Who will be the first lender to drop mortgage rates?

After yesterdays Bank of Canada rate cut we’re seeing lots of articles about what this means for the housing market.

Reasonably enough economists are predicting a dip in mortgage rates after this cut, but so far the big banks don’t seem to be in a hurry.

However, TD Bank was quick to announce Wednesday it will maintain its prime interest rate at three per cent, noting that factors beyond the central bank influence its rates.

“Not only do we operate in a competitive environment, but our prime rate is influenced by the broader economic environment, and its impact on credit,” the bank said in a statement.

And the Royal Bank appeared in no hurry to drop rates either, saying in an email response to a query that “while we don’t have any product announcements to make at this time, we are considering the impact of today’s Bank of Canada decision.”

It was anticipated that the Bank of Canada would move to increase its overnight rate later this year due to an improving economy, until crude prices started to slide and dropped below US$50 a barrel.

Phil Soper, president of realtor Royal LePage, predicted Canadians could be shopping for cheaper mortgages within days.

“It doesn’t take long to react to a policy change like this,” Soper said. “That’s why it’s such a powerful tool.”

Read the full article over at Yahoo.

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Bull! Bull! Bull!
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Bull! Bull! Bull!
yes, i know they are trying to ward off deflation. you aren’t providing amazing insights. main stream media state these things clearly and openly in their news articles. they warded it off after the financial crisis in 2008. what makes you think they won’t do it this time? here is something interesting for you to think about: how did they previously ward of deflation and what was the result. is this knowledge something you can exploit to enrich yourself? bullwhip29 Says: January 22nd, 2015 at 9:20 am 71 @ #69 central banks around the world (not just here) are doing whatever they can to ward off DEFLATION and a diminishing wealth effect, which Japan has had to deal with for 20+ years. supposing that all nations are passengers on the titantic, it makes little difference if one was to move… Read more »
CanucksBoy
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CanucksBoy

rate cut may not make a huge difference – on a half million mortgage it is only about $60 per month lower.

lenders are tightening lending criteria – that is what will make more of an impact.

it is obvious BOC did not even register the existence of a predicament in Vancouver housing while making their decision – it was based purely on what’s best for the economy as controlled and run by their paymasters.

bullwhip29
Guest
bullwhip29

@ #2
“they warded it off after the financial crisis in 2008”

many would argue that the only they did was apply bandaid after bandaid without actually curing the patient of its disease. the system was and still is riddled with too much bad debt despite every central banker having thrown everything they can at the wall. debt fueled asset bubbles are not sustainable forever. in 2008/09 we got a peak at what happens when one of the chair legs gets knocked out. this time around the very same chair is attempting to support multiples of what we saw the last time around. a RE crash in china will make 2008 (and even japanese crash) look like child’s play.

bullwhip29
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bullwhip29

edit: make that @ #1 not 2

bullwhip29
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bullwhip29
patriotz
Member

Why the Bank of Canada rate cut may not bring down mortgage costs

But banks have also been known to hold back a cut for themselves. The last time that happened was December 2008.

History doesn’t repeat, but it rhymes.

@#3
Guest
@#3

As much as I hate it, have they not succeeded at inflating away debts in every other crisis post gold-standard?

To the person who mentioned Japan, the difference is they’ve had negative population growth that sets the stage for negative gdp growth and deflation. Japan could have chosen a much different path it they would have opened their doors to immigrants 20 some years ago.

patriotz
Member

@7:

No Western industrial economy has seen significant inflation (apart from asset inflation) since the 1980’s.

Central banks have been trying their best to induce inflation since the turn of the millenium. My view is that it has not worked because all of the increased income goes into the hands of the 1%. Prior to the war on the middle class the 99% used to get a decent chunk of it.

I think this is the rationale behind Obama’s recent push to redistribute income. The USG needs USD inflation to reduce the real value of its debt.

Bull! Bull! Bull!
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Bull! Bull! Bull!

@3

ah yes, the long awaited china crash. you people love waiting for crashes that don’t seem to happen.

is this some kind of secular apocalyptic thinking?

patriotz
Member

@9:

But it’s the crashes you weren’t waiting for that do happen, and take control of events.

bullwhip29
Guest
bullwhip29

@ #7

some valid points, but one could also argue that the japanese population was for the most part more disciplined and conservative with the typical family having significant savings tucked away to cushion the blow as RE and financial mkts continued to unwind. the same can’t be said for the typical N. American who essentially has only the govt to rely on if the sh#t hits the fan.

bullwhip29
Guest
bullwhip29

@ #9
i suggest you read up on japan and the rise of the “asian tigers”. history is repeating itself.

patriotz
Member

@12:

I think rather than a Chinese crash it may be more of a Chinese flat top. No country has ever completed the transition to an advanced economy with an aging population and I don’t think China will be the first.

Marco
Guest
Marco

@ Bull!Bull!Bull!

I would argue its different this time. A falling Loonie to US dollar. Essential consumer goods set to rise. May lead to consumer confidence eroding. Without the will or desire to buy high ticket items then Deflation will kick in. House prices will fall and supply will rise.

southseacompany
Member
southseacompany

“Central bankers just keep filling the punchbowl”, Globe & Mail

http://www.theglobeandmail.com/globe-debate/central-bankers-just-keep-filling-the-punchbowl/article22565264/

“Critics argue that today’s dovish monetary policy has created asset bubbles – in the form of inflated stock and property prices – that will inevitably pop. They fear central bankers are using loose monetary policy to weaken their currencies instead of forcing governments to make their economies more competitive. Anything to get (or in Canada’s case, keep) the party going.

“We are in a world that is dangerously unanchored,” former Bank for International Settlements chief economist (and former Bank of Canada deputy governor) William White told London’s Telegraph newspaper this week. “We’re seeing true currency wars and everybody is doing it, and I have no idea where this is going to end.”

Central bankers are still pretending it never has to.”

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

All those sinners who gourged on debt will pay on judgment day! On that day we the riotous will rise to heaven – which is a detached house on the west side.

Be not distracted by the HAM falsehood! Stay the true path my brothers and sisters!

Marco
Guest
Marco

From the National Post:

“With Bank of Canada rate cut, sub-2% mortgages are coming to a bank near you.”

Why do I have a feeling CMHC is going to implement changes soon?

bullwhip29
Guest
bullwhip29

@ #17
I don’t expect any major policy changes (of the negative variety) until the election is over; afterwards anything is possible incl another “income trust” type rug pull

space889
Guest
space889

BoC hasn’t embarked on a QE program which they can do since most GoC debt is in Canadian $, nor have they imposed negative deposit rate which is all the rage in Europe.

This is going to get a lot more interesting and we haven’t seen a sustained wave of layoffs and spiking unemployment, I don’t think housing prices here will drop that much. In fact, there is almost nothing on sale right now as sellers seems to be holding back for bigger selling prices.

Royce McCutcheon
Member
Royce McCutcheon

@16: That sounds way too Christian. I’m more partial to Greek mythology myself. Specifically, the story about Cassandra.

crabman
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crabman

B!B!B!

Why is it so hard for you to understand our basic argument? Buying real estate in Vancouver now makes no financial sense. The example we looked at the other day in Shaugnessy had a cap rate of 1.1%. Returns are better for condos, but even those are only yielding about 3%. Even if the market doesn’t crash, we can do much better investing in something else. If/when it does crash/correct it will simply turn a bad investment into a horrible one. Relying on never-ending appreciation is a recipe for disaster.

Newcomer
Member
Newcomer
Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

>Why is it so hard for you to understand our basic argument? Buying real estate in Vancouver now makes no financial sense.

good idea crabman. change the subject. crash talk makes you people look crazy. let’s talk about more reasonable things like cap rates.

buying real-estate in vancouver hasn’t made sense since 2002. yet here we are. take solace in the fact that you are “right”, stop posting, and enjoy the bounty of your sound financial decisions. penticton is actually very nice. if it wasn’t for the need to stay close to family i would also look forward to moving there.

Many Franks
Member

The sound of a tiny, tiny violin: Reduce valuations to reflect true price of Vancouver homes, homeowners say

Mr. McGilvray has no plans to sell or redevelop. In fact, he helped develop some of the city’s current zones aimed at preserving older houses when he worked at the city in the 1990s.

But he doesn’t think any residents should have to pay taxes on improperly calculated value. If his assessment were reduced by the $420,000 he has suggested, that would mean about $1,500 less in taxes for the year.

Tim Hortons Hears a Who
Guest
Tim Hortons Hears a Who

I think Mr. Poloz is proving that If you just keep giving the alcoholic more booze it wards off the DTs quite effectively.

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