Days of ultra-cheap money coming to an end

..At least that’s what Mark Carney and other Bank of Canada officials have said according to this article, yet they’re refraining from being more specific.

Meanwhile the Organization for Economic and Co-operative Development (OECD) is urging Canada to start raising interest rates in the fall and keep on raising them to stop an inflating housing bubble and reign in inflation.

The OECD, a high-powered economic research group backed by contributions from its 34 rich country members, offers a scenario: An increase in the benchmark rate of a quarter of a percentage point in the autumn, and similar increases each quarter through to the end of next year, leaving the benchmark overnight target at 2.25 per cent.

That still would be low by historical standards, yet, according to the OECD, likely a big enough increase to cause prospective homeowners to think twice before buying at current inflated prices. However, the OECD’s recommendation comes with a risk.

The Federal Reserve Board has made a conditional pledge to leave U.S. rates extremely low until the end of 2014. Following the OECD’s path could create an unprecedented spread between Canadian and U.S. interest rates, which would put upward pressure on a Canadian dollar that many say already is too strong.

Oh, and the OECD made this same recommendation a year ago and was ignored. So I wonder how Carney intends to bring the days of ultra-cheap money to an end?

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jesse
Member
Turkey
Guest
Turkey

I think the expression “bat-sh*t insane” is over-used and should be reserved for special occasions.

On a completely unrelated note, our friends at cmhc-class-action.com have removed their blog, but posted some tidbits showing how wronged they were. To wit:

In our affidavits, we were careful to make the first line a denial that were were anything other than a natural Man and a natural Woman, (not Person), we expected the Judge to take notice of this, but it was ignored. No Court has jurisdiction over Men and Women as they are the creators of courts and governments. The created cannot have authority of the creator, much the same that a character in a book cannot have authority over the author. I expressed this opinion later to the Attorney General of B.C. who was very careful to avoid addressing that point.

Anonymous
Guest
Anonymous

@Turkey: Ah. Well that clarifies things. Clearly this housing bubble is literally driving some people crazy.

Anonymous
Guest
Anonymous

@Turkey: LOL…that is gold. This city is filled with people like that, that will refuse to accept responsibility for being wiped out by the pending crash. The entitlement types are going to take a serious beating.

Turkey
Guest
Turkey

@Turkey: Also, they’ve scrubbed the judge’s remarks at cmhc-class-action.com. You can find them here. Some tidbits:

I find that this action, as commenced by the plaintiffs, is designed to annoy and to force the defendants to expend resources coming to court, rather than to advance a legitimate cause of action. Counsel for CMHC seeks an award of special costs.

Parties should not be discouraged from litigating legitimate actions. Here, the plaintiffs’ allegations were utterly and obviously without merit.

fred
Guest
fred

@Anonymous: impending crash? are you another vreaa in the making?
but you are right for one thing “The entitlement types are going to take a serious beating”. they have taken a serious beating; but they didnt learn the lessons, they keep blogging all day!

Anonymous
Guest
Anonymous

can anyone tell me what the last selling price was for ph7 108 west Cordova street, Woodwards building

thanks in advance

What dah
Guest
What dah

Re:Hikes, Carney does not have the balls. I will believe it when I see it.

jesse
Member

What would be interesting is how the Bank of Canada would change its outlook if it included commodity price drops among its “downside risks”.

Regardless I don’t think runaway inflation is a problem; if nothing else the Conservatives will see to that via policies weakening employee wage terms.

real_professional
Member

Home Price Index by National Bank will be published sooner!!!

“Montreal, May 23, 2012 – National Bank and Teranet are pleased to announce that the Teranet – National Bank House Price Index™ will now provide a more timely indication of the housing market. The index will be published a full month sooner, no later than 30 days after the transaction month. “

jumpin in
Guest
jumpin in

I think the market is turning.
Many price reductions in my sector.
More and more SFH below 1 million West of Main…
But prices are still too sticky to my taste 😉
I cannot wait for the fun to begin.

Simple
Guest
Simple

Quiet today. Is everyone resting up for the 19K party or what?

moses
Guest
moses

As a bear, I’m most pleased about the number of price changes. I assume that people are acting on the advice of their realtors.

In my view the realtors are the key to the drop. Volume, not price, is what matters to a realtor so the longer sales stay flat the more nervous the realtors get. This thing will crash when the realtors collectively switch their propaganda from “Buy now or be priced out forever!” to “Sell now or never realize a profit!”

patriotz
Member

@moses:
It’s not a switch per se, the latter is what they tell the sellers and the former is what they tell the buyers.

Or as the NAR put it succinctly, “It’s a great time to buy or sell a home”.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

Is inventory still tracking lock step with May 2010?

Patiently Waiting
Member
Patiently Waiting

Here’s why many don’t consider psychology as hard science:

http://www.news1130.com/news/local/article/365722–many-young-people-living-jobless-ambition-free-lives

So what is Canada’s real unemployment rate?

Patiently Waiting
Member
Patiently Waiting

OK it appears Patriotz was right:

http://www.news1130.com/news/national/article/365647–ndp-worries-about-proposed-mortgage-changes

NDP joins the horde of pandering populists.

Makaya
Member
Makaya
@Patiently Waiting: Some interesting comments from your article: “Wow, this would be a terrible change, and totally unfair. Payment history is all that should be considered. I don’t have a mortgage any more but certainly sympathize with those who do, who would be incredibly stressed every time they had to requalify. It also would mean everyone goes for the longest term possible, to avoid this review. How ridiculous is that idea? At renewal the banks already update your profile, but allowing them to kill your mortgage so easily? No way.” “don’t do that we have been paying our mortgage every months for years now without fail it is the one payment that must be made – why penalize or make me jump through hoops to keep my home which by the way costs a fortune to run in BC. Its… Read more »
N
Guest
N

@Makaya:

What I don’t get is why the banks or the CMHC would want to re-qualify someone. If the person fails to re-qualify, then the bank has to foreclose. Why would they do that when the person is paying? Considering that the money has already been lent, what is advantage to insisting on re-qualification?

patriotz
Member

@Patiently Waiting:
Forcing people to requalify upon renewal of an insured mortgage would result in more foreclosures and hurt the balance sheets of both the banks and CMHC (at least in the short term). It really doesn’t make much sense economically or politically and I don’t see the federal government allowing this change notwithstanding what the NDP thinks.

As for uninsured mortgages it’s up to the banks what they want to do. There’s also the category of mortgages which move from uninsured to requiring insurance due to a drop in equity and thus would have to meet CMHC qualifications. But I don’t think there will be a lot of these.

Yalie
Guest
Yalie

I actually think the NDP is right this time. As much as I think the mortgage rules need to be tightened, this is not the way to do it.

Canada will have enough trouble in the coming years with people defaulting on their underwater homes; why add to the problem by including people who are otherwise willing to keep making their payments?

Anonymous
Guest
Anonymous

If I was a bank, and given the current economic climate, I’d rather foreclose earlier rather than later in the burst cycle. Foreclosing earlier may provide opportunities to mitigate losses by unloading foreclosed properties to unsuspecting idiots who don’t realize what’s happening. That would be more challenging the longer the cycle lasts (although, Vancouver does seem to have a rather unending supply of idiots to draw from). Bob Renni would be out of work if Vancouver runs out of idiots.

mac
Guest
mac

@Turkey: Thank you. Thank you very much. I take 100% credit for shutting the guy down. I ranted and raved at him and dogged him in every calmly-composed response he made to any other poster under the name of FedUpwithU. But the guy is still out there posting on a money advisor site that he had to shut the blog down because no one understood the point he was trying to make. And, oh, yes, how he was like Mahatma Gandhi, the flower seller in Tunisia, the Russians at Stalingrad. I kid not:

http://www.canadian-money-advisor.ca/threadview/2232.html

boogeybear
Guest
boogeybear

Perhaps there are just too many home owners in Canada and the re-qualifying rule is to bring the level of home ownership back to historical norms and thereby stabilize the market. Cull the weaklings, so the herd can stay strong. I never read how long the person has before topping up their mortgage, maybe there could be an intervention period in order to put the home owner under a course that won’t lead to foreclosure. Maybe a 12 month extension to allow a home owner to reduce their expenses or for credit counselling. Stop thinking of this as being a bad thing- but as an opportunity to pull someone out of financial ruin.

Patiently Waiting
Member
Patiently Waiting

“Foreclosing earlier may provide opportunities to mitigate losses by unloading foreclosed properties to unsuspecting idiot”

Yep, it speeds the inevitable. You’d have millions of Canadians sacrificing everything to save a “hopeless cause” mortgage. Hurry them into foreclosure and bankruptcy, and let the healing begin.

I guess now I’m tired of waiting for this shit to end 😛

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