Financial Update For June 9, 2010

Housing starts drop in May, in latest sign Canada's housing market is cooling
• TSX +12.44
• DOW +123.49
• Dollar +1.05c to 95.37cUS
• Oil +$.55 to $71.99US per barrel.
• Gold +$4.60 to $1,244.40 USD per ounce

Mortgage brokers not yet fully protecting data
THE CANADIAN PRESS
OTTAWA — Mortgage brokers still have a way to go in protecting the personal information of their customers, the privacy commissioner said Tuesday.
Jennifer Stoddart said an investigation by her office into the loss of hundreds of credit reports in Ontario two years ago found brokers have tightened their security.
But she says the controls should be tougher, especially since brokers play a major role in home-buying. Brokers handle a quarter of all mortgages and almost half of all first-time mortgages.
The audit was started after the brokerages reported 14 data breaches in the space of a few months in mid-2008. Someone impersonating an experienced agent downloaded credit reports for people who hadn’t even applied for a mortgage and compromised the personal information of thousands of people.
The mortgage companies themselves went to the commissioner when they discovered the leaks.
“The breaches prompted the brokerages to take some positive steps to better protect personal information,” Stoddart said in her report. “However, our audit found that those changes did not go far enough.”
The report said brokers now are more careful in allowing access to personal data, but don’t always have the alarm systems, secure walls and other physical safeguards to protect the files.
They also don’t have computer systems to restrict access to credit reports and aren’t always careful in disposing of their files.
She says mortgage brokers audited by her office have accepted her recommendations to improve security.
The association representing mortgage professionals acknowledged Stoddart’s findings and promised full support.
The Canadian Association of Accredited Mortgage Professionals said it has “an ongoing commitment to improving the information-handling procedures of mortgage brokers and their agents to ensure client protection.”
Stoddart said some firms simply didn’t understand the privacy risks and their responsibilities in protecting privacy.
Of the five brokerages audited, four agreed to all of Stoddart’s recommendations for tighter controls. One is out of business.
The brokers’ case was part of Stoddart’s 2009 annual report, tabled Tuesday in Parliament.
The report said the protection of privacy is increasingly moving into the virtual world and requires a global approach.
“In our interconnected world, we need to take a co-operative approach to protecting personal information,” she said.
She pointed to her office’s much-publicized fight with Facebook over privacy issues as an example of the difficulties in the online, borderless world.
“It was wide-ranging and the issues were incredibly complex and, in some aspects, highly technical.”
Stoddart prodded the social network into tightening privacy provisions and says she’ll be watching to make sure these changes are effective.
She has also opened an investigation into Google over accusations that it captured data from private wireless networks while assembling its street views.
The privacy commissioner is an officer of Parliament charged with overseeing the Personal Information Protection and Electronic Documents Act.
http://news.therecord.com/Business/article/724969
Housing starts drop in May, in latest sign Canada's housing market is cooling
By Sunny Freeman, The Canadian Press
TORONTO - New home construction slowed in May as the number of startups last month fell below economists' expectations — the latest indicator that Canada's once white-hot housing market is cooling off.
Canada Mortgage and Housing Corp reported Tuesday that the annual rate of housing starts dropped last month, pegging the rate at 189,100 units in May, down from a revised 201,800 in April.
Douglas Porter, deputy chief economist at the Bank of Montreal, said May's figures were below expectations but "hardly a shock."
"The surprise so far in 2010 had been how quickly starts had ramped up from their depressed levels a year ago," Porter wrote in a note Tuesday. "While the May level of starts is the lowest so far this year, it’s still above where we see activity for all of 2010."
Economists have widely predicted a slowdown in the housing market in the second half of 2010.
Consumers pushed many sales forward into the latter half of 2009 and the early part of 2010 in order to get into the market in advance of tougher new mortgage rules in April, the widely expected interest rate increase that was announced by the Bank of Canada in June and the implementation of the harmonized sales tax in Ontario and B.C. coming July 1.
CMHC said the decrease in May is consistent with its forecast of 182,000 housing starts for all of 2010.
Urban starts fell 9.5 per cent to 165,200 units in May, while rural starts were estimated at an annual rate of 23,900 units. Urban multiple starts, which include condos and townhouses, decreased 5.6 per cent to 92,800 units, while single urban starts dropped 14.1, to 72,400 units.
While spring and summer are generally the busiest building seasons of the year, construction is expected to slow markedly as a result of cooling demand in Canada's housing market, Porter said, adding it looks as though Canadian residential construction activity has peaked for the time being and will recede in the months ahead.
Most economists now predict that home prices will either remain flat or fall in the rest of the year and into 2011.
Derek Burleton, vice-president and deputy chief economist at TD Bank Financial Group, said starts dropped in May despite unseasonably warm, construction-friendly weather in Central and Eastern Canada and were the first major setback for home building in several months.
"Today's data suggest that the rebound in home-building activity from last year's recession is quickly running out of steam," he wrote in a note Tuesday.
"Prior to May, starts had rallied strongly from a recession low of 112,000 units in April of last year. In the first four months of the year, starts had plateaued at the 200,000 level."
He added that TD Economics anticipates average resale home prices to decline by six to seven per cent over the next four or five quarters.
"A bigger culprit (than the HST) however, is easing price conditions in the broader housing market, as sales continue to come off the boil and more listings make their way onto the market," Burleton said.
But, thanks in part to a strong showing in April, housing starts in the second quarter are still likely to be solid—around 190,000 to 195,000 on an annualized basis —down slightly from about 200,000 units in the first quarter, Burleton predicted.
Meanwhile, he said in the second half of the year, housing starts will moderate to the 160,000 to 170,000 unit range.
The Canadian Real Estate Association last week lowered its 2010 national forecast for resale transactions following a weaker than anticipated start to the year in some provinces, mainly British Columbia, Ontario and Alberta.
CREA also revised its projected housing price increases for this year, saying it still expects a record to be set this year but that the increase now is expected to be just 1.6 per cent over 2009.
The previous forecast had called for prices to rise 5.4 per cent over last year's record-setting peak.
The association predicted that by 2011, the national average housing price is expected to decline by 1.5 per cent, driven down by an easing of the growth in sales in B.C. and Ontario.
http://ca.news.finance.yahoo.com/s/08062010/2/biz-finance-housing-starts-drop-latest-sign-canada-s-housing.html