Shares of Home Capital Group Inc. (TSX:HCG) were static as of the trading morning Friday parrying incremental losses. On Wednesday, August 2 the company reported a $111 million net loss in the second quarter of 2017. The company expressed optimism that the worst is now over and that “There is no longer material uncertainty” when it comes to carrying out regular operations in the future. The stock has declined 55% in 2017 and found itself embroiled in a major crisis in the spring regarding disclosure and underwriting practices.
Meanwhile, Toronto home prices are veering close to a bear market in light of new regulations brought in by the Ontario government and a recent rate hike of 25 basis points by the Bank of Canada. Prices have fallen from an average of $920,791 in April to $746,218 in July as revealed by a recent report released by the Toronto Real Estate Board. Sales also saw a 40.4% decline year over year.
On Friday, August 4 Statistics Canada reported that the country added 11,000 jobs in July and jobless rate had dipped to 2008 levels. This, combined with a GDP report that beat forecasts on July 28, means that a second rate hike is becoming more likely in the fall from the Bank of Canada. Home Capital Group customers face greater exposure to the rising base rate than do customers at the big banks. Thus, individuals at the alternative lender could see payments rise in the double digits in the latter part of 2017.
