Plunging sales, a surge in listings, and eroding prices that spooked these buyers may worsen if the Bank of Canada raises borrowing costs as expected this week.
The move would be the latest blow for a market that’s become unhinged in just three months, with the near-collapse of mortgage lender Home Capital Group Inc.
In such a scenario, residential mortgage debt growth would slow to as little as 2 per cent each year from 6.3 per cent now, Royal Bank of Canada analysts including Geoffrey Kwan and Darko Mihelic wrote in a July 9 note titled “Cruel Summer.” Laurentian Bank Securities analyst Marc Charbin downgraded Home Capital to a hold from buy rating, forecasting a slowdown in loan growth.
He also lowered the target price for the alternative lender and its rival Equity Financial Holdings Inc.
A slowdown in property deals may pose a risk to Canada’s growth — the fastest among G7 countries — just as the economy seems to be overcoming a slump triggered by a drop in global oil prices.A rate increase from the central bank may price people out of the property market but it’s not necessarily a bad thing, said Craig Wright, chief economist at RBC Capital Markets.A debt-to-income ratio hovering near a record “suggests the economy and consumer sector is more sensitive to smaller increases in interest rates than we’ve seen in the past,” he said.“It would take millions to repair it, and no one has been able to say that it would make financial sense.” As well, there was an idea of running commuter service only along the middle and northern sections of the track, from Chelsea up to Wakefield. Issues of financing were always at stake, and it has just been dragging on for so long.” In 2014, a group of train lovers founded the Wakefield Steam Train Group, hoping to attract investors at least to run between Chelsea and Wakefield.Spokesman Neil Faulkner says the train “is in our DNA.” “We see a smaller operation running a shorter distance” than the old route, he said.