Daily Market Update

Alberta has far higher household debt than the rest of Canada… Mortgage insurers report lower level of defaults… Academic analysis of the likelihood of a correction… And US lawmakers look to change controversial ‘two door’ rule.

Daily Market Update
Alberta has highest average household debt
The average Alberta household carries around $50,000 more debt than the Canadian average. A report by BMO shows a rise of debt in the province from an average of $89,026 last year to $124,838. This is far in excess of the national average, which has seen only a modest increase from $72,045 to $76,140. A boom in the economy in the province has prompted more people to take on mortgages; up from 44 per cent last year to 53 per cent now, and as people feel more prosperous and secure they have taken on larger mortgages. The percentage of Albertans with credit card debt has fallen though, from 61 per cent to 50 per cent. Read the full story.
Private mortgage insurers are optimistic about the market
Two of Canada’s largest private mortgage insurance firms are sounding positive notes about the state of the market. Genworth and Home Capital Group have both seen stability in the market; Genworth has reported the lowest level of loan losses since 2009 at 12 per cent, although they predict a final figure for the year to be in the region of 15-25 per cent. The general picture from the insurers is that while household debt has increased, it is generally affordable currently, with defaults less common. Read the full story.
Are we really heading for a correction?
It’s the question on so many people’s lips, and experts’ opinions differ. Murtaza Haider is Associate Professor of Management at Ryerson University and he says that although a correction may be due it would not be on the scale seen in the US or Ireland. He notes that the correction would affect a small number but relatively large markets; Toronto, Calgary and Vancouver, being the areas that have seen the largest growth. Hr Haider also compares the long term trend in Ireland and Canada, which shows that Ireland had sudden spike in house prices around 2006, whereas Canada’s market has seen a steadier rise over the last fifty years. The real concern he says, is that Canadian’s may have over borrowed and to what extent this borrowing is mortgage debt. Read the full story.
US lawmakers to stop the ‘two door rule’
Developers whose buildings include affordable housing are to be stopped from having separate entrances for those who pay market value on luxury condos and those who are living in the social housing. A loophole in New York’s housing legislation means that low income residents are also sometimes excluded from the building’s amenities. As developers receive tax benefits for including affordable housing there is a financial as well as moral objection to the practice. Civil rights campaigners say that the ‘two-door’ or ‘poor-door’ developments discriminate against minorities who often make up large percentages of those who qualify for the affordable units. Read the full story.