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Why these economists think Canada's housing correction is going to be worse than they feared

Financial Post: 'An increasingly hawkish Bank of Canada, the widening of mortgage spreads and news that a lender has suspended new loan applications has prompted Capital Economics to deepen its forecast of home price declines to 20%.

'Mortgage spreads dropped during the pandemic when lenders were eager to offer homebuyers financing, but this trend has reversed in recent months.

'Capital says the spread between the “discretionary” five-year fixed mortgage rate, or the average for uninsured borrowers, and the five-year swap rate doubled from its October 2021 low of 60 basis points to 120. The spread between variable rates and the policy rate jumped by 50 bp to 170.'

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