This Week's Mortgage Market Update Contains:

• Lenders predict rush before oct. 15 change
• Economic future bright, Flaherty tells chamber
• U.S. Mortgage Applications Index Fell 6.2% Last Week

This Week's Quotation:

"If you limit your choices only to what seems possible or reasonable, you disconnect yourself from what you truly want, and all that is left is a compromise." - Robert Fritz

This Week's Highlights:

• Jobs market stalls
• Housing starts stay above 200,000-unit mark
• Canada's first-quarter contraction not expected to persist

WEEKLY ARTICLES OF INTEREST

Lenders predict rush before oct. 15 change

In the Calgary real estate game, Brad Gough considers himself lucky. First of all, he and his wife Sarah got in under the wire for purchasing their first home in Calgary, picking up a Palliser townhouse months before the major price increases hit in 2006. And just last week, Gough, 27, locked up what could be one of Calgary's last 40-year mortgages.
"read more...."

Economic future bright, Flaherty tells chamber

The Canadian economy remains fundamentally strong and capable of withstanding a global economic slowdown even in these "turbulent times," Finance Minister Jim Flaherty said Wednesday in Calgary. "I want to assure you Canada's economic future is bright, based on the economic fundamentals of this country, which are solid," he told a Chamber of Commerce audience. Despite a gathering financial storm south of the border, Flaherty said there are "fundamental differences" between Canada and the United States that decrease the risk of a major recession here. "read more...."

U.S. Mortgage Applications Index Fell 6.2% Last Week

Mortgage applications in the U.S. dropped 6.2 percent last week, led by declining demand for loans to purchase homes as interest rates jumped. The Mortgage Bankers Association's index of applications to buy a home or refinance a loan fell to 489.6 in the week ended July 18 from 522.2 the prior week. The group's refinancing gauge declined 5.6 percent while the purchase index decreased 6.7 percent. "read more...."

"THIS WEEK'S HIGHLIGHTS"

Jobs market stalls

The labour market took a breather in June with 5,000 jobs cut, following May's modest 8,400-job increase, the first back-to-back soft prints since July-August 2006. The unemployment rate edged up to 6.2% from 6.1% and the participation rate slipped to 67.9%, but still near the record high of 68%. The wage measure for permanent employees rose 0.6%, resulting in the year-over-year rate slowing to 4.3%. Once again job gains were concentrated in part-time positions (up 34,200); full-time jobs fell by 39,200, adding to May's 32,200 decline. Both public sector and private sector jobs declined and the number of self-employed increased by a marginal 1,400. Only 34% of the jobs created this year have been full-time -- the lowest proportion in seven years. Still, wage growth remains robust and well above the pace of inflation, giving Canadian consumers the means to continue to spend despite the uncertain financial backdrop and rising gasoline prices. Professional, scientific and technical services added a substantial 37,100 positions in June with wholesale and retail trade adding 12,900 to their payrolls. However, this was offset by declines in business, building services, health care, accommodation and food services, resulting in services-producing firms cutting 5,400 jobs, the second monthly decline. In the goods-producing sector, manufacturing was flat, notable because it followed a whopping 34,200 job increase in May that marked the biggest monthly gain since June 2002. Construction jobs, however, fell by 15,900 trimming back the sector's job gains to 82,400 in the past 12 months.

Housing starts stay above 200,000-unit mark

Housing starts came in at a 217,800 annualized pace in June and May starts were revised higher to 227,700 from the preliminary report of 221,300 units. The decrease in June reflected softening in both the urban singles component, down 7.8% to an annualized 74,600 units and urban multiples component, which fell 3% to 114,700. Four of the five major regions showed declines in the month, with double-digit drops in the Atlantic region (down 12.4%), Quebec (down 11.6%) and the Prairie region (down 20%) and a more moderate 9.5% decline in British Columbia. The only increase was in Ontario where starts popped up by 10.8% reflecting a rebound in the multiples component. Housing starts averaged 220,000 units annualized in the second quarter, 6.2% slower than the first-quarter average of 234,300 units. However, holding above the 200,000- unit mark signals that housing starts activity, although slower, remains healthy. Single detached homes, usually a more stable indicator of the trend in housing, slipped 7.6% in the quarter. The slowing in the single-home component is in line with the steady deterioration in housing affordability throughout 2007. Still, the strong labour market and solid wage gains are keeping Canada's housing market on a firm path in contrast to the U.S. housing market, which remains in a deep downturn.

Canada's first-quarter contraction not expected to persist

The unexpected contraction in first-quarter real GDP largely reflected one-off factors, including a sharp slowing in inventory growth and bad weather, which tempered housing activity. Second-quarter data, however, is showing a rebound, with solid gains in real GDP, manufacturing sales, retail spending and wholesale trade in April. In addition, Canada's labour market has yet to show signs of flagging, with the unemployment holding near a generational low and wage growth running much faster than inflation.