“Conditions in the banking system — and the financial sector more broadly — have improved significantly in the past few years,” he told a banking conference in Chicago.

Speaking by teleconference from Washington, he noted that the capital and liquidity positions of banks have been strengthened but said home mortgage lending continues to be very tight.

Bernanke said home mortgage credit outstanding with banks has contracted about 13% from its peak.

“Many factors suggest that this situation will be difficult to turn around quickly, including the slow recovery of the economy and housing market, continued uncertainty surrounding the future of the government-sponsored enterprises and cautious attitudes by lenders,” he added.

A return to the kind of lending standards that were prevalent before the 2007-2009 crisis would not be appropriate, Bernanke said. But he suggested conditions now were so tight that they were inhibiting lending.

The increase was slightly greater than the 0.2% advance predicted by market operators. Compared with March 2011 the index rose by 2.6%, up from the 2.3% year-on-year growth recorded in February.

The metropolitan region of Toronto and Oshawa, representing 26.6% of the overall market, was the top contributor to the month-on-month advance, growing by 0.6% on good market conditions and increased demand.

The most significant monthly price decline was the 0.7% drop recorded in the British Columbia capital Victoria, where competitive market conditions prompted builders to lower their prices.

Overall, prices were up in 11 regions in March, held steady in seven, and dropped in three.

© Thomson Reuters 2012

This follows a 7.6 per cent increase in February.

The increase was led by permits for institutional and commercial buildings, mostly in Ontario.

The value of non-residential permits rose 13.9 per cent to $2.9 billion in March, after jumping 37.7 per cent the previous month.

The March level was the highest since June 2010.

The value of residential permits declined 1.3 per cent to $3.9 billion, the third consecutive monthly decrease.

Both cities have been singled out by the Canadian Real Estate Association for either skewing the national numbers higher and lower in recent months. And both cities remain among the hottest real estate markets in the country.

And the similarities don’t end there.

Resale prices move higher

On the surface, new data from real estate boards in the two markets shows prices for resale homes are indeed still rising. In Toronto, the average price of a resale home was $517,556 in April — an 8.5 per cent increase from the same month a year earlier.

The average price in Vancouver, meanwhile, was $683,800 in April, up 3.7 per cent compared to a year ago.

Rising prices are broadly perceived to be the surest sign of a buoyant housing market, but the number of homes sold — and the number of homes listed for sale — tell a different story.

In Vancouver, there were 2,799 sales on the Multiple Listings Service last month. That’s a 13.2 per cent decline from the 3,225 homes sold the same month a year earlier. Indeed, the number of homes sold in April in Vancouver is the lowest total for that month since 2001, the Real Estate Board of Greater Vancouver (REBGV) noted in a release this week.

Canada’s biggest banks accepted tens of billions in bailout funds during the recession, according to a report released today by the Canadian Centre for Policy Alternatives.

Canada’s banking system is often lauded for being one of the world’s safest. But an analysis by CCPA senior economist David Macdonald found that Canada’s major lenders were in a far worse position during the downturn than has ever been previously believed.

Macdonald pored over data provided by the Canada Mortgage and Housing Corporation, the Office of the Superintendent of Financial Institutions and the big banks themselves for his report published Monday.

It says support for Canadian banks reached $114 billion at its peak. That works out to $3,400 for every man, woman and child in Canada, and also to seven per cent of Canada’s gross domestic product in 2009.

The figure is also 10 times the size of the amount Canadian taxpayers spent to bail out the auto industry in 2009.

“At some point during the crisis, three of Canada’s banks — CIBC, BMO, and Scotiabank — were completely under water, with government support exceeding the market value of the company,” Macdonald said. “Without government supports to fall back on, Canadian banks would have been in serious trouble.”

During October 2008 and June 2010, the banks combined to report $27 billion in profits on their balance sheets.

Report says mortgages taken off bank balance sheets

One of the most well-known ways in which policymakers helped the banks during the crisis is through a $69-billion CMHC program whereby the housing agency took mortgages off the balance sheets of big Canadian banks.

“The federal government claims it was offering the banks ‘liquidity support,’ but it looks an awful lot like a bailout to me,” says Macdonald. “Whatever you call it, Canadian government aid for the country’s biggest banks was far more indispensable than the official line would suggest.

“The support for Canadian banks was much more substantial than Canadians were led to believe,” Macdonald said.

When asked for comment, the Canadian Bankers Association said they had received the report and were assessing it.

The latest nation-wide housing numbers were released by the Canadian Real Estate Agency on Monday.

According to the statement, the national average for home prices was down 0.5 per cent in March, compared to one year earlier.

That meant the national average price for a home sold in March 2012 was $369,677, but individual markets varied widely, said Gregory Klump, CREA’s chief economist.

“Average prices are up from year-ago levels in most large urban centres,” Klump said in a release. “The slight decline in the national average price points to a tug of war between Toronto and Vancouver from the standpoint of their sales mix compared to last year.”

He added that the national average home price last spring was “skewed higher” by record high-end home sales in Vancouver. The latest figures confirmed the expectation that the phenomenon would not recur this year.

“The decline in average price reflects the change in Vancouver’s sales mix, not housing price deflation,” Klump said.

The March average of $369,677 was down from just under $373,000 in February and down from $371,591 in March 2011.

Meanwhile, home sales rose 2.5 per cent from February to March on average across Canada, with two-thirds of all local markets showing increases in sales, with Toronto, Calgary and Edmonton leading the pack.

The housing agency estimates there were 14,517 actual starts in March, which translates to a seasonally adjusted annual rate of 215,600 units.

The adjusted figure irons out monthly variations and is calculated as if the March starts continued at the same pace for a year.

March’s seasonally adjusted rate was up from 205,300 units in February.

The agency says the March growth was due to an increase in multiple-unit starts, particularly in Ontario and the Prairies.

It was partly offset by decreased multiple starts in British Columbia and Quebec.

Single-detached starts decreased marginally across the country

Urban starts rose by 4.2 per cent in March to 192,100 units on a seasonally adjusted annual basis.

The Royal Bank’s annual home ownership survey found 59 per cent of respondents believe now is the time to get into the housing market, instead of waiting until next year.

That’s four percentage points higher than in last year’s poll.

But 73 per cent said they are unlikely to buy within the next two years, up two percentage points from last year.

The poll was done in late January, about the time Prime Minister Stephen Harper first indicated his government’s intention to reform Canada’s retirement system. There was also widespread concern about the Greek debt crisis at the time.

“I would say that people are pretty conflicted around home buying intentions,” said Marcia Moffat, head of home equity financing for RBC.

The Commodity Futures Trading Commission lawsuit says the bank also concealed the true nature of the trades and made false statements to a futures trading exchange.

Royal says in a statement it consulted stock exchanges and the commission itself for guidance when the trades were made and got no objection from either.

And it’s not necessarily mortgage debt the central bank is most concerned about — it’s the money Canadians borrow by using their homes as collateral.

The central bank says a majority of this borrowing is spent on consumption and home renovation.

Citing a series of research papers, the bank suggests that the financial security of many Canadians is built on a house of cards — the steep increase in the values of homes. If home values correct, that would leave households with a huge debt load and less equity to back it.

The papers repeat already published data that household debt as a ratio of disposable income has risen steadily in the past 30 years and has gone from about 110 per cent to more than 150 per cent in the last dozen.

But the papers also show that the debt to equity ratio has also risen.

And it also notes that despite the equally steep increase in home prices, affordability has remained relatively constant due to rising incomes and falling interest rates.

The bank does not warn of a potential crash as occurred in the United States, but it does worry about households being caught in a bind if an economic shock occurs and that lower-income families are most vulnerable.

Economists have been split about the seriousness of Canada’s debt issues, although all warn that households cannot keep borrowing at levels above their growth in income.