Bond yields jump. Mortgage rates bump. We all blame Trump.
Sure, these things are connected, but the president-elect is not even in the White House yet so it is too early to make any solid economic or fiscal projections about the Trump presidency. Take a look at the U.S. Fed rate. Prior to the election analysts said a Trump win would lower the odds of an increase. Now the market is about 95% certain there will be a rate hike in December.
Of course, whatever happens in the States will influence things here but there are matters that will have a much more direct effect. The most recent being comments from Evan Siddall, head of CMHC. In a speech to a group at the Bank of England he suggested it is time to mandate higher down payment requirements for homebuyers.
The CMHC CEO centered his comments around the ongoing concerns about Canada’s record-high debt to income ratio, which is currently about 168%. Siddall questioned whether governments have made home ownership too easy and too lucrative.
“…it may be a fool’s bargain with the extra demand simply feeding higher house prices: the benefits of the policy accruing to wealthier home sellers rather than to the young first-time homebuyers it purports to help,” he said.
Siddall also challenged the current tax free status of capital gains on a principal residence and he repeated his call to have lenders take on more of the risk in insuring mortgages.