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Dmitri Tkachenko

National Bank is North Americas Strongest Bank: Bloomberg - 0 views

www.canadianmortgagetrends.com/...-strongest-bank-bloomberg.html

Canadian banks best internationally

shared by Dmitri Tkachenko on 25 May 11 - No Cached
  • Dmitri Tkachenko on 25 May 11
     
    "Canada has five banks in the top 20, with CIBC ranking 4th internationally behind National Bank. Canadian banks have "higher capital ratios than anyone else in the world," Canaccord Genuity analyst Mario Mendonca told Bloomberg. National Bank Pres. & CEO Louis Vachon told Bloomberg: "…size is not everything in financial services," and indeed it's not. National Bank's #1 North American ranking shows that prudent risk management and liquidity are meaningful and a source of confidence for investors and customers alike. Other ranking criteria included non-performing assets, loan-loss reserves, deposits-to-funding, and cost efficiency."
naheekim

Household debt continues to rise - Business - CBC News - 2 views

www.cbc.ca/...household-debt.html

household debt consumer debt credit debt

shared by naheekim on 25 May 11 - No Cached
  • Household liabilities grew by 6.5 per cent in the fourth quarter, compared with the same period a year ago, the slowest annual growth rate since the fourth quarter of 2002.
  • The average debt-to-personal disposable income ratio edged down to 146.8 per cent in the quarter, but only because a 1.8 per cent gain in average personal disposable income outpaced a gain in credit market debt.
  • But the rate at which Canadians piled on debt slowed, with nonmortgage credit, such as credit cards, slowing the most, at 5.8 per cent from a year ago.
  • ...5 more annotations...
  • Overall household liabilities grew by 6.5 per cent from the same period a year ago levels.
  • Household net worth per capita increased from $178,200 in the third quarter to $181,700 in the fourth quarter.
  • The rate of growth in net worth, after rebounding from the recession, has stayed in a range of between five and six per cent. That compares with a pace of between nine to 10 per cent in the five years leading up to the recession.
  • "Once interest rates start to rise over the latter half of 2011, the debt-service ratio is expected to climb substantially."
  • Measuring all debt — government, business and family — national net worth edged up 0.3 per cent to $6.3 trillion in the fourth quarter, the slowest quarterly growth of the year.
Steven Iarusci

Consumer fatigue an ominous sign for economy - The Globe and Mail - 1 views

www.theglobeandmail.com/...article2039584

debt consumer ratio economy slow

shared by Steven Iarusci on 02 Jun 11 - No Cached
  • Consumers typically account for 60 per cent of the country’s gross domestic product, and rising living costs along with elevated debt levels suggest they won’t be much help this year
  • Gross domestic product expanded at an annualized 3.9 per cent in the first quarter, the fastest pace in a year, led by business investment and manufacturing, Statistics Canada said
  • that pace will be cut by almost half in the second quarter, while Finance Minister Jim Flaherty told reporters Monday he’s anticipating “more modest” growth in the rest of the year
  • ...7 more annotations...
  • In the near term, households are under pressure as rising food and energy costs cut into their budgets
  • “I will never, never do that again. I want to have the money up front before I buy something, because I don’t want to get into that trouble again,” said Ms. Thornton
  • the household debt service ratio – debt payments to disposable income – jumped to a three-year high of 7.8 per cent from 7.2 per cent
  • Kim Thornton, for example, is one fatigued consumer. The mother of four says her family ran up about $50,000 in debt in prior years on credit card spending
  • In the longer term, high debt levels could restrain spending for years
  • Canadians are getting the message about whittling down debt, and that is translating into fewer purchases of discretionary goods
  • reduced hours and leaner wages – a legacy from the recession – mean many families have less money with which to service their debt, he added
Susan Cui

The Progressive Economics Forum » Housing on the knife's edge - 6 views

www.progressive-economics.ca/...ng-on-the-knife%e2%80%99s-edge

Housing Price Unstable Housing Market

shared by Susan Cui on 23 May 11 - No Cached
  • On the heels of multiple warnings from the Bank of Canada that Canadians have taken on too much household debt for comfort (we hold the dubious distinction of having the worst consumer debt to financial assets ratio among 20 OECD nations), the federal government announced
  • On the heels of multiple warnings from the Bank of Canada that Canadians have taken on too much household debt for comfort
  • the federal government announced
  • ...13 more annotations...
  • these federal changes will have the greatest effect on middle class Canadians
  • With these moves, the federal government is starting to take seriously the risk of record-high housing prices and record-high household debt.
  • It will reduce the maximum insurable amortization period from 35 years to 30 years
  • The pessimistic possibility is that trying to reign in mortgage debt and housing prices could burst the housing bubble that simultaneously exists in six Canadian cities.
  • The optimistic possibility is that reverting to pre-2006 regulations could help put a lid on house prices
  • to get back to basics and start saving again.
  • It could also force Canadians
  • Between 1980 and 2001, housing prices in four of the six major markets in Canada (Edmonton, Calgary, Ottawa and Montreal) remained in a tight band of between $150,000 and $220,000 (in today’s dollars).
  • experienced three housing price declines between them brought on by interest rate hikes.
  • Toronto and Vancouver
  • When the bubbles burst, they wiped out in the worst case more than 35% of an average house’s value
  • Today it isn’t just Toronto and Vancouver; it’s all six major Canadian cities that are outside of the safety zone.
  • Canada’s housing market is still on a knife’s edge and isn’t clear which way we’ll fall.
naheekim

Housing prices to drop 25%, forecaster predicts - thestar.com - 2 views

www.thestar.com/...to-drop-25-over-next-few-years

Housing Prices Recession

shared by naheekim on 28 May 11 - No Cached
  • House prices in Canada will fall over the next several years by as much as 25 per cent, creating a massive impact on the economy and possibly pushing the country into recession, says a forecast
  • predicting house prices will fall by a cumulative 25 per cent over the next several years
  •  Madani says the effects on consumer spending and housing investment could be significant and perhaps strong enough to “push the economy into another recession
  • ...7 more annotations...
  • “If house prices are to fall, there needs to be a mechanism — an excess of supply relative to demand,”
  • Last year, the Canadian Real Estate Association modified its forecasts at least four times. After initially predicting housing prices would increase in 2011, it now says prices will fall by 1.3 per cent — far below the eye-catching 25 per cent forecast by Capital Economics.
  • Financial agencies such as the Canadian Mortgage Housing Corporation, which provides mortgage loan insurance, could also be exposed to significant losses
  • The Capital Economics forecast is not the first to predict a bubble in the Canadian market. Gluskin Sheff & Associates chief economist David Rosenberg has also predicted a 25 per cent drop in Canadian housing prices, as has The Economist magazine.
  • As in the U.S., financial innovation and very low interest rates have allowed Canadian consumers to take on more debt, and house prices are high relative to income
  • However, consumers have remained complacent because low rates are keeping mortgage payments low.
  • The historical home price-to-income ratio is 3.5, but now it's hovering around the 5.5 mark, meaning average house prices are more than five times the income of workers
  • naheekim on 28 May 11
     
    The economists and forcasters are predicting that housing prices will decrease over the next several years by 25%.
naheekim

TheSpec - Average Canadian family $100,000 in the red - 0 views

www.thespec.com/...dian-family-100-000-in-the-red

consumer debt mortgage debt Personal loan household debt

shared by naheekim on 31 May 11 - No Cached
  • The average Canadian family has joined the $100,000 club, but it’s one they most likely don’t want to belong to.
  • Average Canadian household debt has hit $100,879. That’s close to twice as much as we owed 20 years ago, according to a study by the Vanier Institute for the Family
  • At the same time, the rate at which Canadians save has dropped
  • ...7 more annotations...
  • In 2010, that savings rate has dropped to 4.2 percent — about $2,500 per household.
  • the recession has shaken out the labour market. “We’re experiencing a gain in jobs, but people are now in jobs that paid less than what they did.
  • Mortgages account for about two-thirds of the $100,879 owed by the average household, or about $63,126 per household, with 55 per cent holding mortgages and 45 per cent mortgage-free. The other third is consumer debt, which includes credit cards and personal loans.
  • “The debt-to-income ratio is concerning … but recently, (mortgage) credit demand has slowed and consumer credit demand has slowed considerably as well. It’s now at less than 5 per cent, which is half of what we saw in the previous five years on average.”
  • Personal debt consolidation and restructuring expert Jim Ferguson said the most common reason people are getting into overbearing debt is the ease of availability of credit
  • Canadian debt levels, relative to income, are still meaningfully below peak U.S. levels, but that a further sizable increase would be worrisome.
  • “Household financial assets are also growing fast due to the strong stock market, which dampen concerns about the debt, but assets can vanish more quickly than debts.”
Kiruban Mahadeva

Jesse Kline: U.S. looks to Canada to fix its debt crisis | Full Comment | National Post - 1 views

fullcomment.nationalpost.com/...-canada-to-fix-its-debt-crisis

Debt Government Spending

shared by Kiruban Mahadeva on 01 Jun 11 - No Cached
  • In 1994, Canada’s debt-to-GDP ratio was around 67%, but thanks to sound fiscal management, deep spending cuts and sustained economic growth, this number was reduced to 29% by 2009
  • Canadian experience shows that government can balance the books by making significant spending cuts, and that can be done without having an adverse effect on economic growth and levels of employment
Lok-Hin Yuen

CIBC World Markets - Press Releases - 1 views

micro.newswire.ca/release.cgi

Jobs Manufacturing Sector Competition Post-Recession

shared by Lok-Hin Yuen on 03 Jun 11 - No Cached
  • Canadian companies facing stiff competition from better-capitalized, more efficient facilities stateside
  • The economic recovery will add more manufacturing jobs in Canada relative to the U.S., but the gains may be shortlived amid stiffening competition south of the border
  • the improvement in the U.S. is not only stronger, but also much more capital intensive - a trend that will hinder Canada's competitive position in the post recession economy
  • ...4 more annotations...
  • "radical restructuring" of industry, Mr. Tal says, where "much more is being produced with less labour."
  • In Canada, where overall industrial production has stabilized in recent quarters, manufacturing activity in capital intensive sectors has also outpaced activity in labour intensive sectors, though to a lesser degree than in the U.S
  • Examples include Canada's chemical, electronics and computer manufacturing sectors that still utilize a much lower capital-to-labour ratio than in the U.S.
  • The high labour intensity of Canadian manufacturing means that jobs growth here will be relatively stronger during the economic recovery to meet demand, even with a strong Canadian dollar. "However, given the increased prevalence of better-capitalized and more efficient production facilities stateside, Canadian manufacturers will find it even more difficult to compete when the dust settles."
Chris Lee

Is it good to be good? - The Globe and Mail - 0 views

www.theglobeandmail.com/...article1845209

Income Inequality

shared by Chris Lee on 02 Jun 11 - No Cached
  • “That,” I told them, “is charity. Observe: Some got candy; most didn’t.” If every Canadian who needed a candy got one (as in, say, a generous guaranteed annual income), that would be social justice, a sharing of wealth. But wealth isn’t shared – just the opposite.
  • In Canada, the ratio of CEO income to average worker income has gone from 45 to 1 in 1960 to more than 500 to 1 today. This is greed and entitlement on a toxic scale.
  • Here, governments watch and citizens watch as the poor get creamed, the middle class eviscerated, and the rich richer.
  • ...1 more annotation...
  • Meantime, resist. Resist the urge to buy. Instead, give – ethically and year-round, not just now. Finally, decry gross inequality and elected officials who ignore it.
Carolyne Wang

Inequality Rising Across the Developed World - NYTimes.com - 0 views

economix.blogs.nytimes.com/...ing-across-the-developed-world

Income Inequality OECD Gini Coefficient Globalization

shared by Carolyne Wang on 02 Jun 11 - No Cached
  • A new report from the Organization for Economic Cooperation and Development finds that most of its member countries have seen their richest citizens get much, much richer in the last few decades, leading to a widening income gap.
    • Carolyne Wang
      Carolyne Wang on 02 Jun 11
       
      This graph shows that the Gini coefficients of most countries have increased, indicating increasing income inequality in the world as the value of the Gini coefficient approaches 1, which represents perfect income inequality.
  • As lower-paid workers have seen their incomes stagnate or even fall, the highest-paid workers have gotten steep raises.
  • ...8 more annotations...
  • Changes in capital income — which primarily affects wealthier people — have contributed to rising inequality, although the impact has been relatively modest when compared to changes in labor income
    • Carolyne Wang
      Carolyne Wang on 02 Jun 11
       
      In this graph, you can see that there is a greater reduction in the number of hours worked by low income earners compared to the hours worked by high income earners. Fewer work hours combined with low wages leads to lower incomes for the poor and widens the divide between the rich and the poor.
  • Today, across developed countries, the average income of the richest 10 percent of the population is about nine times that of the poorest 10 percent, with much bigger multiples in Israel, Turkey, the United States, Chile and Mexico. In these last two countries, the income ratio is 27 to 1.
  • Besides outright layoffs, there have also been cuts in work hours (sometimes voluntary, sometimes not), disproportionately affecting lower-paid employees:
  • Globalization has had an impact, as rich countries have been sending more of their commodifiable, generally less-skilled jobs offshore, which has displaced many lower-paid workers in rich countries.
  • Technological improvements have also disproportionately benefited the pay of high-skilled workers. Regulatory changes, like loosening protections for temporary (and less-skilled) workers and lower unemployment benefits, may have also had an effect.
  • Over the years people have become more and more likely to marry mates who have similar incomes. “Today, 40 percent of couples in which both partners work belong to the same or neighboring earnings deciles, compared with 33 percent some 20 years ago,” the report says.
  • Surely to some extent this has to do with more women having earnings, period, and therefore having more women’s earning matching what their husbands make. But in any case if poor marry poor and rich marry rich, that magnifies the income gap effect. After all, if poor married rich, the result would be more evenly distributed wealth.
Linda Lei

Stats Canada discusses household debt | The Economic Analyst - 1 views

www.theeconomicanalyst.com/...anada-discusses-household-debt

consumer debt mortgage

shared by Linda Lei on 03 Jun 11 - No Cached
  • Recent research suggests that if interest rates rise by three percentage points, the debt-to-income ratio needs to fall to between 125% and 130% for interest payments on the debt to remain the same
  • Interestingly, note the rise in mortgage debt which started in 2003.  This is the year that the price ceilings were removed by CMHC, meaning that CMHC would insure any mortgage no matter how high.  This, combined with a loosening in down payment requirements, is quite likely the largest driver in house price increase and debt expansion.  Some economists in Calgary recently calculated that the changes in CMHC insurance requirements have been responsible for 40-70 percent of all house price increases since 2004.
Maria Li

Rate hikes okay for most but a 'financial shock' for many - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2041683

Consumer Debt Mortgages

shared by Maria Li on 03 Jun 11 - No Cached
  • Most Canadians should be able to handle higher interest rates expected later this year, but many will still see a "financial shock," Toronto-Dominion Bank economists say
  • "The main question is how households will respond to the eventual rebalancing of monetary policy, TD economists Craig Alexander and Diana Petramala write in a new report that looks at indebtedness among Canadian households.
  • Canadians will experience a financial shock when interest rates eventually rise, but the vast majority of households should be able to cope so long as interest rates rise only gradually
  • ...4 more annotations...
  • Bank of Canada held its benchmark overnight rate steady at just 1 per cent, citing global uncertainty and the impact of the strong Canadian dollar, but said rates must eventually rise
  • Annual personal credit growth slowed to a year-over-year pace of 6.4 per cent in April, compared to an average 10.9 per cent in a period spanning 2004 to 2008
  • The moderation in credit growth has been evident in all measures of debt
  • The debt-service ratio, the interest households must pay on their debt each month as a share of personal disposable income, climbed to a two-year high of 7.6 per cent in [the first quarter of] 2011, despite still record low interest rates.
Steven Iarusci

Report cautions that over-indebted consumers can't drive economy - 0 views

www.vancouversun.com/...story.html

economy consumer debt growth

shared by Steven Iarusci on 02 Jun 11 - No Cached
  • a rate hike may come in the fall
    • Steven Iarusci
      Steven Iarusci on 02 Jun 11
       
      Interest rates
  • the main message is that consumers cannot be the main engines of economic growth over the next couple of years,” the authors conclude. “Instead, the economy will have to rely on other sources of growth, such as exports and business investment.”
  • Canadians have “eased off the debt-accumulation throttle,”
  • ...8 more annotations...
  • still net borrowers, meaning they borrow more than they save
  • consumer spending will not be the engine of economic growth in the coming quarters and the inevitable future rebalancing of monetary policy will be a shock to many households
  • some of the drop in household indebtedness is explained by strong income gains, not by debt repayment per se
  • sustainable personal growth is likely in a range of 4.0-4.5 per cent. Credit continues to grow at a pace that is two percentage points above that
  • the level of Canadian household debt — which in December officially surpassed those of our neighbours to the south — is unsustainable
  • total consumer debt load is reported to be about $1.5 trillion
  • Data released late last year suggested Canadians owed on average $112,000 — a figure that includes all kinds of debt, including mortgages — and a debt-to-income ratio of 150 per cent means they were spending $1,500 for every $1,000 in take-home pay
  • Factors that will moderate credit growth over the short term include spending fatigue, a soft landing in the housing market, stricter mortgage rules and Canadians preparing for the higher interest rates that are sure to come as the economy recovers.
Steven Iarusci

The Canadian Press: Canadian borrowing grows 4.5 per cent in first quarter from year ago - 0 views

www.google.com/...M5hYICAWLxLq6MaVwA5-1OwnCM__kg

canadian debt consumer borrowing

shared by Steven Iarusci on 02 Jun 11 - No Cached
  • Canadians' average non-mortgage debt grew 4.5 per cent to $25,597 in the first quarter compared to a year earlier, signalling that consumers aren't necessarily clamping down on borrowing even as they rein in spending.
  • Total debt per consumer, including credit cards, car loans and lines of credit but excluding mortgages, was up from $24,497 in the same quarter of 2010,
  • most in Quebec and Newfoundland and Labrador, with debt rising by 7.8 per cent in both provinces, while British Columbians had the highest average consumer debt at $36,649
  • ...12 more annotations...
  • consumer debt rose in all provinces
  • the trend still remains modest compared to the double-digit, pre-recession levels
  • Average credit card debt
  • sign of troubled credit health, the national credit card delinquency rate — the ratio of credit card accounts that are 90 days or more overdue — grew 11 per cent from the first quarter of 2010.
  • consumers are focused on consolidating debt after borrowing heavily during the recession
  • Lines of credit are the most popular form of consumer debt
  • more than 41 per cent of outstanding debt at the end of the first quarter
  • consumers should take care to rein in their borrowing
  • consumer spending slowed during the first quarter, to just 0.1 per cent growth
  • average borrower debt on auto loans was also up in the quarter — by 12.4 per cent to $16,189 from $14,402 in the first quarter of 2010
  • higher energy and particularly gasoline prices are taking a bigger bite out of household budgets, leaving less for other forms of expenditures
  • high levels of indebtedness are expected to weigh down purchases going forward
Heshani Makalande

Canadian debt load: $26,000 - excluding mortgages - Moneyville.ca - 0 views

www.moneyville.ca/...ebt-26-000-excluding-mortgages

housing prices

shared by Heshani Makalande on 01 Jun 11 - No Cached
  • Already at record levels, Canadians now owe just under $26,000 on average on their lines of credit, credit cards and auto loans, according to credit rating agency, TransUnion.
  • That’s an increase of 4.5 per cent, or another $1,000, over the same period last year.
  • The fear is that higher rates could push more consumers beyond their ability to repay their loans
  • ...10 more annotations...
  • Debt growth in Canada is slowing from the double-digit pace seen before the recession
  • And total borrowing, including mortgages, typically the biggest household loan, is slowing, major Canadian banks said recently in their quarterly reports.
  • The Bank of Canada’s trend-setting overnight lending rate is just 1 per cent. But with inflation running at 3.3 per cent, above the central bank’s ideal range, Carney is under pressure to start raising lending rates to dampen demand.
  • Total debt per consumer increased to $25,597 in the first three months of this year,
  • Among types of loans, TransUnion said credit card debt, usually the most expensive to carry, barely budged from a year ago, falling $25 to an average of $3,539.
  • In a sign some borrowers may already be struggling, the national credit card delinquency rate rose 11 per cent. The rate measures the ratio of consumers who take 90 days or more to pay their bill.
  • The average line of credit, the most popular loans for their low cost and high flexibility, rose 5.9 per cent to $33,762 compared to last year. However, total line of credit debt declined for the first time in five quarters.
  • One noticeable shift was the decreased use of lines of credit, Higgins said. The category is the largest among consumer loans, making up 41 per cent of the total, and even more in Ontario, at 57 per cent
  • The study found debt loads rose in all provinces, led by Quebec and Newfoundland and Labrador. British Columbians had the highest load at $36,649.
  • Lines of credit are the most popular form of consumer debt, excluding mortgages, accounting for more than 41 per cent of outstanding debt at the end of the first quarter. Debt on lines of credit stood at an average $33,981, up 5.9 per cent from $31,867 in the first quarter of 2010.
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