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Why the Bank of Canada’s ‘wait-and-see’ approach is best for homeowners and the economy: report

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The Bank of Canada has stepped to the sidelines since it last hiked the overnight rate, which influences rates on the mortgage market, this past October.

Leaving the policy rate at 1.75 percent since then is a departure from the central bank’s gradual efforts to push interest rates higher: The Bank of Canada has embarked on five consecutive hikes, beginning in July 2017.

Though the bank has not been as aggressive of late as market watchers might have predicted if asked last year, in a report published this week, TD economists Beata Caranci and James Orlando suggest this tempered approach is indeed the right one for the Canadian economy.

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For the past 10 or so years, they note, Canada has been able to count on the energy sector, housing, or both for economic growth. That isn’t the case today.

“Now we have a situation where both are going through what could be a prolonged adjustment period to a lower level of activity. This warrants a Bank of Canada pause,” reads their co-authored report titled “Patience is a Virtue.”

While lower oil prices and pipeline delays have been battering the Canadian economy, until relatively recently housing had picked up the slack. But with Canadian home prices posting their biggest decline since 1995, the economy is now facing another headwind, a situation TD nonetheless expects to clear up in the first half of the year.

“Our expectation is that evidence of housing stabilization and a rebound in the energy sector should become apparent in second quarter data, offering the central bank more confidence to resume its normalization process with interest rates thereafter,” the economists continue, saying the next rate hike is likely to occur in July.

However, TD notes that the data may not show the anticipated uptrends and risks may emerge.

“Household leverage and elevated sensitivity to interest rate changes have long been highlighted as the biggest risk to the economy,” the report states.

While TD’s view is generally in line with that of other big banks, there has been increasing speculation that the Bank of Canada may be encouraged to reverse at least one of its recent rate hikes in the event of a prolonged downturn in the housing market.

But BMO Chief Economist Douglas Porter isn’t buying that scenario.

“Another round of sour Canadian home sales figures, and a further cooling on household borrowing, seems to have awoken some of the big bears on Canadian housing,” Porter writes in a separate report.

“But before everyone goes all ‘sell Canada on the coming melt in housing’, we would just point to a variety of countering facts,” he adds.

For starters, policymakers were aiming at curbing out-of-control price gains when they implemented mortgage stress testing, hiked rates, and implemented foreign-homebuyer taxes in BC and Ontario — with that accomplished, more action isn’t likely for the time being.

Further, banks have begun cutting rates for five-year fixed-rate mortgages, the most popular type of mortgage for borrowers in Canada.

“As we have pointed out at every available occasion, do not forget that Canada is currently experiencing the strongest population growth in a generation,” Porter piles on.

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Covid-19 altering Canadians’ housing needs: RBC

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Amid a pandemic-driven shift in demand as well as a surge in new listings, the Canadian housing market remained strong in August, RBC Economics reports.

Citing preliminary data from local real estate boards, RBC said that markets in many areas of the country remained “red hot” in August.

“But the bigger story might be that Covid-19 is now prompting more people to sell,” the report said, noting that new listings surged in urban centres such as Toronto, Ottawa and Vancouver.

“We think this in part reflects the pandemic altering the housing needs of many current owners — who are opting to move, something they might not have considered just a few months ago,” it said.

RBC noted that the Toronto market saw new listings jump 57% year over year in August, powering a 40% increase in home sales.

Sales were up more than 20% from July’s near-record levels, it said.

“Clearly, [that] market has fired on all cylinders this summer, making up for the major disruption caused by Covid-19 in the spring,” RBC said.

The primary drivers of sales activity and higher prices were low-rise homes, including single-detached homes, RBC reported.

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RBC’s customer base makes it a favourite of cyber attacks – security experts

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Royal Bank of Canada is among the most targeted institutions by cyber attacks due to its broad customer base, according to an analysis by Palo Alto Networks.

From December 2019 up to present, cybercriminals have been establishing malicious pages disguised as websites by major companies to conduct phishing attempts and other similarly invasive attacks.

RBC ranked third in the most spoofed domains list, more than streaming giant Netflix and professional networking portal LinkedIn. PayPal and Apple ranked first and second, respectively.

“When you look at the broad customer base that RBC has, it makes sense, especially when you compare it to some of the other big names,” said Jen Miller-Osborn, deputy director of threat research at Palo Alto Networks. “These attackers are going after [domains] where they can make the most money, so they’re focusing on these organizations that have really broad customer bases because that really ups the number of potential victims.”

In an interview with BNN Bloomberg, Miller-Osborn outlined what consumers should be looking out for to filter our fraudulent emails.

“Typically, the ones that are going to be scam-related are trying to invoke some sort of emotional response,” Miller-Osborn said. “So they might say something like ‘Someone tried to change your password, click here to say whether or not that was you,’ or ‘Click here to confirm this charge on your statement,’ or ‘We’ve locked your account for strange activity.’ Essentially, things that will make people anxious and will make them want to click first, and not take a step back and pause to think, ‘Is that really the kind of email that my bank would usually send?’”

Other red flags include misspellings and basic grammar errors in the message, especially the sender line.

“Attackers try to closely mimic domain names, so you might see the number zero substituted for ‘o’, or a one substituted for the letter ‘l’. Little thing like an extra ‘s’ or ‘c’ in the name. These things, people tend to glance over very quickly and not notice.”

Miller-Osborn said that these measures should be done in concert with the most effective step in deflecting a spoofing attempt: Calling the bank and asking them if the email that they supposedly sent was legitimate.

 

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Queen confirms new home at Windsor Castle with Buckingham Palace for ‘selected events’

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The Queen will be returning to Windsor Castle in a matter of weeks, with Buckingham Palace only used for ‘select events’.

Her Majesty and her husband Duke of Edinburgh will first spend time privately at Sandringham when they leave Balmoral next week, Buckingham Palace confirmed.

She had been spending summer at her retreat in Aberdeenshire amid speculation that she would not return to the capital amid the coronavirus pandemic.

A spokesperson said: “The Queen and The Duke of Edinburgh will depart Balmoral Castle during the week commencing September 14 to spend time privately on the Sandringham Estate.

“Subject to the finalisation of the autumn programme, Her Majesty’s intention is to return to Windsor Castle in October and to resume the use of Buckingham Palace for selected audiences and engagements.

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