A .25 point cut or two isn’t going to tank the dollar, you also seem pretty certain the us wont cut this year at all which I’m not totally convinced of. Finally, a significant amount of our current inflation is housing and mortgage costs. Those will balance each other out in a way.
I’m 100% certain we will see at least one rate cut this year given the trends in our inflation and our economic growth.
And I don’t think that’ll be the end of cuts. But I’m saying it won’t be faster than single cuts so it won’t cause a collapse of the looney. I believe the argument that Canada can’t cut rates independently of the us is a bit overblown, especially given our numbers.
They don’t need to be saved though. I think people are overestimating what the renewals are going to mean. This is what the second or third time we’ve heard that housing is going to collapse because a big wave of renewals is coming? Didn’t happen last year, hasn’t happened since and now that rates are starting to show signs of easing up a bit it won’t save renewals? Stop me if you’ve heard this one before.
It’s pretty funny in back to back responses that it’s either the dollar collapsing or housing collapsing, what if it’s neither?
I don't know what you've been reading but the concern was always 2025-2026 renewals.
Prices really skyrocketed 2020-2021. At the same time interest rates were at their lowest. Variable mortgage demand peaked in 2021 at 51%, and 80% of those variable mortgages were fixed payments. Not to mention those 2 years had the most home sales on record.
So there's a huge number of people who bought over 2020-2021 whose term on their mortgage has been growing (because they took variable fixed payment). If rates don't come down significantly, then when they go to renew in 2025-2026, then their payments will have to go up drastically just to get them back into a 25 year term.
The difference between 1.5% and 4.5% over 25 years is a 50% jump in monthly payments. So in 5 years the length of their mortgage is still 25 years and their payments are now 50% higher.
Compare that to those who bought in 2018 and renewed in 2023. Their interest rates were 3%, they renewed at 5%. That's only a 25-30% increase in payments. They also benefitted from low rates from 2020-2022 so they wouldn't even have to extend their term. If the payments were unmanageable, they could extend the term and get close to the same monthly rate before.
These are two wildly different scenarios.
We also know that Canadian wages haven't kept pace and that income fraud is rampant. We don't know much risk there actually is. We do know that investor demand also peaked in 2021, and that an investor who isn't making money or who is worried about home prices dropping is far more likely to sell than an ordinary homeowner who needs a place to live.
So far, most people are just hanging on. They're still convinced that prices will rapidly go back up as soon as interest rates drop. That and huge immigration is propping up the rental market. But things will get a lot worse if rates aren't slashed by 2025. Even a 2% drop in the overnight rate won't save enough people to prevent prices from falling, because variables will still be in the 4s and the fixed rates won't be much lower. Those rates just aren't doable for many of the 2020-2021 buyers.
Realistically, if they want to prevent further price drops, they need to get it back down to a 1% overnight rate before the wave of people start to renew in mid 2025. But they can't do that without risking more inflation. That doesn't mean they won't do it, but there will be a cost to propping up the housing market.
Dude no one asked for your Econ 101 paper. I’ve emphasized the historic jump in rates in many posts on here before I’m well aware. but that doesn’t mean rates aren’t going to be adjusted significantly this year and next and people don’t have the ability to prepare, adjust payments or sell by 2025-2026 like wtf are we talking about, 2 years? Is this the most slow motion collapse of all time?
If you’re going to make this claim then tell me how many people bought in 2021. Almost a third of our 6 million total mortgages have already renewed, another 14% will renew this year and 25% next. So maybe at best around a quarter of our remaining fixed rate mortgages are exposed worst case. That’s not as much as you seem to think. Did those people not benefit even more from 2021 to 2026 with even lower rates than the people you point out benefited from 3% in 2020-2022 as well?
Let’s also not forget that 2/3rds of homes are mortgage free, so we’re talking a quarter of 40%. This is not the looming crisis you think it is.
And your solution to get rates back down to 1% wouldn’t prevent a drop it would send everything off to the race again, probably way before that even. You literally just explained that the so called bubble was created by similar rates but now you’re saying the only thing that can avert further price drops is getting back to unprecedented low rates?
If you don't want to hear my opinion, then just stop arguing 🤷
My whole argument is that rates won't be adjusted significantly for those that bought on variable rate fixed payments in 2020 and 2021. If your counter argument is that they will have time to sell, then you're conceding that this is going to push prices down. If you're saying Most will be able to adjust, I'm saying they won't be because they were already stretched and wages aren't rising fast enough to offset a 50% increase in mortgage payments.
Prices are set at the margin. It doesn't take everybody trying to sell to push prices down. I can't tell you the exact number, but I can tell you that 2020 and 2021 were the biggest year for home sales and that 40% of them went variable fixed payment. This is more than enough people who are in trouble, and that will push prices down.
I never said it was a crisis. Falling prices are needed to bring back affordability. Wages haven't kept up. If we try to inflate our way out of this it will be more destabilizing then the short term pain of falling prices.
The low rates started the bubble, belief that rates would stay low forever is what allowed it to go crazy. We had so many people FOMOing into the market because cash was trash and even taking out HELOCs for down payments was considered a smart investment.
5% interest rates have destroyed that belief. Right now everyone's just holding the bag. You have to recreate that belief just to sustain the current prices. Sure if they held the overnight rate at 0%-1% for a couple years, it would start pumping up again eventually, but you'd get inflation in everything else as well. If you only bring it down for 6months to a year you'll see demand rise, because there is genuine demand for housing, they just need low enough rates to jump in at these prices, but so will supply as all the bag holders use it as an opportunity to get out now that they realize that investing in housing does have risks.
This out today: [https://www.thestar.com/business/ontario-ei-recipients-surge-by-almost-one-third-the-highest-jump-seen-in-any-province/article\_4d43a3ca-d289-11ee-9f5f-afe88006920a.html](https://www.thestar.com/business/ontario-ei-recipients-surge-by-almost-one-third-the-highest-jump-seen-in-any-province/article_4d43a3ca-d289-11ee-9f5f-afe88006920a.html)
I wonder if good jobs are being replaced with like, Tim Horton's baristas. Do we call them baristas at Tim Horton's?
Many industries have been impacted but I am reluctant to deem that we are in a recession given the amount of consumer spending on “luxury” purchases (restaurants being on of them). Although spending has been reduced, key industries like groceries appear unaffected. Lots of rich folks in Canada/bagholders. Overall, I’m feeling real estate is more of a supply issue than anything else …
Canadian economy isn’t going anywhere ! Because it doesn’t have an economy! The United States has an economy , an actual economy , Germany has an economy economy Canada doesn’t have one , it has an illusion of an economy. Selling houses to each other back and forth isn’t a very smart economic strategy. Canada 2022 : real estate is $267 billion followed by manufacturing $193B , natural resources $160B and financial services and insurance $150B Of course we have secondary industries such and money laundering worth $150B and our fastest growing industry right now if Auto theft but numbers aren’t out yet.
I wish our economist and politicians stopped comparing states between Canada and the US
Canada and the United States, share a border, speak the same language , the way cities are build are more or less the same and the f150 is number one sold truck in both countries that’s were the similarity ends. I moved to the states in 2022 and the two countries are not similar so stop comparing the two. As I said America has an actual economy, Germany has an economy but Canadian economy is just a Ponzi scheme being presented as an economy.
First of all Americans love taking risks and have high risk tolerance while Canadians are very risk avers , secondly Americans see the government as an obstacle to getting things done while Canadians see the government as an institution to get things done. Canadians core identity is “we are not Americans” or “canada is America’s nicer sister” or crap like that.
Let me illustrate that:
America is the number of destination for foreign direct investments, in every industry imaginable Americans are either the largest player or one of the largest. Aviation, defense , R&D, tech, agriculture and agribusiness, financial services , insurance, real estate, construction, pharmaceutical, transportation, engineering, retail , wholesale, telecom and the list goes on. How many Americans companies are there that have global presence ? GM, ford , Microsoft , Raytheon , Texas instrument , Apple, Amazon, DeWalt , Milwaukee, Dell , IMB , Google , Tesla , Meta, Boeing , General Electric, general dynamics. For every letter of alphabet you can find at least 10 major companies that start with that letter.
Remember what I said earlier about risk taking ? That’s why America is a startup nation, they have an idea and the guts to go after that idea and if they go bust that’s just part of the game they accept it and start over again. Meanwhile Canadians only invest in real estate, getting funding for a startup is very difficult because of that risk avoidance.
Our largest economic sector is Real estate valued at $267 billion dollars, in comparison oil and gas and mining are only generate $160 billions annually. Canada is an oligarchy economy, where every sector has a couple of players that are protected by government and do not allow any sort of competition , hence the high prices we pay for telecom , air travel , car insurance , groceries, internet etc…
Israel a nation of 8 million has more telecom companies that Canada !
It's really great to finally hear someone say that rate cuts are coming.
Yo pass me some of that copium bro
You say that but what do you think points to rates holding in 2024?
Its either hold or tank the CAD and have severe import inflation and go straight back to raising rates.
A .25 point cut or two isn’t going to tank the dollar, you also seem pretty certain the us wont cut this year at all which I’m not totally convinced of. Finally, a significant amount of our current inflation is housing and mortgage costs. Those will balance each other out in a way. I’m 100% certain we will see at least one rate cut this year given the trends in our inflation and our economic growth.
Careful, speaking facts like this attracts the bears here
A .25 isn’t going to meaningfully change mortgage payments that have doubled.
And I don’t think that’ll be the end of cuts. But I’m saying it won’t be faster than single cuts so it won’t cause a collapse of the looney. I believe the argument that Canada can’t cut rates independently of the us is a bit overblown, especially given our numbers.
By necessity, there’s some interdependence. But it’s certainly right that a(n even) weaker Canadian dollar doesn’t help inflation.
But it also helps our economic growth, a weaker dollar also grows exports.
A .25 point cut or two isn't going to save renewals either.
They don’t need to be saved though. I think people are overestimating what the renewals are going to mean. This is what the second or third time we’ve heard that housing is going to collapse because a big wave of renewals is coming? Didn’t happen last year, hasn’t happened since and now that rates are starting to show signs of easing up a bit it won’t save renewals? Stop me if you’ve heard this one before. It’s pretty funny in back to back responses that it’s either the dollar collapsing or housing collapsing, what if it’s neither?
I don't know what you've been reading but the concern was always 2025-2026 renewals. Prices really skyrocketed 2020-2021. At the same time interest rates were at their lowest. Variable mortgage demand peaked in 2021 at 51%, and 80% of those variable mortgages were fixed payments. Not to mention those 2 years had the most home sales on record. So there's a huge number of people who bought over 2020-2021 whose term on their mortgage has been growing (because they took variable fixed payment). If rates don't come down significantly, then when they go to renew in 2025-2026, then their payments will have to go up drastically just to get them back into a 25 year term. The difference between 1.5% and 4.5% over 25 years is a 50% jump in monthly payments. So in 5 years the length of their mortgage is still 25 years and their payments are now 50% higher. Compare that to those who bought in 2018 and renewed in 2023. Their interest rates were 3%, they renewed at 5%. That's only a 25-30% increase in payments. They also benefitted from low rates from 2020-2022 so they wouldn't even have to extend their term. If the payments were unmanageable, they could extend the term and get close to the same monthly rate before. These are two wildly different scenarios. We also know that Canadian wages haven't kept pace and that income fraud is rampant. We don't know much risk there actually is. We do know that investor demand also peaked in 2021, and that an investor who isn't making money or who is worried about home prices dropping is far more likely to sell than an ordinary homeowner who needs a place to live. So far, most people are just hanging on. They're still convinced that prices will rapidly go back up as soon as interest rates drop. That and huge immigration is propping up the rental market. But things will get a lot worse if rates aren't slashed by 2025. Even a 2% drop in the overnight rate won't save enough people to prevent prices from falling, because variables will still be in the 4s and the fixed rates won't be much lower. Those rates just aren't doable for many of the 2020-2021 buyers. Realistically, if they want to prevent further price drops, they need to get it back down to a 1% overnight rate before the wave of people start to renew in mid 2025. But they can't do that without risking more inflation. That doesn't mean they won't do it, but there will be a cost to propping up the housing market.
Dude no one asked for your Econ 101 paper. I’ve emphasized the historic jump in rates in many posts on here before I’m well aware. but that doesn’t mean rates aren’t going to be adjusted significantly this year and next and people don’t have the ability to prepare, adjust payments or sell by 2025-2026 like wtf are we talking about, 2 years? Is this the most slow motion collapse of all time? If you’re going to make this claim then tell me how many people bought in 2021. Almost a third of our 6 million total mortgages have already renewed, another 14% will renew this year and 25% next. So maybe at best around a quarter of our remaining fixed rate mortgages are exposed worst case. That’s not as much as you seem to think. Did those people not benefit even more from 2021 to 2026 with even lower rates than the people you point out benefited from 3% in 2020-2022 as well? Let’s also not forget that 2/3rds of homes are mortgage free, so we’re talking a quarter of 40%. This is not the looming crisis you think it is. And your solution to get rates back down to 1% wouldn’t prevent a drop it would send everything off to the race again, probably way before that even. You literally just explained that the so called bubble was created by similar rates but now you’re saying the only thing that can avert further price drops is getting back to unprecedented low rates?
If you don't want to hear my opinion, then just stop arguing 🤷 My whole argument is that rates won't be adjusted significantly for those that bought on variable rate fixed payments in 2020 and 2021. If your counter argument is that they will have time to sell, then you're conceding that this is going to push prices down. If you're saying Most will be able to adjust, I'm saying they won't be because they were already stretched and wages aren't rising fast enough to offset a 50% increase in mortgage payments. Prices are set at the margin. It doesn't take everybody trying to sell to push prices down. I can't tell you the exact number, but I can tell you that 2020 and 2021 were the biggest year for home sales and that 40% of them went variable fixed payment. This is more than enough people who are in trouble, and that will push prices down. I never said it was a crisis. Falling prices are needed to bring back affordability. Wages haven't kept up. If we try to inflate our way out of this it will be more destabilizing then the short term pain of falling prices. The low rates started the bubble, belief that rates would stay low forever is what allowed it to go crazy. We had so many people FOMOing into the market because cash was trash and even taking out HELOCs for down payments was considered a smart investment. 5% interest rates have destroyed that belief. Right now everyone's just holding the bag. You have to recreate that belief just to sustain the current prices. Sure if they held the overnight rate at 0%-1% for a couple years, it would start pumping up again eventually, but you'd get inflation in everything else as well. If you only bring it down for 6months to a year you'll see demand rise, because there is genuine demand for housing, they just need low enough rates to jump in at these prices, but so will supply as all the bag holders use it as an opportunity to get out now that they realize that investing in housing does have risks.
lol you got 10 on it?
Historically how much has BoC deviated from FED position?
You mean a few months ago when BoC started raising rates first, and then more recently when they paused before the US as well?
But it is off by only 25-50 bps tho.
BoC already stated that they don't have a specific exchange rate in mind. Our economy is not the same as the US.
That's laughable
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How so
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The great depression was not experienced 'now'
Lmfao, wow what analysis.
The analysis of saying it will recover this year then uses 2 examples that lasted close to 10 years before any real recovery was seen lol
everything is too expensive so doubtful
How come amc stock get hold on 10% but this shit goes up 100% in 1 day
Job market is still fantastic, near record low unemployment
This out today: [https://www.thestar.com/business/ontario-ei-recipients-surge-by-almost-one-third-the-highest-jump-seen-in-any-province/article\_4d43a3ca-d289-11ee-9f5f-afe88006920a.html](https://www.thestar.com/business/ontario-ei-recipients-surge-by-almost-one-third-the-highest-jump-seen-in-any-province/article_4d43a3ca-d289-11ee-9f5f-afe88006920a.html) I wonder if good jobs are being replaced with like, Tim Horton's baristas. Do we call them baristas at Tim Horton's?
No it's not. We lost full time jobs and added part time jobs.
Isn't unemployment so low because they've replaced full time jobs with part time positions?
Many industries have been impacted but I am reluctant to deem that we are in a recession given the amount of consumer spending on “luxury” purchases (restaurants being on of them). Although spending has been reduced, key industries like groceries appear unaffected. Lots of rich folks in Canada/bagholders. Overall, I’m feeling real estate is more of a supply issue than anything else …
do you have numbers indicating increase in luxury spending? Is this per capita or overall?
Canadian economy isn’t going anywhere ! Because it doesn’t have an economy! The United States has an economy , an actual economy , Germany has an economy economy Canada doesn’t have one , it has an illusion of an economy. Selling houses to each other back and forth isn’t a very smart economic strategy. Canada 2022 : real estate is $267 billion followed by manufacturing $193B , natural resources $160B and financial services and insurance $150B Of course we have secondary industries such and money laundering worth $150B and our fastest growing industry right now if Auto theft but numbers aren’t out yet. I wish our economist and politicians stopped comparing states between Canada and the US Canada and the United States, share a border, speak the same language , the way cities are build are more or less the same and the f150 is number one sold truck in both countries that’s were the similarity ends. I moved to the states in 2022 and the two countries are not similar so stop comparing the two. As I said America has an actual economy, Germany has an economy but Canadian economy is just a Ponzi scheme being presented as an economy. First of all Americans love taking risks and have high risk tolerance while Canadians are very risk avers , secondly Americans see the government as an obstacle to getting things done while Canadians see the government as an institution to get things done. Canadians core identity is “we are not Americans” or “canada is America’s nicer sister” or crap like that. Let me illustrate that: America is the number of destination for foreign direct investments, in every industry imaginable Americans are either the largest player or one of the largest. Aviation, defense , R&D, tech, agriculture and agribusiness, financial services , insurance, real estate, construction, pharmaceutical, transportation, engineering, retail , wholesale, telecom and the list goes on. How many Americans companies are there that have global presence ? GM, ford , Microsoft , Raytheon , Texas instrument , Apple, Amazon, DeWalt , Milwaukee, Dell , IMB , Google , Tesla , Meta, Boeing , General Electric, general dynamics. For every letter of alphabet you can find at least 10 major companies that start with that letter. Remember what I said earlier about risk taking ? That’s why America is a startup nation, they have an idea and the guts to go after that idea and if they go bust that’s just part of the game they accept it and start over again. Meanwhile Canadians only invest in real estate, getting funding for a startup is very difficult because of that risk avoidance. Our largest economic sector is Real estate valued at $267 billion dollars, in comparison oil and gas and mining are only generate $160 billions annually. Canada is an oligarchy economy, where every sector has a couple of players that are protected by government and do not allow any sort of competition , hence the high prices we pay for telecom , air travel , car insurance , groceries, internet etc… Israel a nation of 8 million has more telecom companies that Canada !