Expect a lower Loonie, steady interest rates, rising house prices in 2014

Expect a lower Loonie, steady interest rates, rising house prices in 2014

Canada’s economy and its affect on everyday investors was a hot topic Wednesday with RBC, the IMF, the Conference Board of Canada and Goldman Sachs all chiming in.


The Loonie will fall: Goldman Sachs

Researchers at the U.S. investment firm expect the Canadian dollar to hit 88 cents USD in 2014 as our trade deficit grows, according to media reports. That, coupled with the rebound in the U.S. economy, could lead investors to short the loonie in favour of the greenback.

Ottawa should consider end to CMHC mortgage insurance: IMF

The International Monetary Fund report suggested that the federal government get out of the business of mortgage insurance because it exposes the government and  taxpayers to risk and might distort the lending market as a whole in favour of mortgages over entrepreneurship. The IMF also recommended that Canada’s central bank hold off raising interest rates until there are signs of solid household spending, exports and investment. The think tank projected modest economic growth of 2.25% for Canada next year.

Canada will ride U.S. coattails: Conference Board

Meanwhile, the Conference Board of Canada suggested Canada could see real GDP growth of 2.4% in 2014 and 2.6%  in 2015—assuming strong growth in the U.S.

Housing affordability is a growing concern: RBC

A new RBC report details the erosion of housing affordability in Canada. The bank said the biggest risk to maintaining manageable affordability levels would be a sharp rise in interest rates, but many analysts believe that is unlikely to occur as long as global economic growth remains moderate and inflation pressures soft.

For more on the reports, head over to Canadian Business.