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A Stand-Off Between the Bank of Canada and the Government of Canada

To start off, a bit of good news for once: the average 5-year fixed rate mortgage has fallen over the last two months. Some qualified borrowers are now able to secure a rate as low as 4.89%. But of course, it is good news, so you probably didn’t see it reported in the mainstream media. 

Here’s what you likely did see: the overnight rate went up by yet another 0.50% on December 7 to 4.25%. Another staggering increase at a time when most experts predicted rates would start levelling out. Not only is this rate hike significant – it’s actually record-breaking. A whopping 4.00% increase in just 9 months took us from some of the lowest rates of this century to the highest.

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Insights From A Top Canadian Economist: Part 2

Canadian economist Benjamin Tal’s presentation at the National Mortgage Brokers Conference was eye-opening. In it, he posited a holistic view of what’s happening with the Canadian economy and what we can expect to happen next. He’s rarely been wrong in the 20 years I’ve been following him – so I thought it was incredibly important to share his insights with you. 

Part 1 of this series dives into the forces he believes are impacting inflation. These include international economies as well as lasting effects from the pandemic. There’s one factor however that I believe is most responsible for our current economic climate and is worthy of a larger conversation: the labour market.

Continue reading “Insights From A Top Canadian Economist: Part 2”

Insights From A Top Canadian Economist: Part 1

Two weeks ago, I attended the National Mortgage Brokers Conference and had the pleasure of seeing one of the most trusted economists in the country speak: Benjamin Tal. Ben is the Deputy Chief Economist at CIBC. I’ve been following him for over 20 years, as have many Canadians, and for good reason; not only is he exceptionally skilled at simplifying complex concepts; he’s also exceptionally skilled at getting it right.

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Rental properties as a secure long-term investment

Warning: More Rate Hikes To Come

Tomorrow will be the 7th rate announcement from the Bank of Canada this year. Of the last 6 announcements, 5 have resulted in rate hikes. Big rate hikes. Rate hikes we haven’t seen yet this century. To put things into perspective, most announcements we’ve seen in the last 12 years haven’t resulted in any movement to rates at all. And when they have, it’s been by no more than 0.25% (up or down).

Not only is it unheard of to announce 5 rate hikes in a row; but these rate hikes have reached as high as a full percentage point. Ludicrous. After 5 unprecedented increases, you would think that rates would plateau. 

Unfortunately I’m here to tell you that we’re not quite out of the woods. Yet.

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How To Navigate Today’s Economy

Rumour has it the worst is yet to come. On October 26th, Bank of Canada Governor Tiff Macklem will very likely increase rates by another 0.50%. Not only will this push the bank prime rate up to 5.95% – it could lead to the average 5-year fixed rate mortgage well above 6.00%. What a mess. As I mentioned in my previous article, the BoC made a critical error and the Canadian people are continuing to pay for it. 

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