Canadian Real Estate Prices Rising on Massively Inverted Yield Curve

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Steve Saretsky
Published on 17 Aug 2019
As the global economy slows Central Banks across the world are aggressively slashing interest rates towards zero. Desperately trying to avoid a recession, there remains little room to maneuver as interest rates slide closer into negative territory. Stimulus in the form of lower interest rates is nearing an end game, however, it appears to be providing one last shot in the arm to the housing market.

National home sales in Canada increased for the fifth consecutive month with the home price index inching up ever so slightly by 0.2% year-over-year. The 100bps drop in mortgage rates are helping spur some purchasing.

However, this uptick comes at a rather intriguing point in time. The Canadian yield curve is now over 90% inverted,  the last time it was like this we had the financial crisis and the tech bust. Is a recession on the way? Or will the Bank of Canada manage to prolong the cycle further?

Blog: Negative Interest Rates and the War on Housing
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