The Bank of Canada (BoC) surprised the market with a rate hike last week, and BMO doesn’t think it was the last one. Canada’s economy is running so hot, the market now expects at least two more rate hikes. It’ll almost certainly lead to higher mortgage rates, which will throttle demand for housing at these prices. That’s not just a coincidence.
It’s going to keep happening until things get under control. Everyone should buckle down and save what they can.
For some of us it’s too late. Age and multiple almost back-to-back recessions have taken their toll.
It’s never too late. 😉
You can always try to make the best of the situation you have. I graduated into a less than ideal situation and two years later my job was basically folding. (thanks iPhone)
From there just kept moving and doing my best. That’s all any of us can do.
I’m 61 and can’t work anymore (due to multiple workplace injuries, etc) so on a fixed income, have mostly worked low-paying labourer jobs, finally been diagnosed with AuADHD so trying to find meds that work, and because of the late diagnosis I’ve had multiple burnouts (usually lasting a year or so each time) and am in fairly deep debt.
Trust me when I say it’s too late for me. Which is fine … just means I will likely be declaring bankruptcy soon so that should take a huge financial load off my shoulders.
What pisses me off is rate hikes create unemployment. It’s a bad lever to pull, yet it’s the one economists reach for every single time.
If I recall correctly, BoC doesn’t really have any other tool in their portfolio to do anything else. We need smarter politicians.
fuck off BOC.
It’s a shitty situation all around. If BoC doesn’t do this, inflation runs high and that will ruin affordability even more. If they continue increasing, that again ruins affordability by increasing mortgage costs, which is the biggest expense for majority of people.
In my naïve opinion, we probably need to slow down immigration, which will cool down housing and probably better long term. But then again, that will cause shortage of labor and output. That in turn is probably going to lead to higher prices again (I could be wayyyy wrong though)
I’m no expert, but this is my view on the whole situation. Would like someone with more knowledge to provide their insight.
To cool down housing, we need to quit the insane way we build car centric cities that results into either too little housing supply or too much hyper-densification. Each Canadian city needs to become more like Montreal: triplexes and other Xplexes everywhere. Added benefit: cheaper infrastructure costs, more resilient to climate change.
If they continue increasing, that again ruins affordability by increasing mortgage costs, which is the biggest expense for majority of people.
This is not quite true. Yes for the ones that have significant mortgages left and have signed / renewed recently. But that’s likely not most people. For new mortgages that start in the high interest climate, the overall cost will be similar to the typical one as prices are already lower. For the whole of Ontario, there are ~200K real estate transactions per year. Over the span of 5 years, that’s 1M. While inflation affects everything and everyone, outaized mortgage costs due to the affect a minority of the households.
BOC rate is still trailing the Fed rate. Sucks to have an economy tied so tightly to the US that their fiscal policy is basically exporting inflation to us.
