Quote:
Originally Posted by GullFoss
So when rates are going down and it results in lower mortgage costs, we should count that in the data. But when rates are going up and it results in higher mortgage costs, we shouldn't count it.
Gotcha!
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The overnight rate is a monetary policy the BoC can use to curb inflation. It's to cool consumer spending and slow the economy. There are clear signs these things are happening, and I assure you they do consider interest rates and their role in inflation (up and down), though they won't state that publicly.
There are more than two million mortgages up for renewal in 2024 and 2025, and many of them will be facing renewal rates almost double what they are coming out of. Canadians have far more household debt than the US. Debt to income ratios 1.85 vs 1.00. Higher mortgage rates don't have nearly the same impact in the US as they do in Canada, as terms are 25-30 years down there.
You're putting a lot of strain on Canadian households if you keep these rates high for too long.