(MENAFN- Baystreet.ca) A flurry of positive reports has inspired Canada's top banks to declare that the domestic housing market is "back". Sales have moved up in major metropolitan areas, with the Greater Toronto Area showing the sharpest signs of recovery. Low rates appear here to stay, and housing remains in the spotlight for this election cycle which will heat up into October.
Home Capital Group (TSX:HCG) stock has climbed 31% over the past three months as of mid-afternoon trading on September 17. Shares have moved to highs it had not seen since the spring of 2017. Unsurprisingly, this was also the most uncertain period for the Canadian housing market. Home Capital was on the verge of collapse, and investors worried that Canada housing could also experience a devastating downturn.
The stricter regulatory environment has provided a boon to alternative lenders like Home Capital. Client portfolio quality has greatly improved under these new rules. To add to that, regulations have also capped the risk of a sharper housing price correction. This was the intention of the policy to begin with, but the aid to alternative lenders was an unforeseen consequence.
The company's mortgage originations increased 4% year-over-year in the second quarter to $1.28 billion and loans under administration grew 1.7% to $22.9 billion. Management expects the balanced conditions in the domestic market to contribute to stability and positive earnings for the rest of fiscal 2019.
Shares of Home Capital still possess a solid P/E ratio of 13.2 and a favourable P/B of 0.8. The stock has retreated from technically overbought territory. Home Capital still has room to run as the broader market storms back.
MENAFN1809201902120000ID1099019694
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.