Low policy rates are causing everybody in the world to pile into real-estate. The UK response deals with income, not Loan-to-Value:
[Professional government mouthpiece Mark] Carney’s attempt to reassure consumers and businesses that the BOE benchmark will peak well below the 5 percent seen before the financial crisis has helped to hold down borrowing costs. Five-year gilts are yielding 1.76 percent today compared with 1.86 percent at the end of last year. Traders are betting the BOE will refrain from raising the 0.5 percent benchmark until June, Sonia contracts show.
Financial-stability officials have taken some action to prevent an unsustainable debt buildup, toughening affordability checks in April and then restricting the proportion of mortgages at 4.5 times income to no more than 15 percent of new home loans.
“They’ve picked out this 4.5 times loan-to-income multiple from thin air because it’s one of the few measures where you’re not through the previous peak substantially,” [Talisman Global Asset Management Ltd. Chief Investment Officer Julian] Sinclair said.
Meanwhile, in Canada:
Bank of Montreal has once again lowered its five-year fixed mortgage rate to 2.99 per cent, from 3.29 per cent, a move that could cause more downward pressure on rates at a time when they’re already defying expectations.
BMO’s rate is not the lowest in the market, but it is the lowest that’s currently available from the country’s biggest banks. BMO sparked a mortgage price war among the banks when it first introduced its 2.99 per cent five-year-fixed rate in early 2012. That rate also earned the bank a lecture from then-Finance Minister Jim Flaherty, who had been taking steps to curb growth in the housing market amid fears that a bubble could be forming. BMO has repeatedly brought the rate back since then, most recently this March.
Dog bites man? That’s not news. But man bites dog is news!
Apple Inc. will charge fees from banks every time consumers use their iPhone to make purchases, a move that will give the company a cut of the growing mobile payments market, Bloomberg reported, citing people with knowledge of the arrangement.
Apple unveiled a watch, two larger iPhones and the mobile payments service Apple Pay on Tuesday.
The new iPhones will come equipped with the payments service, which launches in the United States next month and allows users to pay for items in stores with their phones instead of physically presenting their credit or debit cards.
Under the deals struck individually with each bank, Apple will collect a fee for each transaction, the report said.
As far as consumers are concerned, of course, it just means yet another layer of fee-demanding middlemen. That part isn’t news at all.
It was a poor day for the Canadian preferred share market, with PerpetualDiscounts down 11bp, FixedResets losing 15bp and DeemedRetractibles off 3bp. Volatility was average, but comprised entirely of FixedReset losers. Volume was low, but the highlights consist entirely of FixedResets.
PerpetualDiscounts now yield 5.13%, equivalent to 6.67% interest at the standard equivalency factor of 1.3x. Long corporates now yield about 4.25%, so the pre-tax interest-equivalent spread (in this context, the “Seniority Spread”) is now about 240bp, a significant narrowing from the 250bp reported September 3.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
|||||||
| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.1108 % | 2,640.7 |
| FixedFloater | 4.15 % | 3.40 % | 25,962 | 18.57 | 1 | 0.2626 % | 4,183.9 |
| Floater | 2.90 % | 3.07 % | 45,069 | 19.47 | 4 | 0.1108 % | 2,730.7 |
| OpRet | 4.05 % | -0.05 % | 98,060 | 0.08 | 1 | -0.0395 % | 2,727.1 |
| SplitShare | 4.28 % | 3.81 % | 114,773 | 3.93 | 5 | -0.0317 % | 3,152.8 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0395 % | 2,493.7 |
| Perpetual-Premium | 5.47 % | 0.41 % | 74,819 | 0.09 | 20 | -0.0746 % | 2,437.1 |
| Perpetual-Discount | 5.22 % | 5.13 % | 110,342 | 15.21 | 16 | -0.1122 % | 2,607.1 |
| FixedReset | 4.25 % | 3.74 % | 182,443 | 8.40 | 74 | -0.1453 % | 2,561.6 |
| Deemed-Retractible | 5.00 % | 1.85 % | 100,163 | 0.21 | 42 | -0.0275 % | 2,566.1 |
| FloatingReset | 2.62 % | 1.92 % | 80,212 | 0.16 | 6 | -0.1438 % | 2,529.4 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| VNR.PR.A | FixedReset | -1.96 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-10 Maturity Price : 23.38 Evaluated at bid price : 25.04 Bid-YTW : 4.35 % |
| CIU.PR.C | FixedReset | -1.87 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-10 Maturity Price : 20.42 Evaluated at bid price : 20.42 Bid-YTW : 3.73 % |
| TRP.PR.A | FixedReset | -1.80 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-10 Maturity Price : 21.86 Evaluated at bid price : 22.34 Bid-YTW : 3.93 % |
| TRP.PR.E | FixedReset | -1.02 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-10 Maturity Price : 23.26 Evaluated at bid price : 25.35 Bid-YTW : 3.87 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| NA.PR.S | FixedReset | 147,403 | TD crossed two blocks of 10,000 each, both at 25.60. RBC crossed two blocks of 24,200 and 25,000 at 25.60 and another block of 60,000 at 25.64. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-05-15 Maturity Price : 25.00 Evaluated at bid price : 25.61 Bid-YTW : 3.61 % |
| TD.PF.B | FixedReset | 108,747 | RBC bought 10,000 from Scotia at 25.12 and crossed 50,000 at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-10 Maturity Price : 23.20 Evaluated at bid price : 25.10 Bid-YTW : 3.74 % |
| TRP.PR.D | FixedReset | 65,592 | RBC crossed 25,000 at 25.35; TD crossed 26,300 at the same price. YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-10 Maturity Price : 23.27 Evaluated at bid price : 25.25 Bid-YTW : 3.85 % |
| MFC.PR.E | FixedReset | 61,921 | Called for redemption September 19. YTW SCENARIO Maturity Type : Call Maturity Date : 2014-10-19 Maturity Price : 25.00 Evaluated at bid price : 24.99 Bid-YTW : 4.73 % |
| ENB.PF.E | FixedReset | 23,875 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2044-09-10 Maturity Price : 23.15 Evaluated at bid price : 25.08 Bid-YTW : 4.22 % |
| MFC.PR.M | FixedReset | 23,150 | Recent new issue. YTW SCENARIO Maturity Type : Call Maturity Date : 2019-12-19 Maturity Price : 25.00 Evaluated at bid price : 25.07 Bid-YTW : 3.92 % |
| There were 23 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| VNR.PR.A | FixedReset | Quote: 25.04 – 25.49 Spot Rate : 0.4500 Average : 0.2836 YTW SCENARIO |
| CIU.PR.C | FixedReset | Quote: 20.42 – 21.00 Spot Rate : 0.5800 Average : 0.4395 YTW SCENARIO |
| GWO.PR.M | Deemed-Retractible | Quote: 26.20 – 26.45 Spot Rate : 0.2500 Average : 0.1643 YTW SCENARIO |
| TRP.PR.E | FixedReset | Quote: 25.35 – 25.60 Spot Rate : 0.2500 Average : 0.1647 YTW SCENARIO |
| FTS.PR.G | FixedReset | Quote: 24.51 – 24.75 Spot Rate : 0.2400 Average : 0.1708 YTW SCENARIO |
| POW.PR.G | Perpetual-Premium | Quote: 26.02 – 26.23 Spot Rate : 0.2100 Average : 0.1414 YTW SCENARIO |