MLN NewsStream

Rates have jumped several hurdles in the last few weeks, from CPI to GDP to job numbers. Bond yields have powered through it all to close on Friday at a 17-month low.

There's not much on the radar this week that should foreseeably force yields back up. Canada's economic calendar is light until September 17, and U.S. CPI inflation (the week's highlight) is expected to land near consensus at 2.6% y/y.

Post this quiet spell, expect the plot to thicken.

If you're a mortgage originator and none of your CRM emails include graphs, it's time to jazz them up. Visuals tell stories better than words. Charts, in particular, accelerate comprehension and turn newsletters into less blah, more ah-ha.

That's why mortgage clients and referral sources rarely grumble when you hit them with a relevant chart. ("Relevant," meaning it tells a compelling story that potentially impacts their net worth.)

That's also why we're thrilled to announce the updated AI Copilot for MLN Pro members. This revised chart builder is now easily accessible from anywhere in the Mortgage Command Centre (MCC).

Chart Copilot 2.0 makes it faster to build custom graphs thanks to:

1. Improved logic (i.e., the AI recognizes and follows instructions better)
2. A more straightforward interface (just click the floating button in the lower right corner).
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Along with smarter AI, the best part is that you can now see what you're doing in a pop-up "Copilot" window. No more typing a prompt and then having to scroll way up the screen like your finger's on a treadmill.
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To make a chart

1. Click the <Chat with your data> button in the MCC
2. Tell it what you want to chart (here's all the available data)

• For example, you could type: "Create a chart of Canadian unemployment and mortgage arrears."

3. Make your chart pretty (change colours, line thickness, the title, the subtitle, etc.)
4. Download the chart or chart data (see below)
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Tips for better charts

• Here are all the chart types you can choose from
• To change the chart colour to red, for example, type:
  "Change the line colour to red"
• To eliminate points on chart lines, type:
  "Remove points on the chart lines"
• To make chart lines thicker, type:
  "Increase line thickness by 1 point"
• If you see a chart with blank space [like this], type:
  "Start the chart at January 1990"
  (pick a date where you see chart data start)
• To hide the legend, type:
  "Hide the legend"
• To change the title, type:
  "Change the title to "X" (pick whatever you want)

If you have any questions, email support anytime at info @ mortgagelogic . news. Meanwhile, plot it like it’s hot.

Mortgage Bytes

• Macklem hints at home price bump: Don't be surprised to see "some pickup in housing prices" as rates drop, Governor Macklem said last week. But higher home prices don't necessarily mean higher overall shelter inflation—not if we get lower rates, immigration and rents, he says. (Here's his response to MLN's question about it.)
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• Ourboro update: Shared equity investor, Ourboro, says it anticipates removing its waitlist "this fall." The company, which takes an equity stake in people's homes in exchange for down payment funds, has seen "overwhelming" demand. Chief Product Officer Alex Kjorven told MLN last week that there's no waitlist for homebuyers with 10% down, however (Ourboro contributes the other 10% in exchange for half the appreciation). She says that once the company's pilot with an undisclosed major bank is over, the company expects to have ample capital to meet demand. "We have phenomenon institutional backing," she says, including Fengate Asset Management.

Mortgage lenders and originators have been waiting for CRA digital income verification since dinosaurs roamed the earth. Or at least it feels that way.

How the government has waited this long to implement such a common-sense lending and anti-fraud improvement is mind-boggling. Seriously, Moses had an easier time getting those tablets.

Canada's monetary barbers have trimmed another 25 bps off the top.

The Bank of Canada lowered its overnight rate to 4.25% today, sending four key messages in the process:

1. "We need to increasingly guard against the risk that the economy is too weak and inflation falls too much."
2. "There is little evidence of broad-based price pressures."
3. "The slack in the labour market is expected to slow wage growth."
4. "Shelter price inflation is still too high. It remains the biggest contributor to overall inflation."

Apart from point 4, it's mostly good tidings for borrowers. Odds are, by this time next year, Ottawa's financial stylists will have given our rate market a whole new look.

Cash flow improves

With the inflation roller coaster of 2021-'23 and its savage rate hike cycle still fresh in our memories, millions of Canadians dread the thought of re-inflation.
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They worry that the BoC will yell "Psych!" — and that rate cuts will boomerang back as hikes, punishing them for choosing a variable mortgage. For families on the budgetary edge, that broken promise of cuts would feel kind of like being sucker-punched by a loan shark.

Fortunately, that doesn't seem too likely at this point. The Bank of Canada, in its public messaging, is clearly more worried about disinflation than the opposite.

The country is suffering from "excess supply," says Governor Tiff Macklem. He's concerned about inflation falling too much, too fast, as that could coincide with more backbreaking job losses.

To prevent that, the Bank is inclined to keep trimming rates.

As for how aggressive it will be and for how long, even the BoC's crystal ball is cloudy on those points.

It's all riding on if—or how quickly—our economy turns into a dumpster fire. Aside from high inflation, the last thing the Bank of Canada wants is to keep monetary policy too tight and run into negative growth.

But how do you measure the risk of face-planting into a recession?