Economist to brokers: The boom is over

Economist to brokers: The boom is over

Economist to brokers: The boom is over A leading economist believes last year’s prosperous market won’t carry on through 2016.

“I think mortgage brokers should recognize the mortgage market will slow; there is no way we’ll see a repeat of 2015 performance in Toronto and Vancouver,” Dr. Sherry Cooper, chief economist with Dominion Lending Centres, told “The government is certainly doing what it can to encourage the slowdown.”

Cooper spoke to in reaction to Wednesday’s Bank of Canada rate decision.

The central bank maintained its target for the overnight rate at 1/2%.

“Inflation in Canada is evolving broadly as expected. Total CPI inflation remains near the bottom of the Bank’s target range as the disinflationary effects of economic slack and low consumer energy prices are only partially offset by the inflationary impact of the lower Canadian dollar on the prices of imported goods,” the Bank of Canada said at the time. “As all of these factors dissipate, the Bank expects inflation will rise to about 2% by early 2017. Measures of core inflation should remain close to 2%.”

The bank did acknowledge that commodities and oil prices continue to take a hit and negatively impact the economy. It suspects the economy stalled in Q4 2015. It also expects growth to be delayed.

For her part, Cooper believes the move – or, indeed lack thereof – was solid, but that the economic policy report, released alongside the rate decision, was too optimistic.

“I don’t object to keeping the rate as they did. I wouldn’t have objected if they reduced the rate either; I thought it could have gone either way. What I do object to is the tone of the statement and the monetary policy report,” Cooper said. “The government maintains the economy will rebound soon without stimulus and I don’t see that happening.”

Cooper argues the factors that dampened the economy aren’t temporary and that the turmoil in the energy segment will be long-term.
  • Mike 2016-01-21 10:12:37 AM
    Sherry better tell the baby boomers kids to stop buying, don't think they got the memo. In our area we have the lowest unemployment in the last ten years. Lots of great decent paying professional jobs available. Alot of 20 somethings that know how to save driven by parents who who have their houses paid for and now looking at vacation properties. Big difference from last year is the weather. The long hard winter made us have a slow start last year. Not seeing that this year. Preapprovals are up. Biggest problem is we need more good inventory. Maybe things are slow at Dominion but just because Dominion thinks the sky is falling the rest of us will keep making money.
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  • Darrell 2016-01-21 12:52:18 PM
    In any market there is a need for good advice. I agree that "the boom" is over but what a fantastic opportunity to help folks recover or hedge against hardship. What is also true is that when someone needs to sell then someone eventually has to buy. Always a home for a good broker to fit in. Now is the time to shine.
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  • felix 2016-01-22 10:40:24 AM
    Mike's opinion seems focused on discrediting the dominion brand. If I look in my 'area', I can make positive anecdotal generalizations endlessly as well. Unfortunately when discussing the economy the rest of us professionals extract our heads from our pants and rely on a broader range of economic indicators.
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