Mortgage rates could be heading higher;
Three Canadian brokers told the Financial Post that they’ve already been contacted by lenders about a hike. Should the yield on the Canadian five-year bond hold at its current level heading into the end of the week, brokers believe that a hike between 10 and 20 basis points will be rolled out.
“Lenders want to make sure (the) move is a permanent move to a steady state,” said James Laird, co-CEO of Ratehub.ca and president of mortgage broker CanWise Financial. “If bond yields hold around their current levels, you should see mortgage rate changes in the later part of this week.”
Throughout the China pandemic, housing starts have remained fairly strong in North America, bolstered by a very hot remodeling sector. Lot’s of people are buying, perhaps moving out from big cities. So demand for mortgage funds remains strong. I would never, these days, invest in any banks or near-banks. Some mortgages could go into default.
Yet Home Capital Group released their quarterly report yesterday and apparently deferred mortgage balances have declined drastically and bad loans are practically nil. Not bad for the sick man of the Canadian mortgage scene.
Have to see what the real banks release later this month.
Perhaps Little Potato and his largess with our money has done some unintentional good. Of course, a cynic (not me you understand) would say that he might as well have just skipped the middle man and given the money directly to his friends (oops, I mean the banksters) but I digress.
I understand what you are saying. As a retiree, I am supposed to have about 20-30% of my RRIF portfolio in bank or near bank stocks, for supposed safety reasons (this is what the media-finance experts say). But right now I have 0% in banks. I have 20% in gold stocks.
It’s just a bad feeling I have about the Canadian economy in particular and the world economy in general. Government spending is utterly out of whack; inflation will begin to increase; and as such mortgage rates will increase. Yes I have a PhD in economics, but this is a feeling I have in my bones. The media are all-so-happy with Trudeau and Biden in power. They’re giggly happy.
I like the SDA phrase “It’s probably nothing”. Our economy is whistling in the dark.
Most G20 economies are although ours is undeniably at the bottom of the lot and bad choices made here recently have exacerbated things to a degree not seen elsewhere.
We have already had our Japanese style lost decade. What comes next ? Stagflation ? I think so (well, at least more so than hyperinflation). The economy (the real one.. what is left of it) is suffering very badly. Selling each other houses and services doesn’t form the bedrock of a robust economy moving forward so it will continue to decline. Meanwhile, Little Potato (or his discount further Leftist replacement) will raise taxes as much as they can and more likely institute a program of devaluation to pay for all this spending. For a nation mainlining on imports as we do, that means increased inflation. Bad economy + inflation = stagflation (or so I was taught at the Parry Sound Upstairs School of Macro-Economics and Sheep Shearing)
(I don’t believe we will see hyperinflation. Central Banks more powerful than our own will keep that in check).
What does that mean for my portfolio ? Less Maple, more US and more EAFE exposure and much more fixed income (including USD denominated governmental notes)
And it wouldn’t hurt to up the strategic beans and ammo reserves.
Don’t bet on Biden you will lose.
Media is lying to everyone and not adjusted down his vote numbers…fake news.
It is very entertaining but fake news.
Not quite so pessimistic on the banks. ReFi has been underway as well, anyone with a pending mortgage renewal or consolidation should have done so at these rock bottom rates.
Any significant anticipated defaults would not be now, but down the road, when rates could be much much higher, though if anyone knows for sure, you should be playing the lottery instead.
Canadians have been, and continue to be, very good at making their payments. I think you should worry about banks for other reasons, not mortgage debt, despite all the braying by the media and the IMF, amongst others. So long as rates stay low, less than 4%, the market will remain healthy.
One of the big banks problems is all those brick and mortar branches. They can’t all be turned into McDonald’s & Tim Horton’s.
Hmmmm. Just thinking of someone saying about the massive new debt will correct itself.
He was so proud of how cheap he could borrow this at….Can’t think of that assholes name right now.
“Can’t think of that assholes name right now.”
I think the asshole’s father was an asshole himself, driving mortgages to over 20% with excessive government borrowing.
Come on Scar … that was Paul Volcker that took interest rates to the moon … Canada was just dragged along in that little bout of insanity.
Rates were stupid at 20 % and they are stupid at 1% …. I just saw 5 years at 1.29 % … that is nuts when I think of my 1982 mortgage at 18.5% on a 100,000 bucks.
I had one of those Jimmy Carter mortgages … on my very FIRST 1982 home … 783 sq.ft. and I felt LUCKY to score a 5-1ARM at 16.5%
Yes. I blamed Jimmy Carter. He completely destroyed; housing and energy. You know. … two things that the middle class don’t really care about …
Meanwhile, bank savings account interest rates continue to drop.
Tell me about it – $250,000 in the bank and got .02cents interest. Switched everything to Tangerine and got $23
A low risk comm stock, which are a decent buy right now, would yield annual dividend payments of $11,250 at a 4.5% yield.
Upside is the stocks have been beat up by COVID market, but have upside when normalcy returns.
Hold your nose and buy some BCE, R or T, and sit back on those blue chips. Don’t bother with Shaw, the stock is a dog with no upside whatsoever, terrible yields and poor EBITDA.
Its all funny money now.
Houses for sale all over my hood are selling in less than a week for stoopid prices.
Buddy, around here too. Friend of mine listed a clients house on a saturday, and it sold 73 K over list within 24 hours. I have looked at 2 properties lately, and there were conditionals on both, I am now waiting to see if the second one comes back on the market, and I ma have a chance, as ther e are 3 conditions on the offer. It’s a fixer up, north of here.
Yup
Our neighbours 1.2m went for 780k which is what we paid for ours (half as big as theirs) 2 years ago
Then you have to buy back in. As we near our retirement, this comes up every few months. If we want to take advantage here in Victoria, it means moving further out, and someone will have to commute when/if normalcy returns.
Or live in an older home needing upgrades, in a rental neighbourhood. No Thanks.
We will wait, whether markets are up or down, it’s all relative
I used to understand the basics of investing. I tried to avoid anything that had government sticking it’s nose in. Hard to do these days.
I thought I was a total idiot when I paid $500K for a house in Toronto 13 years ago. I don’t get the value of Tesla. Negative interest rates in some places, but our mortgage rates are going up at a time when many are up to their eyeballs in mortgage debt and something like a 50bp bump might be ‘stressful’.
Somebody shoot me, please!
The prices are stupid, but in less than three years there will be a million ” new Canadians” looking for somewhere to live. That’s an entirely new big city worth of people.
Rusty, and the “old” immigrants are all move to were I live,as they want to get away from the new immigrants, and buy some land driving prices through the roof
Bingo. All of that hot money from the ridiculous TO & VAN housing markets is spilling out and causing markets in other parts of the country to heat up. Here in HFX, houses are selling as fast as the sign goes up, and increasingly over asking.
Good for homeowners? Yeah. I guess. Good for society at large? Probably not. Do TPTB in this country give a crap? Nope, not one bit. They can always import new suckers to keep the game of musical chairs going.
Can a welfare immigrant buy a million dollar bungalow in Canada and how many taxpayers does it take to support that welfare immigrant?
Depends how many of ‘em you rack & stack in the house. The Brampton solution is to shoehorn twoscore or more in one dwelling and charge rent accordingly. The rent/mortgage is paid en masse – literally – and everybody’s happy.
Well, maybe not the single family-occupied neighbors, but hey! Multiculturalism. Diversity. Tolerance. Population density.
Librano votes.
My opinion is that we would have been suffering from deflation over the last several years had the money supply not been brutally increased. Borrowing and spending hundreds of billions of dollars, stimulating UNemployment, is going to be the straw that broke the camel’s back. Zimbabwe-like inflation might be on the horizon. Printing money has risks. it is theft from existing holders of money and will not be tolerated in the long-term without compensation. Real estate is the shithole world defense against inflation.
Sorry scar, but inflation and not deflation is the reality when buying groceries, a house and the costs associated with it.
Intrusive governments have so screwed up the economy that they will be going after every perceived source of wealth to tax and destroy. Given that real estate is the primary source of savings for most Canadians, they will likely eliminate the capital gains exemption for primary residences and increase the rate, impose more rent controls, perhaps force large home owners to rent out to the hoards of the Spawn’s people being paid to enter the country and to top it off, implement Ragmeet’s calls for a wealth tax in some fashion. And all of this will not scratch the surface in addressing the sovereign and provincial debt. Increased mortgage rates are the market’s attempt at correcting just one small distortion in an otherwise debauched economy. It will be the BOC and digital money supply increasing that will inflate away the wealth of the nation that is the only means politically available to a nation of political morons to “deal” with the fiscal immorality of the Spawn and his ilk.
Intrusive governments…no shit.
Law after law, restrictions after restrictions and that is all 3 levels of our insane politicians
And yet they don’t see it and don’t care.
Just give us more and more money and starve to death.
Yep, keep on voting you will eventually get what you want, SCREWED.
“Mortgage rates could be heading higher”
Good if all lending rates head higher, it’s about time the savers actually got some incentives and rewards for savings.
Too many Canadians don’t have enough savings for a rainy day much less retirement, they’ve locked all their money into inflated housing markets and other loans on depreciation toys due to cheap interest rates.
The last 15 years or more of low interest rates have allowed the “live for today” crowd to speculate everyone else into housing bubbles and the future debt crisis. Meanwhile savers and those that can logically see more than a week beyond today have been punished by low interest rates, rising inflation, and various low interest driven consumer bubbles.
Paul, the government has been destroying the purchasing power of my investments for 15 years now. Even with serious inflation planning I was unable to keep ahead of the rapacious bastards. They want to destroy Canada and the voters are letting them succeed. Have I used the word STUPID here before?
You missed adding in idiotic too and that’s all of our politicians.
Not a one is worth coon shit.
Stupid is not the right word to describe those responsible for the mess we’re in because it isn’t accurate. The word we should use is “evil”. Stupid people could not deliver evil so completely.
Well John, evil can be stupid.
But unlike the original ant and grasshopper parable, the ants will be forced to support the grasshoppers. The grasshoppers will end up better off than the ants.
How about you all give me call when the rate reaches 19.9% A poor bastard who bought a house from me in 1979 wound up with a mortgage at that rate. I was paying 15% as it was. I do know that very few people these days are intelligent enough to see what has been and is happening. Hey folks, enjoy your ignorance.
Unfortunately, they will continue their enjoyment. Those of us who have been frugal will be forced to bail them out.
Mike, not me, I don’t have that much time left on this planet. My wife hates to hear me say that but hey, three score and ten maybe and a few more in a home, where I will never be going.
Three score and ten is only seventy years.. That qualifies as very old?
My mother is almost a dozen years over that and the youngest child out of ten, with most of my aunts and uncles still alive at 70+25 years. In their OWN homes/farms. Everyday they wake up is a blessing!
Don’t give up hope just yet!
Ya’ll didn’t read the post did you?
Long-term interest rates are related to long-term economic growth rates.
To put it another way, interest rates are so low because the economies of the western world have been stagnant or contracting since at least 2008, no matter what the “gross domestic product” numbers say. (GDP numbers are much easier to forge than interest rates.)
All the real wealth creation—making and building useful things—has been offshored to the Third World. It should be obvious what that has meant for the living standards of the peoples of the western world—as opposed to the “diverse” hordes who thrust globalist stooges handpicked by Beijing into office on every continent.
+++SG
“All the real wealth creation—making and building useful things—has been offshored to the Third World.” Nonsense, We haven’t “offshored” our resource sectors, our construction sectors, our financial sectors, nor all of our manufacturing sector. Trade with China amounts to 4% of our GDP.
We do, however, have a 40 billion dollar yearly trade deficit with them. That’s significant.
“We” are actively trying to destroy our resources sector, and half of our manufacturing sector has been driven out of Ontario by stupid electricity prices and stupid Liberal government (prov & fed) policy. I guess we can continue to buy and sell and build housing, trading condos among ourselves with increasingly worthless helicopter money, while our leaders spend and borrow us into a death spiral.
Santayana’s Ghost:
And let’s remember that GDP includes gubmint spending. And it is not reduced by the borrowing undertaken to finance this spending.
History repeats, but each time it does there is an exponential factor that shortens the time line each cycle.
The hangover from the great social engineering of the 60’s didn’t really kick in until the later half of the 80’s.
This time it should be less than a decade so the SOB that initiated all the deficit spending will still be in office when the cuts have to be made and the little turd will be responsible for taking away the benefits he committed to.
I survived 20.5% mortgage rates, by buying gold and stuffing excess cash in 90 day terms. Rolled them over. Royal Trust would hold your cash if it came due just before a rate change, so you’d get the better rate. Been taking a few off the table this week and keeping cash for a bit. I follow gold but not buying. Too much .gov interference in the price. The only gold to hold is physical, but it’s generally useless to have at our level. Might as well as have a bag of marbles in your pocket for the usefulness it is. Like Dan above, telcos, utilities (someone needs to heat and light them houses up) pipelines, ’cause they don’t make nuclear cars and electric ones will never replace the utility of fossil fuels for transporting anything, from fuel itself to people or food. Seen any electric aircraft? Battery ones? I rest my case.