raising interest rates: how fast?
The BOC is holding interest rates at a record low .25% for now, but hinting that may change soon. BC is doing some belt tightening now that the games are over, but in the rest of Canada the economy is growing surprisingly fast. So when do rates start going back up, and how fast should they be raised to reign in inflation?
The C.D. Howe institute is recommending that they be raised sharply for every rate announcement for the year after their conditional July commitment. This would mean the overnight rate would move from its current .25% to 2.0% at the end of 2011.
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March 25th, 2010 at 2:38 pm
FUNDAMENTALS where are we going??? are people still immigrating in large numbers? Has the debt people have taken on gone up? for every 100.00 on average canadian owes 145.00 And the one thing no one mentions is over the next 20 years how many people turn 65 everyone will be surprised to see that statistic. So anyone who posts up up up go to Statistics canada and look at some charts it is not pretty. Who is going to support all of this
March 3rd, 2010 at 10:40 am
@MIA: “Rather than service cuts, the Province increased spending in education, health care, and on ‘families.’”
Oh they did, did they? A better way to look at it is how their budget keeps up with the operating costs required to keep the status quo. Answer: it doesn’t.
The property tax deferral program is the province getting into the loan business. What sort of financial situation do you have to be in to take this kind of loan? The terms are horrible and rely on property prices increasing for these families to escape.
March 3rd, 2010 at 10:05 am
@patriotized
“It’s not a party for you unless you’re inside. For everyone else, including those in Vancouver, it was just another TV event.”
It is a shame you missed out on all the free venues, free events, free concerts, free shows, free fireworks, and just walking around enjoying the proud Canadian atmosphere. It was a party inside and out.
That said, I watch TV reports on the > $1.4B spent on the DTES. For the money, I’d rather watch the Olympics again.
Post Olympic Job Losses – “The show’s host had to ask her several times how many people were hired who will now be out of work. After much dodging she finally came up with a ballpark figure. Over 50,000″ « Vancouver Real Esta Says:
March 3rd, 2010 at 7:28 am
[...] March 2010 · Leave a Comment bestplaceonmeth at vancouvercondo.info 2 Mar 2010 at 5:31 pm – “I was listening to a spokesperson from Adecco Employment Services on CBC this [...]
Feb 2010 Benchmark House Price: $800,796 | Vancouver Condo Info Says:
March 3rd, 2010 at 3:07 am
[...] higher interest rates affect those margins. Here’s some interesting math courtesy of reader bestplaceonmeth: Based on $58,000 median household income in Vancouver using ING’s “how much can I borrow?” [...]
March 3rd, 2010 at 2:18 am
and MIA – no problem. Keep up the good work.
March 3rd, 2010 at 2:17 am
70 RP:
I’ll be fine, but thanks for the concern. I have a very generous private pension scheme and will be able to fund my own retirement and health care (I’m retiring in a warmer country than this one).
So yes – I will still feel the same way.
March 3rd, 2010 at 1:11 am
Patriotz,
After watching you post on every possible subject under the sun on this blog, it is exceedingly clear that you are the eternal know it all who simply has to comment for the sake of keeping attention on yourself.
You choose to dissect elements that are not even relevant to the information I posted on RE (49,53). You find a flaw with everyone’s commentary or information, often splitting hairs when it serves no purpose.
I provided information and details on an issue that has raised questions on the blog, namely the property tax deferral programs. I gave you insights from Minister responses and press scrums, some of which will never make it print.
It is pretty clear you never get close to the political machinery, and the reasons why certain decisions are made. I will keep my information to myself next time, but thank you Logic for taking the time to express some appreciation.
March 3rd, 2010 at 12:50 am
do people actually pay pst when they sell a used car in this province
March 3rd, 2010 at 12:36 am
Patriotz
I agree with the Expo was a bigger party. The fair lasted for 5 months and was a party for all while the Olympics were very geared to Gordo and his douchebag friends along with IOC family. Today Vancouver is not a bargain like in 86 therefore we will not see RE appreciation like we did after the fair. I do think that tourism will get a boost. There are far too many deals in the US for any investor to choose Raincouver.
March 2nd, 2010 at 11:10 pm
Logic
“I don’t have kids, and have no plans to have any. Can I please stop paying for other people’s choices (to have kids) please? ”
You are paying for what you spent as a kid. Didn’t you go to school at some point in your infancy?
March 2nd, 2010 at 11:01 pm
@bestplaceonmeth: Are you sure that prior to April 19 CMHC approves you at 1.95% variable? You might want to check this is the case. I thought they approve people on 3 year fixed but correct me if I’m wrong. Post April 19th the difference would be from 3 year to 5 year, not variable to 5 year, not as big a change.
March 2nd, 2010 at 10:54 pm
@rp:
“My kids will be your social safety net when you’re too old to work.”
Social safety net, doctors, physiotherapists, all those things you’re going to need in old age. People with Logic’s attitude really piss me off, they should be paying MORE for not having kids, not less.
Try to look at the world beyond the tip of your nose Logic, there’s more to everything than the contents of your own personal bubble.
March 2nd, 2010 at 10:53 pm
@bestplaceonmeth: @Dave:
I’m not saying the REBGV is being intentionally deceptive. It’s equally possible they’re just plain incompetent.
March 2nd, 2010 at 10:43 pm
@Yalie:
True… everybody knows the REBGV numbers have been cooked for years.
March 2nd, 2010 at 10:34 pm
#54 @logic: “I don’t have kids, and have no plans to have any. Can I please stop paying for other people’s choices (to have kids) please?”
Will you still feel that way when you’re 60, I wonder? My kids will be your social safety net when you’re too old to work. They’ll be paying higher taxes than you ever did. Please try to be a little considerate. BTW, this is not an endorsement of any crap in the budget.
March 2nd, 2010 at 10:32 pm
Hmm… a 22.5 percent price increase year-over-year? That’s funny, the latest Teranet data shows a mere 5.4% increase year-over-year in Vancouver. Yes, I know, the Teranet data is 2 months behind. So let’s compare the latest Teranet numbers to the REBGV’s numbers from 2 months ago.
December 09 year-over-year price increases in Vancouver:
Teranet: 5.4%
REBGV: 16.2%
I know who’s numbers I trust.
March 2nd, 2010 at 10:18 pm
@best_place_on_meth:
47
X best_place_on_meth Says:
March 2nd, 2010 at 5:31 pm
I was listening to a spokesperson from Adecco Employment Services on CBC this morning, they’re the ones who hired people for the Olympics.
The shows host had to ask her several times how many people were hired who will now be out of work.
After much dodging she finally came up with a ballpark figure.
“Over 50,000″ was her answer.
+++++++++++++
No worries, they will just listen to what the Lieberals have been saying for the last decade and take up a trade.
March 2nd, 2010 at 9:24 pm
BS that is the funniest thing I’ve ever read on this blog..
March 2nd, 2010 at 9:24 pm
Wow, the February numbers just came in… “the benchmark price of a detached home in Metro Vancouver, an average for the typical homes sold, hit $800,796, a 1.5-per-cent jump from January and a 22.5-per-cent increase from the same month a year ago.”
http://www.vancouversun.com/bu.....story.html
March 2nd, 2010 at 9:24 pm
@vreaa:
My pleasure, and the first interest rate hike will in effect be a whopping 2% in about 6 weeks time.
Hardly tiny.
March 2nd, 2010 at 9:01 pm
@bestplaceonmeth: thanks for the math, meth.
Informative numbers.
This is why there is likely to be a ‘threshold effect’ with interest rates.
Price drops won’t be a slow attrition; a tiny interest rate move can easily push Vancouver RE right over the edge.
Then falling prices will beget fear and more falling prices… etc, etc..
March 2nd, 2010 at 8:50 pm
@best_place_on_meth:
5
X best_place_on_meth Says:
March 2nd, 2010 at 10:07 am
superdupe:
How’s that lack of land working out for Manhattan real estate prices?
They ran out of land 150 years ago.
++++++++++++
Wadda ya talking about? Last time I was in NY, they were growing huge tracks of pumkins and cranberries on urban land too!!! LOL
“I work in high-tech and moved here from Ottawa recently. I honestly don’t know why any high-tech company stays in Vancouver.” « Vancouver Real Estate Anecdote Archive Says:
March 2nd, 2010 at 8:40 pm
[...] taylor192 at vancouvercondo.info 2 Mar 2010 1:23 pm – “I work in high tech and moved [to Vancouver] from Ottawa recently, so I can comment on Vancouver vs Ottawa: [...]
March 2nd, 2010 at 8:30 pm
Some more number crunching, because math has never been more enjoyable now that interest rate hikes are imminent.
Based on $58,000 median household income in Vancouver using ING’s “how much can I borrow?” for 35 years (yes, 35 years – it’s what all the cool kids are doing nowadays).
Also assuming no other debts (ha ha) and a conservative $250 a month for property taxes or condo fees or both.
Prior to April 19, qualifying at 1.95% variable rate:
YOU QUALIFY FOR A MORTGAGE OF $415,270 WITH 5% DOWN!
After April 19, now having to qualify at 3.89% fixed rate:
YOU QUALIFY FOR A MORTGAGE OF $313,880 WITH 5% DOWN!
Holy foreclosure, Batman! That’s a 25% haircut off current prices!
Now let’s fast forward to the end of 2010, 4 successive 1/2 point interest rate hikes and you now need to qualify at a rate of 5.89%.
YOU QUALIFY FOR A MORTGAGE OF $244,287 WITH 5% DOWN!
That’s 41% less than 10 months ago, and we’re just getting started.
See, I told you math was fun.
Now, who wants to go out and get into a bidding war?
Buy now or be forced to pay a much, much lower price in the future!
“I have noticed a very definite trend of Asians of Chinese descent moving back home. The big complaint from my soon-to-be ex-neighbours is that there are no business opportunities in Canada.” « Vancouver Real Estate Anecdote Archive Says:
March 2nd, 2010 at 8:14 pm
[...] old kitsie at vancouvercondo.info 2 Mar 2010 12:59 pm – “I live in the Arbutus area of Vancouver, my kids were often the only non-Asian kids in their high school science classes. I have [now] noticed a very definite trend of Asians of Chinese descent moving back home. They are now citizens, with two passports, and no longer have a need to educate their children here. The big complaint I have heard from my soon-to-be ex-neighbours is that there are no business opportunities in Canada. China is the place to make money. There are many homes vacant in this neighbourhood and it appears to be an escalating trend. I do not see an influx of immigrants as in the past.” [...]
March 2nd, 2010 at 7:47 pm
Canadian housing haven myth collapsing
“Having been conned by lower than market interest rates heavily set by the Central Bank of Canada, people were misled into purchasing “investments” they will not be able to afford in the future once interest rates rise.”
http://www.thecomingdepression.....ollapsing/
March 2nd, 2010 at 7:39 pm
@patriotzed:
I still have my $89 seasons pass in my possession.
That was the best party ever. It was so good I went to Expo 88 in Brisbane and Expo 92 in Seville just to experience it again and again.
March 2nd, 2010 at 7:19 pm
Re: Tax deferral program
The prov gov will be charging interest on the amount deferred. So, they are essentially giving out 2nd mortgages to those with an 85% first.
That, my friends, is a risky asset to hold. And now all BCers get to hold it thanks to the prov gov!
March 2nd, 2010 at 7:15 pm
@BB:
If the suite is truly secondary the whole property is covered under the principal residence exemption (not to be confused with the old lifetime capital gains exemption, now defunct).
AND you can deduct the operating loss, but you can’t claim depreciation (CCA).
But you can’t live in one suite of a 4-plex and claim the whole building as your principal residence. 3/4 of it will be subject to capital gains or losses.
March 2nd, 2010 at 6:36 pm
@Anonymous:
Must agree with you there. There are probably a large number of amateur landlords who have no idea that their rental income is taxable. All CRA needs to do is start address matching.
……
Except….. that if you claim the rental income, you can also deduct your expenses, the biggest of which would be that that part of your mortgage that pays for the rental suite (but also taxes and maintenance), and there’s no way your rental income would come even close to covering your expenses in this city, so you would in fact be claiming loss. I guess that there could be some capital gains to pay in the end but considering that’s taxed at a lower rate, and I think there’s still a lifetime exemption so I doubt it would all add up to much overall tax income for the GOV in the end.
March 2nd, 2010 at 6:35 pm
46 – MIA:
Thanks for the budget summary.
I don’t have kids, and have no plans to have any. Can I please stop paying for other people’s choices (to have kids) please?
March 2nd, 2010 at 6:30 pm
@MIA:
Even if anyone actually qualifies, it’s not spending. It’s a loan.
March 2nd, 2010 at 6:26 pm
@taylor192:
The Olympics were no more a “party for all Canadians” than the Stanley Cup Playoffs or the Grey Cup Game. It’s not a party for you unless you’re inside. For everyone else, including those in Vancouver, it was just another TV event.
For Expo 86, anyone could buy a season pass for $89. That’s what I call a party.
March 2nd, 2010 at 6:17 pm
Dave says: “As a taxpayer, I feel the same way. Would you rather put your money into economic activity that generates a return (e.g. assets like the Convention Centre and RAV), or into a never ending black hole?”
Dave,
If you like assets that generate a return, you must hate Vancouver Real Estate. Most people that buy it get no return and just shovel money to the black hole lender.