Tag Archives: interest rates

BIS warns on interest rates

From southseacompany: another warning about rates knocking back growth.

“The world has become so used to cheap credit that higher interest rates could derail the global economic recovery, the Bank for International Settlements has warned.”

“After cutting interest rates to all-time lows and pumping trillions of dollars into markets to boost growth in the aftermath of the global financial crisis, central banks are now preparing to tighten their monetary policies.”

“All this underlines how much asset prices appear to depend on the very low bond yields that have prevailed for so long.”

Read the full article here.

Friday Free-for-all! June 17th 2016

It’s that time of the week again…

Friday Free-for-all time! This is our standard end of the week news round up and open topic discussion thread for the weekend.

Here are a few recent links to kick off the chat:

Lowest interest rates in 5000 years
Tales from a line-up
Careful with that equity Eugene
Would ‘Brexit’ affect our prices?
Bank of mom & dad
More tales from a line-up
Housing bubble alarm

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

Friday Free-for-all! May 26th 2016

It’s the end of another work week and you know what that means…

It’s Friday free-for-all time here at VCI. This is our regular end of the week news round up and open topic discussion thread for the weekend. Here are a few recent links to kick off the chat:

Housing market concerns at BOC
Broker Economist on concerns
Vancouver ‘freakshow’ market
Peterborough up 24% YOY
Save for 23 years
4 out of 10 caught short on money
lack of compliance on money laundering
high cost of ultra-low rates

So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!

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.

How to prepare for interest rate hikes.

We should be well and deep into the ‘boy who cried wolf’ territory by now.

How long have you heard warnings that interest rates may be going up?

We’ve all become so used to hearing that it’s going to be a big surprise if they do.

The CBC has an article that says interest rates will go up this year and here are 4 ways Canadians should prepare.

#3 is ‘don’t rush to buy a home’:

Higher interest rates could also lead to a correction in the housing market.

“The big issue as far as I can see is that people panic and think they have to get into the housing market before interest rates climb. But they have to recognize the overall long-term impact of interest rates actually climbing,” says Laurie Campbell, CEO of Credit Canada Debt Solutions.

Homebuyers who rush out to purchase homes to beat a spike in rates could end up with homes dropping in value.

“I think people have to be vigilant about any big purchases they may be making in the next little while. Housing in particular,” Heath says. “If someone is considering purchasing a house, they have to really look at more normal interest rates during their budgeting.”

Read the full article here.