MLN NewsStream

It's no secret that average mortgage amounts surged in the last decade. The chart below illustrates that well.

But those rising balances hide an important fact, as noted in a recent report from RE/MAX.

Institutional traders believe the Bank of Canada is approaching a cul-de-sac on rates. Overnight index swaps price in two full cuts by October and almost one more in December.

It wouldn't be the first time this year that markets made this "prediction," so to speak. The difference now is that an array of economic warning indicators are suddenly flashing red. South of the border, for example, real-time GDP projections have abruptly plunged.

In February, MLN covered a Bank of Canada-published study on how mortgage brokers "steer" customers into riskier loans because it is "more profitable" for the broker. (Here's that story)

The paper even went so far as to suggest brokers should be better regulated to thwart this practice.

Well, our story seems to have caught the eye of the Bank of Canada and Professor Robert Clark, a co-author of that study and Steven J.R. Smith Chair in Economic Policy at Queen's University.

Most Canadians planning to buy a home in the next 12 months aren't too confident about their qualifications.

According to a new RATESDOTCA/LEGER survey:

• 7 in 10 claim they're concerned they may not qualify for the mortgage amount they want.
• 1 in 3 was "very concerned."

Bond yields surged early in the week as banking worries gave way to inflation worries. But thankfully, we ended March with better-than-expected U.S. PCE data. That took inflation anxiety down a notch (more on that below).

If you're a Canadian rate watcher, you know that U.S. inflation data matters as much as its domestic equivalent. That's why Friday's PCE progress helped Canada’s 4-year swap rate—a proxy for basic fixed-rate funding cost—dip six basis points.