A Recap Of The Week's Financial Headlines

By: Thomas Sigsworth on August 9, 2013

Markets moved sideways this week, as mixed economic numbers were reported in both Canada and the US. Meanwhile, President Obama announced major changes to the way mortgages will be financed in America.

• The Canada Mortgage and Housing Corporation announced on Tuesday that it is capping the amount of mortgage-backed securities it guarantees. The move surprised industry observers and is widely perceived to be an effort by the government to cool a resurgent Canadian housing market.

• The news came on the heels of a report from market research firm Urbanation suggesting a growing oversupply of Toronto condos. The city saw 3,903 new condominium units sold in the second quarter of 2013, an 18 percent drop from the same period last year.

• The price of new houses in Canada grew by 0.2 percent in June from May, Statistics Canada said on Thursday. The number was in-line with economists’ estimates and marked the 27th straight month that prices rose nationally.

• The upbeat house price report was offset by a weak building permits number. Statistics Canada said the value of building permits taken out by contractors fell 10.3 percent in June. The permits number points to a sharp slowdown in construction activity across the country.

• In the US, President Obama announced a new plan to overhaul government sponsored mortgage firms Fannie Mae and Freddie Mac. The President’s proposal would encourage more private capital to enter the mortgage market while scaling back government guarantees.

• Meanwhile, debate raged over a possible end to the Federal Reserve’s quantitative easing program later this year. Remarks by several Federal Reserve officials seemed to indicate that QE could begin to be wound down as early as September, which may lead to higher mortgage rates.

• Back in Canada, TD announced it will be taking hundreds of millions of dollars in flood-related insurance losses over the next few quarters. The bank, which is Canada’s second largest insurer, reported a third-quarter charge after taxes of $418 million. A spokesperson for TD also indicated that the firm may be increasing its homeowners insurance premiums to offset the charges.