As expected, on April 16, 2014
, the BANK OF CANADA
announced that it was maintaining its target for the overnight rate at one per cent. The Bank Rate is correspondingly one and a quarter per cent and the deposit rate are three quarters of a per cent.
The Bank continues to see a gradual strengthening in the fundamental drivers of growth and inflation in Canada. This view hinges critically on the projected upturn in exports and investment. With underlying inflation expected to remain below target for some time, the downside risks to inflation remain important. At the same time, the risks associated with household imbalances remain elevated. The Bank judges that the balance of these risks remains within the zone for which the current stance of monetary policy is appropriate and therefore has decided to maintain the target for the overnight rate at 1 per cent. The timing and direction of the next change to the policy rate will depend on how new information influences the balance of risks.
The financial institutions will also keep their Prime Lending rate at 3%. Fixed rates have continued to fall with record low rates of 2.99% for a 5 year term. Variable rates continue to remain steady with 5 year discounted variable rates at Prime -.50%.
The next Bank of Canada Rate Announcement will be on, June 4, 2014.
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New mortgage guidelines push CMHC to embrace insurance basicsApril 14, 2014
The Canada Mortgage and Housing Corp. was created by the federal government nearly 70 years ago with a mandate to help smooth the way toward home ownership for millions Canadians who might not otherwise achieve their dream.
As a tool of social policy the CMHC has done a pretty good job, but when it comes to market discipline, maybe not so much. In fact critics say that by pursuing its social policy goals so zealously it has distorted the country’s real estate market, helping to push up prices to record levels.
Now Canada’s financial regulator wants to fix the problem.
After two years of planning, the Office of the Superintendent of Financial Institutions on Monday released a set of draft guidelines for mortgage insurance providers aimed at tightening standards around underwriting and risk management.
The proposed rules essentially tell mortgage insurers to pay attention to the basics of their business, like ensuring that the banks they deal with maintain strong lending practices and that the insurance purchasers have good credit quality. It sounds like business 101, but the very fact that OSFI felt it needed to bring in the rules suggests things in the mortgage insurance market were not as they should be.
In a statement, OSFI said the so-called Guideline B-21 rules will “provide clarity about best practices in respect of residential mortgage insurance underwriting, which contribute to a stable financial system.” The long-awaited rules — the regulator first revealed it was developing new standards back in April 2012 — are open for public comment until May 23.
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Three key questions about Canada’s new mortgage insurance rulesApril 14, 2014
Canada's housing watchdog released a set of long-awaited guidelines for the country's three mortgage insurers on Monday.
The new guidelines spell out the practices that the Office of the Superintendent of Financial Institutions wants to see from the country’s three mortgage insurers, Canada Mortgage and Housing Corp., Genworth MI Canada and Canada Guaranty.
Here are answers to three key questions about the proposed rules:
Why is Canada’s financial regulator releasing new mortgage insurance guidelines?
This stems from global efforts to prevent another crisis like the U.S. subprime mortgage crisis. When that crisis was taking a toll on the global economy in late 2008, leaders of the G20 countries took a group that had existed, called the Financial Stability Forum, and broadened its membership and tasked it with developing strong regulations that would contribute to financial stability around the world. The group, which now includes regulators and banking experts from around the world, was renamed the Financial Stability Board in 2009. It is chaired by former Bank of Canada governor and current Governor of the Bank of England Mark Carney. One of the recommendations it made, more than two years ago, is that all countries should review their rules for mortgage insurers. (It was also the FSB that recommended that all mortgage insurers be regulated, part of the reason why former Finance Minister Jim Flaherty gave OSFI oversight over Canada Mortgage and Housing Corp.)
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Globe & Mail