Right now, the housing market in Canada is a strange bird. The latest reports suggest that aggregate house prices are well into the high six figures, and quite a few Canadians have been unable to get in accordingly. However, there are signs of recovery afoot, and Canadians are weathering the storm much more effectively than expected. Still, Canada’s three leading banks—Royal Bank of Canada (TSE:RY), Canadian Bank of Commerce (TSE:CM), and Toronto Dominion (TSE:TD)—all ended up down fractionally in Monday afternoon’s trading despite optimism from mortgage holders.
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In fact, word from the Bank of Canada revealed that if mortgage holders have to increase their mortgage payments, they could do so when the loans renew. However, Canadians are also increasingly paring back their overall spending, possibly in aid of the original point. Canadians expect interest rates and inflation to remain high, and they’re already pulling in their collective wallets. Nevertheless, the report noted that the most “financially vulnerable” households are feeling the pinch and working to limit their spending most.
Signs of Life Cropping Up
The last 18 months have already been regarded as “…some trying times…” for the Canadian mortgage market in general. And with Canadians planning to rein in spending in a bid to have more available cash to pay the mortgage, that’s not all that surprising either. Yet, there are some signs of life coming back in. We’ve already heard about the Royal LePage report that suggested as much, but word out of the Vancouver real estate market says that there are signs of a “spring market” to come. With people actively reconsidering their spending and focusing on housing, that may have just the impact the market needs, even as rates—and inflation—remain high.
Which Canadian Bank Stock is the Best Buy?
Turning to Wall Street, analysts consider TD stock to be the leader in the field. With an average price target of $67.18, this Moderate Buy stock offers investors an 11.87% upside potential. Meanwhile, CM stock comes in as the laggard among the three, as this Hold-rated stock offers investors a 3.76% upside potential on its average price target of $47.75.
