Statistics released today by the Canadian Real Estate Association (CREA) show national home sales set another all-time record in December 2020.

Home sales recorded over Canadian MLS® Systems jumped by 7.2% between November and December to set another new all-time record.

CMHC's Fall 2020 Residential Mortgage Industry Dashboard discusses mortgage deferral agreements and their impact.

At the end of the second quarter, credit unions, mortgage finance companies (MFCs) and mortgage investment entities (MIEs) have allowed mortgage deferral agreements for about 6%, 7% and 7% of their respective residential mortgage portfolios.

Chartered banks have allowed 16% of mortgages to go into deferral since the beginning of the pandemic. Of these, close to 2 out of 3 borrowers had resumed payments on their mortgages at the end of the third quarter of 2020. In the coming months, we could see higher delinquency rates if some borrowers are unable to resume their payments; these mortgages will have to be booked as arrears.

The Bank of Canada today maintained its target for the overnight rate at the effective lower bound of ¼ percent, with the Bank Rate at ½ percent and the deposit rate at ¼ percent. The Bank is maintaining its extraordinary forward guidance, reinforced and supplemented by its quantitative easing (QE) program, which continues at its current pace of at least $4 billion per week.

Canada’s Federal Finance Minister provided a first multi-year peek at the impact of the pandemic on the Canadian economy and its finances in her Fall Economic Statement 2020. The deficit is set to soar to $381 bn (17.5% of GDP) in FY21—an increase of about $40 bn since July estimates. At the same time, the government acknowledges it could be as high as $400 bn under alternative scenarios of extended and/or escalating COVID-19 cases.

The blow to government revenues contributes to a quarter of the shortfall, while COVID-19 spending will add another $275 bn of deficit financing this year. The bulk of increases in pandemic spending had already been announced—but not costed—prior to the update, whereas new announcements reflect about $25 bn. This includes a $17 bn top-up to the wage subsidy program to bring its coverage back up to 75% for the remainder of the fiscal year.

While older Canadians may be more likely than their younger counterparts to require help and care in their daily lives, almost one-quarter of Canadian seniors aged 65 years and older are caregivers themselves. And while the roles and responsibilities of these senior caregivers may have changed in the context of the COVID-19 pandemic, the challenges they face could be heightened.

Although the pandemic has affected the lives of all Canadians, seniors have been identified as a population particularly vulnerable to COVID-19. Not only are seniors more at risk of severe illness, they are also more affected by isolation measures. As a result, many senior caregivers who help people living outside of their household may not have been able to provide the same level of care that they usually do. Senior caregivers providing help to their spouse may also have seen their burden of care increase, given the possible lack of other support during the pandemic. For example, older caregivers who are usually supported by their adult children to provide help and care for their spouses, may have had to perform additional activities and provide more hours of care than usual. While the data in the current study were collected prior to the COVID-19 pandemic, the results highlight the many challenges senior caregivers already faced.

Real GDP continued to recover in August, gaining 1.2% m/m, a result above the +0.9% print expected by consensus. This marks the fourth monthly gain in a row for this indicator, however total output is still down 4.6% from its pre-pandemic (February) level. Production rose in 15 of the 20 industrial sectors covered in August, with two others remaining flat in the month. Goods sector output climbed 0.5% on decent rises for construction (+1.5%) and manufacturing (+1.2%). Industrial production edged up 0.1%. Services-producing industries, meanwhile, experienced a 1.5% surge in production, with the steepest progressions occurring in arts/entertainment (+13.7%), accommodation/food services (+7.3%) and educational services (+3.4%). Year on year, total economic output was down 3.8%.

There was no shock and awe in the Bank of Canada’s overall set of communications this morning (here, here and here). In fact, the overall guidance appears to be well short of ‘crushing it’ in my opinion. CAD was little changed in the aftermath of the communications, but it had been depreciating ahead of time with the driver being Covid-19 effects on global risk appetite. The Canada curve was also little affected post-communications with less than a basis point rise in the two-year yield.

Seasonally adjusted home sales rose 0.9% in September to a monthly record of 56,422 units. Sales in Ontario missed August’s record by a hair due to a 5.3% monthly decline in Toronto. Records were nonetheless registered in Ottawa and Hamilton. In the Province of Quebec, sales were at a record level in the Quebec CMA and in Gatineau, and close to August records in Montreal. In B.C., transactions reached a record outside the three main markets of Vancouver, Fraser Valley and Victoria. There were also sales records in Nova Scotia and New Brunswick. The active-listings-to-sales ratio indicates that the Canadian home resale market was favorable to sellers in Ontario Quebec, the Maritimes Provinces and marginally so in B.C. The market was balanced in the four other provinces.

• Canada’s Parliament re-convened today with a ceremonial Speech from the Throne delivered by the Governor General.
• Canada’s continued response to the COVID-19 pandemic took centre-stage, while providing a lens for a plethora of broader promises: an extension of the wage subsidy, expanded employment insurance, investments in childcare, reaffirmed commitments to universal pharmacare, and green infrastructure investments among many others.
• Given the exhaustive list of priorities, this Speech is unlikely to bring the minority government down as it provides plenty of hooks for negotiations in the lead-up to a Fall update where details will be laid out.
• It clearly signals more fiscal spending ahead for Canada leaving the question not if but how much. But this was largely channeled ahead, so the market reaction has been muted—or more likely, it is eclipsed by broader US and global developments.
• There is little beyond lip service by way of fiscal restraint. This will be left to the Finance Minister to make inevitable trade-offs in her first budget this Fall, particularly as she may need to reserve some firepower for second waves.