MARKET UPDATE

Economic - The global headwinds have no doubt restrained Canadian economic activity but the Bank of Canada (“BoC”) is still expecting growth to be approximately in line with production potential. Consumption and business investment are expected to be the most dominant factors contributing to growth which is consistent with the intent of the Bank's stimulative monetary policy. Record high household debt coupled with the volatile and weak global economy continue to be the most prominent risks to domestic growth. The BoC is projecting the economy to be at full capacity in the second half of 2013. 


Commercial Mortgage Market - The Commercial mortgage market in Canada continues to see participation from most major lending groups. We are approaching the season when some lenders begin to reach their annual allocation targets due to active origination volumes in the first half of the year. This development has already removed some lenders from the market and would provide justification for the recent expansionary pressure we are seeing on mortgage spreads. Five year funds continue to be the most prevalent financing option provided by lenders. Ten year funds are being offered by fewer lenders but are still available for strong borrowers with high quality assets. Although there are fewer lenders with ten year money, competition remains strong as the active lenders continue to compete strongly for high quality deals.