The Canadian Real Estate Association (CREA) reportedly expects to report sharp declines in the month of April for the housing market. However, the drop should not be as severe as the March report. Home sales have fallen precipitously in the huge Vancouver and Toronto housing markets, while some smaller markets in Canada have actually performed reasonably well.
Alternative lenders are suffering from the bearish market conditions.
Equitable Group Inc. (TSX:EQB) was down 1.73% at the bottom of the noon hour on May 14. The Toronto-based residential and commercial mortgage lender released its first quarter results on May 10. Net income fell 7% from Q1 2017 to $40.2 million and diluted earnings per share were down 8% to $2.34. Mortgages under management hit a record $23.8 billion, representing a 9% jump from March 31, 2017 and a 2% increase from December 31, 2017. The company said that it deployed more capital into its commercial lending business in order to offset a slowdown in residential lending.
Home Capital Group Inc. (TSX:HCG) was down 1.09% at the bottom of the noon hour. Shares have plunged 17.9% in 2018 so far. In the first quarter Home Capital reported net income of $34.6 million as reduced loan balances and lower securitization income continue to weigh on its core business. However, the company expects the highest renewal rates in history due to the new OSFI mortgage rules which have cut into the ability of home owners to shop for new mortgages.
Still, loan growth will be a challenge going forward for both companies. As spring and summer numbers start to trickle in it is possible that 2018 will be a static year in the housing market.
