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Bank of Canada Interest Rate

January 19, 2010 0.25%
March 2, 2010 0.25%*
April 20, 2010 Next meeting date

Source: Bank of Canada
*Bank of Canada statement included reference to hold rate to end of second quarter 2010

Bank Prime Lending Rate

January 20, 2010 2.25%
March 3, 2010 2.25%
April 21, 2010 Next meeting date

Source: Bank of Canada

US Federal Reserve Board Discount Rate

December 15, 2009 0.00% – 0.25%
January 27, 2010 0.00% – 0.25%
March 16, 2010 Next meeting date

Source: US Federal Reserve

Exchange Rate $CDN($US)

January 27, 2010 0.9392
February 10, 2010 0.9407
February 26, 2010 0.9501

Source: Bank of Canada

Government of Canada Bonds

Bond Type January 27,
2009
February 10,
2010
February 24, 2010
1 year Treasury Bill 0.56% 0.56% 0.62%
3 year Benchmark
Bond Yield
1.66% 1.65% 1.65%
5 year Benchmark
Bond Yield
2.46% 2.51% 2.54%
10 year Benchmark
Bond Yield
3.35% 3.43% 3.45%

Source: Bank of Canada

Total New Housing Starts (Seasonable adjusted and annualized)

Province November
2009
November
2008
December
2009
December
2008
January
2010
January
2009
Newfoundland/Labrador 3,300 2,700 3,800 4,000 3,600 3,600
PEI 1,100 800 1,000 900 700 600
Nova Scotia 2,800 3,600 3,000 3,000 2,700 2,800
New Brunswick 3,600 3,900 3,200 3,000 5,200 3,800
Quebec 46,500 48,200 52,100 44,000 55,400 45,300
Ontario 55,800 58,300 54,500 66,100 55,500 54,700
Manitoba 4,300 5,900 3,300 6,400 5,100 3,600
Saskatchewan 7,600 5,700 4,300 4,700 6,300 3,800
Alberta 30,200 20,400 27,300 20,000 23,600 17,200
British Columbia 20,400 22,400 23,000 23,100 27,500 18,100
Canada 175,600 172,000 175,500 172,200 185,600 153,500

Source: CMHC Housing Now – December 2009 and December 2008.
This seasonally adjusted data goes through stages of revision at different times of the year.

Average MLS resale price for local markets

City January 2009 January 2010
Halifax $242,861 $241,968
Saint John $155,520 $163,824
Quebec $202,977 $229,875
Montreal $256,432 $283,890
Ottawa $290,930 $323,762
Toronto $343,632 $409,058
Hamilton/Burlington $264,549 $288,397
Winnipeg $177,718 $206,454
Saskatoon $278,545 $270,191
Calgary $362,143 $382,009
Edmonton $317,049 $314,783
Vancouver $536,162 $637,637
Victoria $431,312 $509,514

Source: Canadian Real Estate Association

Source: TD Economics February 2010

The Bank of Canada reiterated last Tuesday its conditional pledge to keep its key-lending rate at a record low until July, but took a more hawkish view on inflation by indicating the risks to its outlook are “roughly balanced” as opposed to tilted to the downside.

That was the one significant change in its scheduled interest-rate announcement, and analysts might interpret this as a first step by the central bank to ready markets for an interest-rate hike.

“The Bank of Canada is now walking not crawling towards the exit,” said Kathy Lien, director of currency research at fx.360.com, following the release of the statement.

“Change is afoot. Evolutionary change, but change nonetheless,” added Stewart Hall, economist at HSBC Securities Canada.

For nearly a year, the central bank has pledged to keep its benchmark rate at 0.25 per cent until July in an effort to pump up economic growth, on the condition that inflation would not hit its preferred two per cent target until mid-2011. The central bank’s mandate is to set its key policy rate at a level to achieve two per cent inflation.

In previous statements, the central bank had suggested inflation risks were titled downward because of the possible need to engage in quantitative easing, in which the Bank of Canada would flood financial markets with cash in an effort to spur lending and combat deflation.

But through the statement, the central bank might be indicating deflation is no longer a concern.

“The bank judges that the main macroeconomic risks to the inflation projection are roughly balanced,” it said, with upside risks being stronger-than-projected growth, while a protracted recovery and strong Canadian dollar flagged as downside risks.

Hall said this shift in nuance was “indicative of the need for a policy change at some point.”

The change in the inflation outlook emerged after Statistics Canada reported that the economy grew at a five per cent annualized rate in the fourth quarter of last year – blowing past market expectations for a four per cent gain and the central bank’s original 3.3 per cent forecast. Economists say the fourth-quarter performance has set the stage for another robust gain, of perhaps four per cent or more, for the first three months of 2010.

Recent data indicate that both the headline and core inflation rates have moved much closer to the two per cent level than the central bank had expected. Under the bank’s forecast, the two per cent level would not be reached until the third quarter of next year.

“Core inflation has been slightly firmer than projected, the result of both transitory factors and the higher level of economic activity,” the central bank said in its one-page statement. “The outlook for inflation should continue to reflect the combined influences of stronger domestic demand, slowing wage growth, and overall excess (economic slack).”

In its economic outlook in January, the central bank said stubborn unit labour costs along with increases in property taxes and other administered prices accounted for the recent “stickiness” of core inflation.

The longer inflation stays “sticky,” analysts say, the more likely that the output gap, or the measure of excess economic capacity, is narrowing at a faster pace than previous central bank expectations.

The bank has said it anticipated the output gap to close in the third quarter of 2011. A large amount of excess production capacity suggests a lack of consumer demand, and gives producers little to no pricing power.

Meanwhile, the central bank also acknowledged that economic activity has been “slightly higher” than its own projections, with the five per cent gain in the fourth quarter powered by “vigorous domestic demand” and a recovery in exports.

“The underlying factors supporting Canada’s recovery are largely unchanged – policy stimulus, increased confidence, improved financial conditions, global growth and higher terms of trade,” the bank statement said.

It added that “persistent strength” in the Canadian currency and the “low absolute level” of U.S. demand would continue to act as “significant drags” on economic activity.

“The Bank of Canada has walked a fine line with its latest decision, though overall it is undeniable that the risks to Canadian monetary policy are starting to tilt upwards,” said Eric Lascelles, chief economics and rates strategist at TD Securities. He added the firm’s view was that the central bank would not begin raising rates until the fourth quarter, “but it is hardly inconceivable that this could now come a touch sooner, in September or possibly even July.”

The central bank’s next statement on interest rates is April 20, and two days later it will release its updated economic forecast. Meanwhile, the governor, Mark Carney, has scheduled two speeches this month in which he may provide further guidance as to how the bank would behave as its conditional pledge comes to an end.

Source:
Edmonton Journal

January Housing Starts

February 8, 2010

housingThe seasonally adjusted annual rate1 of housing starts reached 186,300 units in January 2010. This is an increase from an annual rate of 176,100 units in December 2009, according to Canada Mortgage and Housing Corporation (CMHC). According to final figures, actual housing starts for 2009 totalled 149,081 units, with activity improving as the year progressed.

“Housing starts improved in both the singles and multiples segments in January,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “These increases are similar to the ones that occurred in December.”

The seasonally adjusted annual rate of urban starts increased by 4.4 per cent to 165,200 units in January. Urban multiple starts increased by 5.7 per cent to 76,300 units while single urban starts increased by 3.3 per cent to 88,900 units.

January’s seasonally adjusted annual rate of urban starts increased by 19.8 per cent in British Columbia, by 7.3 per cent in Quebec, by 2.3 per cent in Atlantic Canada, and by 1.5 per cent in the Ontario. In the Prairie region, the seasonally adjusted annual rate of urban starts decreased by 4.8 per cent.

Rural starts were estimated at a seasonally adjusted annual rate of 21,100 units in January2.

Meanwhile, Statistics Canada said Monday the value of building permits fell in November by 4.6% from the previous month to $5.9-billion. Still, that was 23.1% higher than November 2008 and 62.8% higher than February 2009, “when the lowest value during the economic downturn was recorded,” the federal agency said.

“However, November’s value remained below values recorded in 2007 and early 2008.”

The decline was due to a drop in the non-residential sector, which offset increases in the residential sector, the agency said.

For more information, call 1-800-668-2642.

1 All starts figures in this release, other than actual starts, are seasonally adjusted annual rates (SAAR) — that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels.

2 CMHC estimates the level of rural starts for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, CMHC conducts the survey in rural areas and revises the estimate.

Information on this release:
Charles Sauriol
CMHC
Media Relations
613-748-2799
csauriol@cmhc-schl.gc.ca


For regional starts information contact:

Prairie provinces:
Lai Sing Louie
CMHC
403-515-2991
llouie@cmhc-schl.gc.ca

CAAMP has recently released a report on potential rate increases and their impact on mortgage debt levels.
To view a copy visit www.caamp.org

Bank of Canada Interest Rate

December 8, 2009 0.25%
January 19, 2010 0.25%*
March 2, 2010 Next meeting date

Source: Bank of Canada
*Bank of Canada statement included reference to hold rate to end of second quarter 2010

Bank Prime Lending Rate

December 9, 2009 2.25%
January 20, 2010 2.25%
March 3, 2010 Next meeting date

Source: Bank of Canada

US Federal Reserve Board Discount Rate

December 15, 2009 0.00% – 0.25%
January 27, 2010 0.00% – 0.25%
March 16, 2010 Next meeting date

Source: US Federal Reserve

Exchange Rate $CDN($US)

December 24, 2009 .9525
January 15, 2010 .9714
January 27, 2010 .9392

Source: Bank of Canada

Government of Canada Bonds

Bond Type December 23,
2009
January 13,
2010
January 27, 2010
1 year Treasury Bill 0.66% 0.60% 0.56%
3 year Benchmark
Bond Yield
1.82% 1.80% 1.66%
5 year Benchmark
Bond Yield
2.70% 2.72% 2.46%
10 year Benchmark
Bond Yield
3.57% 3.61% 3.35%

Source: Bank of Canada

Total New Housing Starts (Seasonable adjusted and annualized)

Province October
2009
October
2008
November
2009
November
2008
December
2009
December
2008
Newfoundland/Labrador 2,900 3,100 3,200 2,700 4,200 4,000
PEI 1,200 600 1,000 800 1,300 900
Nova Scotia 4,000 4,300 2,800 3,600 2,900 3,000
New Brunswick 3,600 5,000 3,900 3,900 3,600 3,000
Quebec 37,200 48,400 40,400 48,200 51,600 44,000
Ontario 57,600 82,600 53,000 58,300 56,300 66,100
Manitoba 4,200 5,800 4,200 5,900 3,400 6,400
Saskatchewan 3,600 4,900 6,100 5,700 4,500 4,700
Alberta 25,000 24,700 24,800 20,400 27,800 20,000
British Columbia 18,200 32,300 19,200 22,400 22,200 23,100
Canada 157,400 211,800 158,500 172,000 177,800 172,200

Source: CMHC Housing Now – December 2009 and December 2008.
This seasonally adjusted data goes through stages of revision at different times of the year.


Average MLS resale price for local markets

City December 2008 December 2009
Halifax $234,063 $246,380
Saint John $156,923 $178,037
Quebec $203,239 $231,235
Montreal $267,050 $285,356
Ottawa $272,672 $311,604
Toronto $361,284 $411,931
Hamilton/Burlington $240,073 $285,795
Winnipeg $182,814 $209,963
Saskatoon $266,411 $291,554
Calgary $362,557 $394,300
Edmonton $310,974 $319,201
Vancouver $560,953 $627,582
Victoria $444,222 $522,211

Source: Canadian Real Estate Association

Royal Lepage 2009 Q4 Hourse Price Survey

Detached Bungalows

Market Q4 2009
Average
Last Quarter
Average
Q4 2008
Average
Bungalow
% Change
Halifax 239,000 241,000 215,000 10.7%
Charlottetown 160,000 160,000 157,000 1.9%
Moncton 152,300 165,240 150,000 1.5%
Fredericton 182,000 180,000 162,000 12.3%
Saint John 228,000 177,980 225,064 1.3%
St. John’s 217,167 215,000 190,050 14.3%
Montreal 248,157 240,045 237,855 4.3%
Ottawa 332,417 328,667 321,333 3.4%
Toronto 446,214 437,929 405,917 9.9%
Winnipeg 241,650 240,875 219,886 9.9%
Regina 273,000 273,000 274,167 -0.4%
Saskatoon 310,500 311,500 300,000 3.5%
Calgary 412,478 401,944 410,333 0.5%
Edmonton 299,286 308,571 301,429 -0.7%
Vancouver 828,750 802,500 743,750 11.4%
Victoria 474,000 465,000 440,000 7.7%
National 315,055 309,328 297,111 6.04%

Standard Two Storey

Market Q4 2009
Average
Last Quarter
Average
Q4 2008
Average
2 Storey
% Change
Halifax 265,333 265,333 260,667 1.8%
Charlottetown 195,000 190,000 188,000 3.7%
Moncton 131,000 137,000 126,000 4.0%
Fredericton 210,000 205,000 210,000 0.0%
Saint John 299,000 237,905 294,625 1.5%
St. John’s 298,833 296,667 261,800 14.1%
Montreal 357,888 343,480 308,018 3.3%
Ottawa 331,917 327,833 320,083 3.7%
Toronto 554,175 561,725 544,842 3.5%
Winnipeg 275,500 265,938 250,529 10.0%
Regina 259,000 251,500 245,000 5.7%
Saskatoon 338,750 340,750 328,750 3.0%
Calgary 427,067 414,556 417,511 2.3%
Edmonton 340,557 327,429 344,636 -1.2%
Vancouver 917,500 904,750 837,500 9.6%
Victoria 449,000 449,000 433,000 3.7%
National 353,026 344,929 335,689 5.2%

Standard Condominium

Market Q4 2009
Average
Last Quarter
Average
Q4 2008
Average
Condo %
Change
Halifax 167,000 196,500 159,500 4.7%
Charlottetown 122,000 120,000 120,000 1.7%
Moncton
Fredericton 145,000 145,000 133,000 9.0%
Saint John 160,000 136,876 158,283 1.1%
St. John’s 230,333 230,000 203,000 13.5%
Montreal 220,625 213,278 186,706 5.0%
Ottawa 218,167 213,583 207,833 5.0%
Toronto 309,316 300,632 300,722 2.9%
Winnipeg 153,929 145,614 133,083 15.7%
Regina 185,000 185,000 172,917 7.0%
Saskatoon 197,500 210,000 186,500 5.9%
Calgary 256,056 249,500 257,189 -0.4%
Edmonton 213,380 213,250 206,854 3.2%
Vancouver 452,750 445,500 405,000 11.8%
Victoria 265,000 275,000 265,000 0.0%
National 205,756 204,358 193,474 6.35%

Source: Royal Lepage