Mortgage data from Canada’s two biggest banks are painting a picture of homeowners straining under high borrowing costs, Bloomberg News reported. Royal Bank of Canada, the country’s largest lender, disclosed that 43% of its Canadian residential mortgages had an amortization period of longer than 25 years, as of July. That’s up from 40% a year earlier, and just 26% in January 2022. Canadian banks have allowed customers to stretch payments for longer periods to help them bring down their monthly payments after a rapid rise in rates.
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After months of underperforming the broader market, Canada’s Big Six banks are likely to continue struggling as expenses and loan-loss provisions rise and consumer finances deteriorate, Bloomberg News reported. Higher interest rates are expected to hurt lenders’ fiscal third-quarter earnings when they begin to report Thursday. Inflation data on both sides of the border have ratcheted up bets that central banks could raise rates further still, which would further erode spending power and borrowing demand.
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Canadian June retail sales grew by 0.1% from the previous month driven mostly by car sales, data showed on Wednesday, a sign of weak consumer spending that could convince the central bank that interest rate hikes are sinking in, Reuters reported. The slight June gain was led by increases at motor vehicle and parts dealers as well as gasoline stations and fuel vendors, Statistics Canada said. Excluding sales of cars and car parts, retail sales declined 0.8% in June. Economists had forecast June sales would be flat and that they would rise 0.3% excluding autos.
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Canada's big bank results are expected to bring to light a number of challenges as lenders set aside more funds for bad loans in a tough economy that has also led to a slowdown in dealmaking and forced borrowers to rethink about new mortgages, Reuters reported. The big six banks, which control a majority of the market in the country, have had to brace for macroeconomic uncertainties and build reserves while also ensuring they have enough capital to meet new regulatory requirements in case of uncertainties.
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The U.S. Commerce Department on Thursday said it will set preliminary anti-dumping duties on tin-plated steel from Canada, Germany and China, in a move to shield domestic steelmakers that will prompt warnings of higher prices for cans made from the steel and the foods, paint and other products they contain, Reuters reported. The department said it will propose preliminary anti-dumping duties of 122.5% on tin mill steel imported from China, 7.02% on imports from Germany and 5.29% on imports from Canada. A formal Federal Register notice is expected later on Thursday.
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Investment in Canada's financial technology sector was reduced to less than half in the first six months of 2023 from last year, according to a report from accounting firm KPMG on Thursday, Reuters reported. Startup valuations across the technology spectrum have been hit as high-interest rates and worries over a looming economic slowdown sour investor appetite, leading to a shift towards safer investments with greater focus on profitability and away from cash-burning firms.
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Canada's annual inflation rate surged more than expected to 3.3% in July as core measures eyed by the central bank remained stubbornly high, data showed on Tuesday, increasing the likelihood of another interest rate increase, Reuters reported. Analysts polled by Reuters had forecast inflation would rise to 3.0% from the 27-month low of 2.8% recorded in June. The consumer price index was up 0.6% on a month-over-month basis, Statistics Canada said, also higher than a forecast of a 0.3% gain.
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A Burnaby-based company that designs and builds electric bikes and scooters has added Veemo’s covered electric tricycle to its catalogue, the Vancouver Sun reported. According to Envo Drive Systems CEO Ali Kazemkhani, his company is taking over the 122 orders for the electric trike that Veemo had in place before the business folded in January. Kazemkhani said all Veemo customers had been refunded their $250 deposits and would soon be asked whether they want to continue their order under the Envo banner.
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A Scottish renewables company, backed by Scottish Enterprise, has been placed into administration as a result of problems with its Canadian subsidiary, Daily Business reported. Edinburgh-based Sustainable Marine Energy (SME), developed tidal energy systems and last year its Canadian business was successful in harnessing tidal currents in the country’s Bay of Fundy, in Nova Scotia, using its innovative, floating platform.
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Canada Pension Plan Investment Board lost 0.8% in the fiscal quarter ended June 30, as a stronger Canadian dollar and declines in fixed income assets on the heels of higher interest rates weighed on results, Bloomberg News reported. The fund, Canada’s largest, grew to C$575 billion ($429 billion) from C$570 billion at the end of the previous quarter, according to a statement Thursday. Net transfers totaling C$9 billion from the Canada Pension Plan (CPP) helped offset a net loss of C$5 billion, increasing net assets by C$5 billion during the quarter, the fund stated.