Bank of Canada annouces 3 more rate hikes before 2023

[J0e Th0rnton]

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.

I did tell my neighbors over beer what i was planning. A few agreed with me and a one paid a small penalty to renew early. The ones who didn't now wish they did.

[J0e Th0rnton]

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?

Personally, I was living paycheck to paycheck and unable to save money. I can't imagine trying to save in Ontario or BC for a house.

But I tapped into the RRSP first time homebuyers loan for mine. 5 years ago that was still possible in Nova Scotia to be a living pay to pay fellow and get your 5% downpayment, but now with the price explosion, I doubt i could have done it had I tried in 2020. RRSP loans are one of the smartest things the government ever did for working class Canadians.

Apartment life in Halifax is rough. In 2012 I was paying $1300/mth for a good 2 bedroom apartment. Now the prices are insane here. its closer to $2000 for that same apartment unless you want to live in the shittiest areas. Since house prices doubled in the last 2 years, most mortgages come in around the $2000 mark too. Well, they did at 2.1% for 5 year rates.

[J0e Th0rnton]

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.

Depends on the province. Halifax house prices went up by near 90% over the last 2 years . The correction is only expected to knock them back 30%.

[audiopile]

Wanna know?

2016- bought land, built house $400K (1.9%) payment 2k/mth
2020 - sold for 820K
2021 - bought new home for 850k on Strata (2.1%) payment 2k/mth
2022 - sold that for 1.15M.... yeah at the VERY TOP.
BUT
Also bought next property at the very top for 940k. Its a junk pile double wide trailer on a larger piece of land in the city but my mortgage balance is small. Will be paid off in 5 years at 4.2% payment 2k/mth. I should be ok, but many wont be. Others who were fearing they would never own may end up in the best situation of all.

[Stifler]

a lot of people got stupid when house prices jumped. They sold high, bought high and are now gonna be royally screwed when it's time to renew.

in 2016 we bought our new built home for $540 and it's worth anywhere between 800/900 now with the peak price around a million last april may.

My mortgage is at 1.59% for another 3.5 years and we should be good despite what rate we will get at that point.


The only good thing, in my opinion, about the house market crashing is that the rates can't get too high as I have a hard time believing they will make people walk away from homes like in the 80's.

Also, I fully anticipate trudumb to not be re-elected in 2 years (fingers crossed) so hopefully things stabilize before my renewal is up

[J0e Th0rnton]

a lot of people got stupid when house prices jumped. They sold high, bought high and are now gonna be royally screwed when it's time to renew.

in 2016 we bought our new built home for $540 and it's worth anywhere between 800/900 now with the peak price around a million last april may.

My mortgage is at 1.59% for another 3.5 years and we should be good despite what rate we will get at that point.


The only good thing, in my opinion, about the house market crashing is that the rates can't get too high as I have a hard time believing they will make people walk away from homes like in the 80's.

Also, I fully anticipate trudumb to not be re-elected in 2 years (fingers crossed) so hopefully things stabilize before my renewal is up

You are in dream land if you think things will stabilize back to low rates in time for you to renew.
We had all time low rates for years and years as they tried to massage the market to boost the GDP. The conventional 5 year rate is going back to 6% or higher and staying there.

[Loch]

We had all time low rates for years and years as they tried to massage the market to boost the GDP. The conventional 5 year rate is going back to 6% or higher and staying there.

Which "they" are you referring to? It's been about 50% Conservatives and 50% Liberal in the 14 years since rates came under 5% to stay... Or were both doing it?

[audiopile]

Which "they" are you referring to? It's been about 50% Conservatives and 50% Liberal in the 14 years since rates came under 5% to stay... Or were both doing it?

Don;t go down the road called "They". That is where the conspiracies live.

[J0e Th0rnton]

Which "they" are you referring to? It's been about 50% Conservatives and 50% Liberal in the 14 years since rates came under 5% to stay... Or were both doing it?

All federal government for the past 12 years and the bank of Canada who takes advice from them. And yes, it started under Harper's watch and got worse during the last 4 years. Was never meant to carry on this long. Kicking the can down the road and using real estate to artificially prop up the GDP has consequences.

During the start of the great recession in the states, it was understandable as it helped cushion how much canadians felt it. A few years later, not so.

[J0e Th0rnton]

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)

Almost 2 years later. Im still locked in till 2031 at 2.95%, but one of my good coworkers is looking grim
Their renewal is up in the next year and they have to go from 2.1% to 6.75% and he thinks they wont be able to afford the house as his payments will jump $650 a month. The worst part is, the rental market is even more nuts.

Folks need to split 5 ways in a 2 bedroom just for shelter.

2025 and 2026 renewals are going to cripple a lot of people

[GretzkysMullet]

Almost 2 years later. Im still locked in till 2031 at 2.95%, but one of my good coworkers is looking grim
Their renewal is up in the next year and they have to go from 2.1% to 6.75% and he thinks they wont be able to afford the house as his payments will jump $650 a month. The worst part is, the rental market is even more nuts.

Folks need to split 5 ways in a 2 bedroom just for shelter.

2025 and 2026 renewals are going to cripple a lot of people

If you look at rates historically they were unsustainably/historically low before all this happened. I'm getting screwed on this myself, but it was never realistic to expect rates to stay that low forever.

[butch]

my older brother told what rate my parents were paying in the 1980's ; you dont want to know

[Invictus]

my older brother told what rate my parents were paying in the 1980's ; you dont want to know

you mean lack there of