3.5% Fed rate in 2017?

Here’s a prediction:

“US interest rates will rise – and hit 3.5pc by the end of 2017”, The Telegraph UK

“A momentous change looms large in the US. It seems highly likely that the US Federal Reserve will raise interest rates this week.”

“What makes the probable rise in interest rates so significant is not the size of the increase. The rate rise is likely to be a mere 0.25pc. But this would represent the first rate increase for nearly 10 years. Moreover, we all know that once rates have begun to rise, usually the process does not stop after only one increase.”

Does anyone believe we’ll see a rate increase by the Fed from 0.25% to 3.5% in the next two years?

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patriotz
Member

Free rent for a month? Calgary, Edmonton landlords try to woo renters as prices fall

Alberta has no rent controls of any kind. Except the market.

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

REPEAL THE TENANCY ACT! LET THE MARKET DECIDE!

elvince
Guest
elvince
I don’t think it’ll happen, but it’s possible. Bond (govt/muni/corp), mortgages and consumer credits could be at exactly the same rates whether the FF rate is 2.5% or 3.5% at the end of 2017, so it’s totally possible. I think what will mostly stop the Fed from raising ever higher will be corporate bond rates. If those start creeping higher, buisness will stop investing, employment rate will decline, and inflation will turn to 0 or even negative. The US consumers and homedebtors can withstand more increase that buisnesses imho. Keep in mind that not every company is a google or an Apple, flush with cash. Actually, larger employers have more capex and debts, so if their financing rates increase, their only solution is job cuts (or hiring freeze, at least). In canada it is the very opposite. Consumers and homedebtors… Read more »
elvince
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elvince

That talk abour rentals in CGY and EDM makes me wonder, does anyone has inventory numbers for rentals? As we see the inventory for sale drop and drop and drop, is it possible that “investors” are buying condos to rent them? I know there’s the anecdotal evidence that rental prices are going higher, but is it really true from a statistical point of view? Are prices being raised due to lack of inventory or something else? And is it restricted to a particular market (SFH) or is there price increases across the board?

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

New daily Aeromexico flights to Vancouver seen as boon for tourism and business

http://www.torontosun.com/2015/12/11/new-daily-aeromexico-flights-to-vancouver-seen-as-boon-for-tourism-and-business

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
southseacompany
Member
southseacompany
“Inside the toxic politics of cooling Canada’s housing market”, Macleans’ magazine http://www.canadianbusiness.com/economy/inside-the-toxic-politics-of-cooling-canadas-housing-market/ “Finance Minister Bill Morneau’s out-of-nowhere decision to curb housing prices last week was a reminder of a serious flaw in the country’s vaunted approach to financial regulation.” “The power of the pedestal is the only weapon the Bank of Canada has to guard against financial crises. In some countries, the central bank has the ability to squeeze asset-price bubbles, an adjunct of monetary policy known as macroprudential regulation. In Canada, that power rests with the finance minister.” “Bloomberg News reported earlier this month that former finance minister Joe Oliver rejected advice from officials that he take steps to restrain soaring house prices. The National Post’s John Ivison wrote that former prime minister Stephen Harper opposed tighter mortgage rules because they would hamper his desire to boost home ownership.… Read more »
UBC in crisis mode
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UBC in crisis mode

No, as emerging market slows down, the FED is nerves. The rate may stay at 0.25% for a long time.

Canada would go for negative rate when Iranian oil hits the world oil market and oil drops to $30 per barrel.

If you can, talk to your banker to borrow more!

elvince
Guest
elvince

@UBC in crisis mode: We’re talking about US rates. If the barrel drops below 30$, that’s deflation, not inflation.

realist
Member
realist
Of course, I don’t know where interest rates will be in 2 years. I have a deflationary bias, so I read with interest the contrarian viewpoint from one smart person that the world economy is on the brink of a reflation shock with consequent increasing interest rates: from Ambrose Evans-Pritchard in Financial Times 24 Nov 2015 “Elite funds prepare for reflation and a bloodbath for bonds All the stars are aligned for an end to the deflationary supercycle, yet $6 trillion of bonds trade at yields below zero” http://www.telegraph.co.uk/finance/economics/12014821/Elite-funds-prepare-for-reflation-and-a-bloodbath-for-bonds.html “One by one, the giant investment funds are quietly switching out of government bonds, the most overpriced assets on the planet.” “Nobody wants to be caught flat-footed if the latest surge in the global money supply finally catches fire and ignites reflation, closing the chapter on our strange Lost Decade of… Read more »
realist
Member
realist

More from Ambrose Evans-Pritchard on why interest rates will rise:

“Why the world economy as we know it is about to be turned on its head” from Financial Times 29 Sept 2015

http://business.financialpost.com/news/economy/why-world-economy-as-we-know-it-is-about-to-be-turned-on-its-head

“We are at a sharp inflexion point,” says Professor Charles Goodhart, a pillar of the London School of Economics and a former top official at the Bank of England.

“As cheap labour dries up and savings fall, real interest rates will climb from sub-zero levels back to their historic norm of 2.75 per cent to 3 per cent.”

“The implications are ominous for long-term U.S. Treasuries, Gilts, or Bunds. The whole structure of the global bond market is based on false anthropology.”

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

THE GREAT RATE SPIKE IS FINALLY COMING GUYS!!

space889
Guest
space889

The Fed almost never raise rates during US election years and next year is an election year. Very low probability of Fed raising rates at all in 2016. And look at Japan, after nearly a decade of 0% rate, the BoJ attempted to raise rates only to have to crash it back down to 0% and holding it there for another 10 years and running, with 30Y Govt of Japan bonds going for 1.5% or lower.

Unless the Fed start tolerating mass defaults and let market forces actually work, it will be trapped by this ZIRP for a long time, while letting the silent PCI inflation, and more obvious asset inflation run, until everything goes to hell in a basket.

space889
Guest
space889

So what if more and more good rentals – ie. not a teardown, moldy, 60s/70s original deco & appliances, etc – get converted to VRBO and AirBnB? Is renting still going to be so great?

Hotels in Vancouver in summer can easily go for $300+/night. A 1br condo renting for $200 – $300/night is going to be a good deal for lots of travellers. It would be funny if more and more landlords starting doing 9 or 10 months leases Sept – May only.

Jimmy
Guest
Jimmy

Fed raised from 1% to 5.25% between 2003-2007.

So 0.25% to 3.5% by 2018-19 sounds about right. That would be a pretty hot economy, similar to ’06-’07.

Bull! Bull! Bull!
Guest
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OMG JIMMY DOES THAT MEAN THAT REAL ESTATE WENT UP AS FED RAISED RATE!?!??!?!?

WHAAAAA!!!?!??!

HUH!?!??!?!??!

BUT! BUT! BUT!!!!

CANCEL RATE SPIKE PLEAZE!!!!

ben & janet
Guest
ben & janet

@#19 The US buying frenzy started before 2003, when the Fed dropped its rate from 6% to 1% as a result of the dot.com bust/911 attacks recession. in 2001. US RE prices started to decline in 05/06 as there was a delayed reaction to the rate hikes as variable rate mortgages reset. By 2007 the bust was on full speed.

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

>The US buying frenzy started before 2003

BUT OUR BUYING FRENZY STARTED BEFORE RATES WENT UP TOO!!!! WHAT DOES ALL THIS MEAN GUYZ!?!?!?!

say whaaaa?
Guest
say whaaaa?

@21

You seem stressed. Problems at work?

Mister Obvious
Guest
Mister Obvious
@78 They don’t have to sell. They secure shelter for their families and move on with their lives. Bears have been putting their lives on hold since 2004 and counting. What a shame! —————————– Way to miss the point! I was responding to someone talking about all the money that’s been made by recent buyers. So, where is all that “made” money, exactly? You haven’t made a dime in equities until you sell for more than you purchased. The same applies to houses except you have to sell for quite a bit more than you purchased because of high closing costs. If you’ve bought a home and paid a Vancouver price for it, then bully for you. Enjoy yourself. But don’t delude yourself into believing you’ve ‘made’ money until you actually have. I made money on my house. Lots of… Read more »
patriotz
Member

@23: “You haven’t made a dime in equities until you sell for more than you purchased.”

Dividends.

“The same applies to houses”

Rental value. Both net of carrying costs.

patriotz
Member

@20:

US 30 year mortgage rates were, on average, .5% higher in 2007 than in 2003 – 6.34% versus 5.83%, an insignificant increase.

Yes I know it’s so nit picky to look at the rates people actually pay for mortgages but that’s just me.

http://www.freddiemac.com/pmms/pmms30.htm

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