If you’re a regular reader of this site, you’ll know I’ve been very skeptical and critical of the Bank of Canada (BoC) for continuing to increase interest rates. It just hasn’t made sense.
The BoC raised rates FIVE TIMES between July 2017 and October 2018. That’s a 1.25% increase. For anyone with a $300,000 mortgage, your payment increased by $189 per month. Or, to put it another way, for every $100,000 of mortgage, your payment went up by around $63 per month.
Yet, we kept hearing that the BoC wanted to raise rates further. Economists and other experts were saying we should expect more rate increases by the end of 2018! Wow!
Continue reading “Remember when I said rates could go down, not up?!”
Remember all those pessimists who were calling for a housing bubble or collapse?
If you listened to them and rented for the past eight years, how much would you have lost? How much would your rent have increased since then? And would you still be able to rent that condo or house… or would your landlord possibly have plans to sell it and leave you out in the cold?
We used to expect an economic slowdown or recession every five years. But something happened after the last big recession in 1990. Since then, there has really only been one recession: in 2009.
This came off the heels of the infamous US subprime mortgage crisis that crippled most of the world’s economies for years. Yet, in Canada, we got off relatively easy. Our slowdown lasted less than a year.
Continue reading “Housing slump? Recession? Not so fast…”
There’s nothing surprising about the loosening of mortgage standards to spur growth. In the last real housing bubble of 1990, banks and government brought in stricter lending rules, making it tougher for borrowers to get a mortgage.
Fast forward to the present. We’ve yet to see a housing bubble or market crash, but the government has taken drastic – perhaps even unheard of – precautions to slow the housing market.
In 1990, I was working for the largest trust company in Canada. I can tell you that it has never been harder to qualify for a mortgage than it is today!
Continue reading “Looser Mortgage Standards Hit the UK! Is Canada Next?!”
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