Are you ready for higher interest rates?

That seems like a really weird question as rates continue to drop.

But over at the Vancouver Sun, Barbara Yaffe says ‘Prepare now for interest rate shock‘.

On top of the Bank of Canada recent surprise .25% rate cut there are a number of people predicting another cut coming this year, so why worry about interest rates at all?

The size of the average mortgage on a dwelling in Greater Vancouver is $400,000, reports Jeff Johnson, mortgage broker at Cloverdale-based Dominion Lending Centres Canadian Mortgage Experts, with offices in B.C. and Alberta.

That jumbo figure is based on the average 2014 value of a Vancouver property, $801,000, and a Canadian Association of Mortgage Professionals survey last year showing the average equity position assumed by borrowers is 50 per cent.

Johnson notes that if interest rates rise in 2015 by even just half a percentage point, monthly payments on a typical variable rate $400,000 mortgage could increase by $100 to $1,872.

“And this is the best case scenario, as rates could continue to slowly increase (thereafter).”

Elyea points out such increases would be coming on top of 2015 hikes imposed on B.C. residents for MSP premiums, car insurance and BC Hydro.

And it is worth remembering British Columbians have more modest employment earnings than elsewhere in Canada. The B.C. average weekly wage last year was about $890, compared to $940 across Canada.

Ok, sure. But we know all that already. How long have we been hearing the warnings about ‘being ready’ for rate increases while they just stay down at record lows or continue to drop?

It’s like that old story ‘The Boy who cried Wolf’.  Eventually the villagers get sick of hearing all the false warnings, learn to ignore them and live happily ever after.

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Boombust
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Boombust

Barbara Yaffe? Surely you jest! That woman doesn’t know her face from her ass.

paulb
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Active Member

New Listings 242
Price Changes 48
Sold Listings 125
TI:11606

http://www.paulboenisch.com

Boombust
Guest
Boombust

OTOH, maybe they’re one and the same.

midnite toker
Member
midnite toker

That’s some comedy…this was published what, two days before the rate drop?

also I can’t remember how many offers I got from credit card companies with crazy low promo rates. 1.9% for a year, 0 % for a year even. Easy to fall into that trap!

renters rule
Guest
renters rule

Mayor MoonBeam nailed.

http://www.vancouversun.com/business/judge+quashes+land+swap+between+Vancouver+Yaletown+developer/10764762/story.html

The only things missing is a reference to BR.

Can’t believe the Asian trollip rumours are still circulating… um, the mayor does not play for that team?

chinoria
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chinoria

Whenever there is any weakness in the economy this Government turns to the easy button which is blowing more air into the housing bubble.

Note after the BoC rate drop, Oliver says he wouldn’t be ‘forcing the banks to cut rates’.
What does that mean?

it means the fat clown is telling the banks to get with it and cut before he has to give them a push.
result = 24 hours later they cut.

Craigster
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Craigster

@chinoria – point accepted; but if, as many point out, the govt are following the UK/Australia playbook, then the point is that the reason they have to prop up the housing market is that most are so deeply in mortgage debt that the economy would COLLAPSE if housing took the dive. Witness comments from Alastair Darling former UK finance minister that, in 07/08, the UK economy was “days” from systemic collapse before government stepped in. Wonder how much oversight BoC has ref. banks value at risk in AB and BC mortgage books? I’ll tell you – lots…

Boombust
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Boombust

Craigster, they cannot stop a housing correction any more than they can adjust the ebb and flow of the tide.

You are giving them FAR TOO MUCH credit.

@5
Guest
@5
The residents had also argued that the financial details of the swap had not been in the city and taxpayers’ best interests. At the time, the city’s land was valued at $15 million and Brenhill’s at $8.4 million. Brenhill would also give the city $25 million in “community amenity contributions.” Ultimately, the city agreed to a deal in which the $6.6 million difference in the land values and the $25 million in CACs would be used by Brenhill to build the social housing building. But since then the B.C. Assessment Authority has reassessed the city’s property at more $59.5 million, a difference of more than $47 million. What a scam. Vision essentially gives the developer $22 million in free density. Not sure who the developer is but I bet they donate big to Vision. Good thing we have courts to… Read more »
Shut It Down Already
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Shut It Down Already

5, check the comments in that article – either Ted changed his name or got banned from the Sun and had to open a new Facebook account to continue posting his tripe there. What a clown.

Back to the article – I wouldn’t be surprised to hear of similar problems at the site a block over – where the corner of Seymour/Helmcken is being redeveloped. It wasn’t a site swap but I understand they cut a deal with a developer in return for keeping the HIV clinic there. Time will tell.

88
Guest
88

Interest rate spike would help because it would take ‘canadians’ out of the game. Forget big HAM though. Even little nobodies from mainland china can put down $500k cash down payment without trouble.

Daisy Mae
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Daisy Mae

Lets see if Garth Turner writes blog post about the banks being GREEDY and only lowering prime by .15% as opposed to the .25% they should have.

Never defame the hand that feeds you. Make no mistake sheeple, he knows where his true loyalty resides.

JR
Guest
JR

#6 Chinoria is correct. The BOC is a joke. For years we’ve been listening to their rhetoric about the great unwashed being too much in debt, taking too much advantage of cheap money. Then, they turn around and make it cheaper still, tanking our dollar and issuing a siren call to yet more property virgins. Too bad that so much of Ontario’s manufacturing power has been wiped out. A low a dollar and housing hype would have made a much bigger difference a couple of decades ago. Now, it just makes us look like more of a real estate obsessed Banana Republic.

88
Guest
88

Another BAD BMW Driver in Richmond, BC

https://www.youtube.com/watch?v=GCMHSVkvL8g

ostritch
Member
ostritch

Paul’s numbers show what I am seeing in the neighbourhood. Actually, they indicate more inventory than is currently in my hood. Here, inventory is really ugly old townhouses that need a lot of work and they are selling after having sat since the early fall last year. There is almost nothing decent. I think the same goes for Kits: fugly or insane greedy prices.

@10
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@10

“check the comments in that article – either Ted changed his name or got banned from the Sun and had to open a new Facebook account to continue posting his tripe there. What a clown.”

He changed his name from Ted Danton to TedDantonCal. I guess his fantasy of living in California partially comes true if he changes his Facebook name to end in Cal.

chilled
Member
chilled

@10 Says:
January 27th, 2015 at 11:13 pm 16

“check the comments in that article – either Ted changed his name or got banned from the Sun and had to open a new Facebook account to continue posting his tripe there. What a clown.”

He changed his name from Ted Danton to TedDantonCal. I guess his fantasy of living in California partially comes true if he changes his Facebook name to end in Cal.

+++++++++++++++++++++

The two of you should get a room and leave Ted out of it. The fact that you’re carrying on a conversation about someone not even in the thread is freaky, to say the least.

patriotz
Member

“The size of the average mortgage on a dwelling in Greater Vancouver is $400,000”

Less than a decade ago the average market value of a dwelling was $400K (remember “dwelling” includes condos).

You cannot have an average grow this high simply from mortgages for first time purchases – there aren’t enough of them. A lot of it has to come from existing owners trading up to bigger properties, or refinancing to help their kids enter the market. THAT is what is driving Vancouver’s high prices.

There are about a million private dwellings in metro Vancouver. If the average mortgage doubles from $200K to $400K, that represents a capital inflow via debt of 200 billion dollars.

George
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George
history
Guest
history

Tedeastside announcement today. Will US FOMC rates go up a little or a lot?

Will Goof Smily be on the right side of the trade?

And will a Han HAM run hi german or italian engineered vehicle into a) another vehicle, b) concrete abbutman, c) his realtor?

Royce McCutcheon
Member
Royce McCutcheon

Question: if you received 50k cash today (and didn’t already have wealth or debt to service) and had a time horizon of MAYBE buying a place here by 2018, where would you put it? I know some will say buy the place now, and that’s fine. As markets and house prices set new highs, and cash is devalued by sub-inflation rates in a savings account, it’s curious to see what people think.

vangrl
Member
vangrl

#21 – I’d buy stocks in the oil and gas sector. Either an ETF that holds a bunch, or 25 grand worth of CNQ and 25 grand worth of Suncor, maybe add Husky in that mix to bring the div yield up a bit!

bullwhip29
Guest
bullwhip29
@ #14 no, this person is a better than average Rmd driver since she(i think) is only exceeding the speed limit by say 25%, actually uses turning signals when cutting everyone off and has a vested interest in not wrecking the only BMW SUV she could afford (ie. a very unHAM-like BMW X1) also remember if the signal is activated (even when “simultaneously” changing lanes) then the manoeuvre is fair game and right of way is assumed in the minds of drivers like this. same goes for entering parking lots and calling dibs on any space within a 100m radius by simply being the first to flick on their blinker. that said, when it comes to douches with cars valued at a very minimum of $100k, there are no rules. he who has the best and most expensive car can… Read more »
Softy
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Softy

http://business.financialpost.com/2015/01/26/the-natural-rate-of-interest/

Are low rates the new normal? Michael Walker on why we should follow the natural rate of interest

Republish Reprint
Michael Walker, Special to Financial Post | January 26, 2015 | Last Updated: Jan 27 11:55 AM ET

In the case where population growth falls and then ceases, like say Japan or Germany, or most of the EU, the largest population cohorts will be those that have been associated with the years of greatest population growth. As those largest cohorts age they become the net savers in the country.

Interest rates are low because of demographics — an aging population of savers creates a borrower’s market

history
Guest
history

Interesting take on 25k.

If it was me, id seriously consider putting the dough in a traveling motor home based on Van Isl. I might consider a ship, depending on the marina-moorage deal.

Punting on Odour of Tarsands investment, i would first check with Mark Carney.

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