In a client note, Canaccord Genuity analyst Gabriel Dechaine wrote that the net positive effects on the new rules will be reflected on the six largest banks’ roll-out of their year-end earnings, which begin today.
“We believe recent regulatory changes and the surprise rise in (long-term) rates have improved the earnings outlook for the Canadian mortgage business,” Dechaine states, as quoted by the Financial Post.
The main reason for this development would be “lessened competition” on the part of the Big Six, since the regulatory revisions will effectively sideline smaller lenders and financers. Potential rate hikes might contribute to industry earnings, as well.
On the other hand, National Bank Financial analyst Peter Routledge stated that such a prediction in unrealistic due to already apparent signs that the new rules have slowed down activity in certain housing markets.
“The recent changes enacted by the federal Department of Finance with respect to mortgage finance [including risk sharing], coupled with material signs of deterioration emerging within the Vancouver housing market, signal an environment with questionable growth prospects,” Routledge cautioned.
The new federal rules—intended to moderate the record-breaking price growth in Canada’s most active housing markets—have garnered unease among mono-line mortgage providers, many of which have responded by adjusting their predictions for loan volume growth downward.
MBN
We hope you are finding our Blog informative and enjoyable to read while keeping you up to date with the ever changing real estate market.
Please feel free to contact me via Direct/Text or e-mail at any time and my team will be pleased to assist you, family members and friends with all your real estate needs. Referrals are always welcome!
No comments:
Post a Comment