief said that the policy changes that targeted the strong markets of Vancouver and Toronto has also impacted others including Calgary which “was already under pressure and didn’t need any additional cooling.”

He also pointed out that the changes only affected a relatively small percentage of those in Vancouver and Toronto and therefore had little impact on rising prices. Mr Levings said that local measures may be more effective, citing the foreign buyers’ tax in Vancouver.

In conclusion, he called on the federal government to pause before making more changes; modify the stress test to better reflect rate expectations; scrap plans for a risk-sharing model; and work with all levels of government to study and address local housing issues.