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Thread: Bank of Canada annouces 3 more rate hikes before 2023

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    Default Bank of Canada annouces 3 more rate hikes before 2023

    https://www.bankofcanada.ca/2022/07/...announcements/

    Well, im glad last year when Trudeau called election that I renewed for a 10 year fixed at the super low rate. A lot of folks called me crazy and I had to strongarm my wife into it, but I saw this coming a mile away and him calling election early after saying "calling election during a pandemic would be evil" for a year was like a neon flag of how bad things were going to get. Im also glad houses didn't double in price in Halifax until a years after I bought.

    Using housing and real estate sales to prop up our GDP was a can they kept kicking down the road. Like some quarters it was 40% of our GDP as opposed to the average 10%. Now the housing market is cooling fast and we will see how big a trouble we are in. The USA just posted consecutive quarters if negative GDP, signalling a recession and historically, Canada always follows. When you kick the can down the road too far, instead of a fall down a hill, you eventually reach a cliff.

    My neighbor passed away in 2019 and her house was sold for $260000. The guy did zero renovations, saw the way the market was turning and then sold it for....$420000 in early 2021. Now my new neighbors are scared shitless because their 5 year fixed was at 2.1% and they are already house poor and in 2026 they get to renew under the new rates. Which ain't pretty. FOMOing to bidding wars just to get any house and pay these jacked rates is going to cost a lot of people who bought in the last 3 years. Imagine going from paying $1850 a month to seeing a clock ticking to where it will suddenly cost you $2550 a month, with wages stagnant and the cost of everything else going up.

    I don't even want to think about how bad it is in places like Toronto or BC where houses cost millions.


    In any case, I only have to pay $1200 a month for the next 9 years. How are the rest of you doing up here in Canada?
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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    My investments are down more money then I make in a year and I'm scared to look again to get an updated amount lol.

    It's fine, everything is fine...
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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    Toronto home owner since 2018... get to renew my mortgage a year from now. But am guessing I'll just go variable this time around and ride it out. Woulda been better off going variable to begin with (20-20 hindsight).

    If the housing market truly tanks and there are foreclosures, can the gov't really continue to keep rates high and sit back and watch? My perspective is no, and that rates can only go so high due to the housing market boom they created by keeping rates so low for so long.

    And to clarify, that link you posted is the scheduled dates for rate announcements. Where does it say they're specifically hiking it all three times?

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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    Nice move Joe locking it up for a decade. Smart.
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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    I bought a crappy house prolly 10yrs ago, then reno'd it, sold it 5yrs ago and took the money to invest with then rented due to work travel

    I worked my butt off for 2 straight yrs to get a downpayment for the house, then worked hard for 2yrs to reno it. Still ended up ahead, but man I am now effed. Early 30s, renting, and looking at interest rates skyrocket. My only hope to own now are these people who stretched themselves too thin in 2020 and their house is going to be worth less than their payments so they need to quick sell. I'm lucky I'm in a rent controlled building, but man...the housing market is effed for first time home buyers. Working 2 jobs might be the only way to survive now.

    It's not a fun time, but it's also not like it's a shock. What did we think was going to happen?
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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    The housing market is only going to get better for first time buyers. At the rate it was going, they would have never been able to enter the market. This correction will give them that opportunity. Or those of us who missed out on a rental property/cottage before the prices skyrocketed. Save your $ and wait a couple years.

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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    Quote Originally Posted by striderz View Post
    Toronto home owner since 2018... get to renew my mortgage a year from now. But am guessing I'll just go variable this time around and ride it out. Woulda been better off going variable to begin with (20-20 hindsight).

    If the housing market truly tanks and there are foreclosures, can the gov't really continue to keep rates high and sit back and watch? My perspective is no, and that rates can only go so high due to the housing market boom they created by keeping rates so low for so long.

    And to clarify, that link you posted is the scheduled dates for rate announcements. Where does it say they're specifically hiking it all three times?



    Agreed, that is a huge distinction. From my understanding the Bank of Canada does not announce moves in advance.
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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    Making huge financial decisions on when Trudeau decides to call an election seems bizarre and far fetched. Current inflation has nothing to do with that. Think more of pandemic induced supply chain hang overs, shifts to increase climate change mitigation spending globally, and Russia screwing with international markets as the main current drivers.

    With that said, I've been holding a variable rate mortgage for 12 years now but definitely weighing my options...

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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    So are you able to re-negotiate your mortgage (so rate) at any point or do you have to wait for the contract length to be up?
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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    Quote Originally Posted by Invictus View Post
    So are you able to re-negotiate your mortgage (so rate) at any point or do you have to wait for the contract length to be up?
    You can probably renegotiate it whenever but there's most likely a penalty if you're not up for renewal.
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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    Quote Originally Posted by Axeman33 View Post
    You can probably renegotiate it whenever but there's most likely a penalty if you're not up for renewal.
    Being on a fixed rate already, my mortgage provider (Meridian Credit Union) offered a blend and extend option whereby they take your current rate and remaining time frame, and then blend it with adding some additional years at whatever their new fixed rate is. I don't believe there was any penalties for this, as I assume the bank is happy to retain your business for an longer period of time and not risk you jumping to a different provider when up for renewal. I never went down this route though, and at this point I'm more interested to roll the dice and see where things are at in a year (and likely go variable)

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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    We bought our first house a little over 2 years ago right before the rates fell, so our 3%+ rate has looked pretty bad until recently.

    We put 20% down, we max out our yearly lump-sum payment of 15% of the original mortgage amount, and we've done double-payments for the last year or so. We sacrificed getting a little bit of a worse rate for the good repayment "privileges", and our plan was to be in a position to simply pay the entire thing off when the 5 year term was up in case rates were unfavorable when its time to renew (and as of now, it looks like that may be the case). We've learned not to tell people this in real life because they scoff and chalk it up to some kind of 'luck' (even though we don't have particularly high incomes), but I don't mind sharing it with strangers.

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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    The kind of funny thing is that between 1973 and 1992 the nominal fixed 5yr mortgage rate never went below 10%.... so this was the norm for a lot of years (sub 5% is recent and rare sort of thing). Of course, the ridiculous growth in house prices kinda makes this a problem now.

    As a note, my mortgage was up 8 months ago, renewed last summer at just over 2%... better to be lucky than good!
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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    Quote Originally Posted by striderz View Post
    Toronto home owner since 2018... get to renew my mortgage a year from now. But am guessing I'll just go variable this time around and ride it out. Woulda been better off going variable to begin with (20-20 hindsight).

    If the housing market truly tanks and there are foreclosures, can the gov't really continue to keep rates high and sit back and watch? My perspective is no, and that rates can only go so high due to the housing market boom they created by keeping rates so low for so long.

    And to clarify, that link you posted is the scheduled dates for rate announcements. Where does it say they're specifically hiking it all three times?
    Im trying to find the link tree of news I was following, but Tiff Macklem indicated this would indeed be the case after a few experts chimed in on expectations.

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    Default Re: Bank of Canada annouces 3 more rate hikes before 2023

    Quote Originally Posted by lobo1969 View Post
    Making huge financial decisions on when Trudeau decides to call an election seems bizarre and far fetched. Current inflation has nothing to do with that. Think more of pandemic induced supply chain hang overs, shifts to increase climate change mitigation spending globally, and Russia screwing with international markets as the main current drivers.

    With that said, I've been holding a variable rate mortgage for 12 years now but definitely weighing my options...
    Not really. Him calling election was completely out of left field and unexpected. He spent the better part of the year saying "calling election during a pandemic would be selfish and evil" and then he went and did it himself. he didn't think he could get a majority. Many people were perplexed at his timing.

    Every economic mind came to the conclusion we were about to hit a steep downward trajectory and that Trudeau had modelling data in front of him saying its now or you will be reaping so much blame in 2 years that election won't be winnable. Wholesalers signaled to the market that prices were going to go way up and folks were saying it even then. The wholesalers indicated they did not want to shock the market, but we still haven't seen the peak for groceries.

    Inflation was very slighter at the time he called election. But the signs of money print inflation were there(yes also a factor. its economic 101 that when you double the money supply, inflation follows). Rates have been at an all time low for so long they had nowhere to go but up. And Knowing inflation is coming means knowing rate hikes were coming. Gas prices were at an all time high in Nova Scotia well before Ukraine/Russia, as much as folks try to move the goalposts in that direction and lay a lions share of the blame there.

    My choice was simple and not a huge financial decision. My decision was Pay $50 a month more than I do now for 10 years when my 5 year runs out in July 2021, but have the security and peace of mind, or look at playing the variable game. Rates had nowhere to go but up and had been all time low so long that the neon flag of him calling election made me look at options.

    The banks were belligerent and did not want to give me a 10 year. I had to tell them I would move my Mortgage if they didn't allow it to go 10 years though since they were my original lender. They tried very hard to talk me out of it and explain all the reasons a 10 year would be foolish and I ended up arguing a while and then just saying "ok, thanks, ill speak with my broker about looking elsewhere because I want a 10 and long term security" and they caved. I was betting that by locking in at a ten year rate I am going to pay less than if I locked in a lower five year rate and to refinance 5 years down the road. The banks also feel that's going to happen which is why the 10 year rate was well higher than the 5(a 5 year rate was 2.1% at the time). But they also want to secure my money... so yeah, they caved and i got what i wanted


    When I bought the house, my rate was 2.5% on a 3 to 5 year for $1150 a month or so. I juggled it a bit between 2015 and 2021, but when the time came here I knew. The best rate i could get on a 10 year was 2.95% so my payment went up to $1200 a month. but now I know I will be paying that for the next 9 years(wow, a year has gone by since i made this decision lol)
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