BREAKING NEWS… BANK OF CANADA RAISES RATE BY 0.25% AND THE SKY HASN’T FALLEN!!
Stephen Poloz, the Bank of Canada Governor, raised the Target rate by 0.25% to 0.75%. Maybe now the media will move on to other news.
Seriously, aren’t we all kinda tired of hearing how rates are going to skyrocket,…how this is going to make our mortgages unaffordable… how we have record debt levels.. how we are going to default our mortgages, lose our homes and go into a recession…it’s doom and gloom? This isn’t happening.
SOME FACTS ABOUT THE RATE HIKE Continue reading “Bank of Canada rate hike.. it’s really not a big deal.”
Houses selling over asking price is becoming the norm, these days. Kinda crazy. Sometimes a house is just listed under market value to attract a frenzy of buyers. An old tactic that has worked well in larger urban markets. Today, that tactic is being used in smaller communities, too.
What’s unclear is if this selling tactic is contributing to houses selling for more than they’re worth. And what is a home worth, anyway? I always thought a house was worth what someone was willing to pay in the open market. That’s still true in most cases, today.
When I see reports of houses selling for $100k, $200k and $300k over asking, it makes me wonder. How long will this market last? Will it crash? And if so, when? It’s hard to make forecasts and I can’t see into the future, but let’s examine this a little.
WHEN WILL THE HOUSING MARKET CRASH? Continue reading “Panic buying? When will the housing market slow down?”
Fixed mortgage rates have increased by about 0.40% in the last 6 weeks. Today’s 5 year fixed rates are at around 2.89% and will could continue to go up in 2017. There are political and fundamental reasons why rates have gone up. (oh, by the way.. it’s not panic time.. who ever said that 5 yr fixed rates were the best product to choose anyways? more on this later.)
Govt of Cda bond yields have gone up around 0.55% since October (fixed rates are priced from govt of Cda bond yields). It’s more expensive for Lenders to fund mortgages due to stricter government regulation and higher Capital holding requirements. These increased costs are being passed down to the consumer.
Okay, this is the “how” the rates are higher.. but what’s prompted these fundamentals? Why are rates higher?
POLITICAL REASONS.. IT’S ALL POLITICS Continue reading “Mortgage rate outlook 2017.. Expect Fixed mortgage rates to go up…Expect Variable rate pricing to drop.”
Last month, the US Fed Reserve Bank Chairperson, Janet Yellen, raised rates for the first time since 2006. Historically, Canada follows the US with rate movement.. However, times are changing…Don’t expect Canada to follow the US move anytime soon.
Divergence. That’s the new buzz-word. Bank of Cda Govr, Stephen Poloz said, “Usually you think of the Canadian economy following the U.S. economy fairly closely. This will be one of those places where it really doesn’t.” “But as a macro statement, there will a divergence there. We’re already seeing it, and so you should expect a divergence in policy too,” he said. Continue reading “US Fed rate hike doesn’t mean Bank of Cda rate hike!”
You gotta love the media. Yesterday, the Bank of Canada Governor gave a speech and announced a change in contingency plans should we fall into another financial crisis… like the US-made global recession in 2008.
But if you read the headlines, you would think the sky has fallen. All I kept seeing were headlines claiming “Canada could see Negative interest rates. Below zero interest rates. Canada would consider negative interest rates… ” Wow, talk about misleading the public.
Okay, so here’s what he really said, and this is straight from the Bank of Canada website…I quote… “We don’t need unconventional policies now, and we don’t expect to use them. However, it’s prudent to be prepared for every eventuality,” Governor Poloz said in a speech today to the Empire Club of Canada.
He went on to say that he believes that our economy is on target to rebound for 2017.. and here’s another direct quote. “The Bank is forecasting increasing annual growth in 2016 and 2017, with the Canadian economy expected to reach full capacity around mid-2017.”
I think this is pretty clear. The ‘worst case scenario’ plan has changed.. and the BOC govr expects our economy to rebound in the next 12 to 18 months. Hope this helps to clarify the message. Keeping it real.. and keeping it simple.
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Steve Garganis 416 224 0114 firstname.lastname@example.org