Hot off of the press – below the Bank of Canada expects mortgage rates to rise in the summer of 2014 !!!
Warren buffet said everyone knows what is going to happen – [rates rising] – but no one knows when. Now we know, or at least we think we know. The article does a good job explaining that when the market rises, bonds have to pay more to get people to buy them and this increases the bond rates. Surprise, higher bond rates = higher mortgage rates.
So … pay off that debt, the line-of-credit, the credit cards, car loans and all the rest now while you can. And, think about locking in your mortgage if you are in a variable, and getting your docs in for a 120 day mortgage rate hold to be triggered when we find out from the banks that rates are going to rise. The 6 month clock is ticking.
Long-term rates may rise soon, Stephen Poloz says
Bank of Canada governor predicts pressure on bond yields as Fed continues tapering
CBC News Posted: Jan 07, 2014 1:22 PM ET Last Updated: Jan 07, 2014 2:34 PM ET
Bank of Canada governor Stephen Poloz says he expects long-term interest rates to rise this summer as the U.S. Federal Reserve continues tapering, but he believes that would be a positive development.
Poloz, who was named Canada’s top central banker in May, said he believes that the U.S. Fed will continue to taper its bond-buying program throughout the year and that will create market pressure on bond yields.
“In the context of a firming global economy, especially the U.S., we’d expect to see some upward pressure in market interest rates, long-term rates in particular, where the quantitative easing has its primary effect,” Poloz said in an interview with Amanda Lang on CBC’s The Lang & O’Leary Exchange to be aired later today.
“So as a tapering occurs we might expect to see as we saw in the summer some increases in long-term rates, most of it seems to be priced in,” Poloz added.
The Fed reduced its buying of U.S. bonds to $75 billion this month, after a decision announced at its December meeting to reduce the stimulus program meant to keep interest rates low and grow the American economy.
The market handled the tapering announcement well, though it put pressure on bond yields, including Canadian bond yields, Poloz said. That would lead to an increase in long-term fixed mortgage rates, though the Bank of Canada would not increase its benchmark rate.
Poloz said he believes a long-term rate rise wouldn’t greatly hurt the Canadian economy as the housing market appears to be heading for a soft landing and consumer spending, which has kept the economy strong these last few years, must come down to bring down household debt levels.
The Bank of Canada kept its benchmark interest rate at one per cent in December, but there was an uptick in mortgage rates last summer after bond yields rose. …
On a daily basis people call me to talk mortgages and think that the big Canadian Bank loves them. It does not!
Only in Canada do we feel great if they rip us off – just give me the security blanket of a big bank – and I’ll gladly pay more of my hard-earned, post-tax dollars!
Below is an article that this is now happening in areas other than mortgages too. So …. do you still think that they love you OR do they love their shareholders?
Couple feel ‘robbed’ by 25% interest TD car loan
Dealership promised relief after a year but didn’t deliver, customers say
Below is part of an article that notes all the in-bound migration supporting home prices …
Calgary sales powered by economy
In Calgary, 16,302 single family homes changed hands, an eight per cent increase, and 4,007 condos were sold, a 14 per cent rise.
The benchmark price for a single-family home was $472,200 in December, an 8.6 per cent increase from the previous year.
“Two consecutive years of elevated levels of net migration, combined with an improving job outlook and confidence surrounding long-term economic prospects, supported the demand growth,” said Ann-Marie Lurie, chief economist for the Calgary Real Estate Board.
How strong the housing market remains in 2014 depends on interest rates.
Finance Minister Jim Flaherty warned in an interview Sunday that Canada will face global pressure to raise rates in 2014 as the U.S. Federal Reserve pulls back on its stimulus efforts and the U.S. economy rebounds.
Toronto and Calgary prices to continue upward
The Toronto Real Estate Board predicts price growth will continue to exceed inflation in 2014, largely because demand for low-rise houses continues to far outstrip supply.
… In Calgary, both prices and numbers of sales are expected to rise in 2014, the Calgary real estate board said, but the increases are not likely to be as steep as in 2013.
Property values for both single family homes and condos are up in Calgary, according to the city’s assessment findings.
Based on market value on July 1, 2013 and the physical condition as of Dec. 31, 2013, the numbers were released Friday, the same day property and business assessment notices were mailed out.
The typical residential property assessment change is 6% between 2013 and 2014.
“We have certainly seen a really strong increase and sort of a re-setting of some of those values back before some of the financial crisis happened,” said city assessor Nelson Karpa.
Though it was considered a strong year, the highest market value shift was 43% between 2006 and 2007, reports the city.
This year, about 96% of residential properties’ revenue neutral taxes — pre-2014 tax rate changes — will stay within ±10% of last year’s taxes.
Though the percentage of change varies from community to community, those in the 0% to -10% are most heavily clustered on Calgary’s west side, in the inner city and in the deep south, while the northeast is dense with neighbourhoods in the 0% to 10% range.
“You’ll generally find properties that are lower in value typically will increase faster than properties that are higher value,” said Karpa, adding there’s a larger pool of people able to afford the less expensive homes….