*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[Azure]

Originally Posted by bizaro86

Do you mean trying to subsidize domestic production of semiconductors like the US and their CHIPS act? Because that's likely to be an expensive boondoggle if we tried it here (and it probably will be there as well, but at least Intel exists there). This stuff will almost certainly be solved by the time a new Canadian facility could be built anyway, and the supplies needed are all at huge premiums because Taiwan is building fabs at break neck speed.

Their other legislative initiatives related to inflation can be summarized as giving people government money, which is actually quite inflationary. There is a compassionate argument in favour of that, but it does make the problem take longer to solve.

Having the US next door to invest in the CHIPS act is a massive, massive benefit for Canada. We probably can't contribute much to help that along, but if there is anything our government could have done, I hope they were involved.

But no I don't expect multi-trillion dollar investments to onshore everything.

I do expect however dealing with money laundering and criminal activity in the real estate market, as an example. And for those that think those activities don't drive up the price of housing....

International money laundering watchdogs have condemned Canada’s failure to regulate its mortgage brokers, lenders, housing investment funds, realtors, developers and lawyers. Transparency International has consistently ranked Canada near the bottom of the pack of all G20 countries due to its failure to meet G20 anti-money laundering commitments. And last summer, Global Financial Integrity (GFI) — a Washington, D.C.-based think tank focused on corruption and money laundering — issued a report the underscores Ottawa’s many failures.

GFI’s report analyzed 35 cases involving US$626.3 million ($783 million) in laundered funds over five years (which is a drop in the bucket considering that a 2019 RCMP report estimated that $46.7 billion was laundered in Canada in 2018 alone). It found that about half the money laundered through Canadian real estate came from outside the country, with China accounting for nearly a quarter of the foreign funds. Of the domestic money laundered through real estate, well over half came from drug trafficking.

So far, nothing has been done to crack down on professionals or immigration investor scams. These intermediaries, like chartered banks, should be required to report suspicious clients and suspicious transactions to authorities, as is the case in other countries, such as the United Kingdom.

https://financialpost.com/diane-fran...an-real-estate

Been going on for years. Been a problem for years. Everyone has known there has been a problem for years. Guess what the government has done for years? Nothing.

[Azure]

Originally Posted by PeteMoss

Yes - the auto wait time is catch up to the back-up. They aren't restrained in production (or are minimal).

Tech companies in the stock market are all taking a beating and laying off a bazillion workers in the past month. The pent up demand for this stuff that built up during the pandemic is ending (as people are spending their money elsewhere or more likely running through the money they saved while everything was shutdown)

There may be a recession incoming, likely actually, but tech companies laying off people is again indicative of nothing.

There is a massive shift happening right now in the tech industry. Apple as an example has laid off nobody. Microsoft has laid of thousands while investing billions in AI (including into jobs).

Investigate reporting into those laid off workers has revealed most get jobs somewhere else pretty quickly.

So is it indicative of an incoming recession, or just tech companies reorganizing and cutting staff after living the high life the past few years while profits were massive?

[Johnny199r]

Originally Posted by Azure

Having the US next door to invest in the CHIPS act is a massive, massive benefit for Canada. We probably can't contribute much to help that along, but if there is anything our government could have done, I hope they were involved.

But no I don't expect multi-trillion dollar investments to onshore everything.

I do expect however dealing with money laundering and criminal activity in the real estate market, as an example. And for those that think those activities don't drive up the price of housing....



https://financialpost.com/diane-fran...an-real-estate

Been going on for years. Been a problem for years. Everyone has known there has been a problem for years. Guess what the government has done for years? Nothing.

The government in this country has been absolutely useless on this issue. I think they're scared that pointing this out inevitably gets some groups yelling "racist!", even though there is ample evidence to back up the problem.

It's been one of the most disappearing aspects of governments in the last 10 years.

[bizaro86]

Originally Posted by Azure

Having the US next door to invest in the CHIPS act is a massive, massive benefit for Canada. We probably can't contribute much to help that along, but if there is anything our government could have done, I hope they were involved.

But no I don't expect multi-trillion dollar investments to onshore everything.

I do expect however dealing with money laundering and criminal activity in the real estate market, as an example. And for those that think those activities don't drive up the price of housing....



https://financialpost.com/diane-fran...an-real-estate

Been going on for years. Been a problem for years. Everyone has known there has been a problem for years. Guess what the government has done for years? Nothing.

In that case I agree. Eliminating fraud and money laundering would probably help keep prices more reasonable for people to live, especially in Vancouver/Toronto.

[GGG]

Originally Posted by Johnny199r

The government in this country has been absolutely useless on this issue. I think they're scared that pointing this out inevitably gets some groups yelling "racist!", even though there is ample evidence to back up the problem.

It's been one of the most disappearing aspects of governments in the last 10 years.

In terms of housing it’s a factor but not a significant one

https://news.gov.bc.ca/releases/2019FIN0051-000914

More than $7 billion in dirty money was laundered in B.C. in 2018, hiking the cost of buying a home by about 5%, according to British Columbia’s Expert Panel on Money Laundering in Real Estate.

In general blaming foreigners and fraud is easier than actually fixing zoning and nimbyism. I think the focus on foreign buyers and fraud is used to deflect to parties who benefit from current zoning.

[Johnny199r]

Originally Posted by GGG

In terms of housing it’s a factor but not a significant one

https://news.gov.bc.ca/releases/2019FIN0051-000914



In general blaming foreigners and fraud is easier than actually fixing zoning and nimbyism. I think the focus on foreign buyers and fraud is used to deflect to parties who benefit from current zoning.

They're all issues. All of them.

Stupidly low interest rates, foreign money laundering, zoning and nimbyism etc

Everything should have been looked at and addressed. I don't care if it was only 1% of the problem.

[bizaro86]

Originally Posted by Johnny199r

They're all issues. All of them.

Stupidly low interest rates, foreign money laundering, zoning and nimbyism etc

Everything should have been looked at and addressed. I don't care if it was only 1% of the problem.

Except the government puts in a ban on foreign buyers and then dusts of its shoulders. No sense looking at the ALR/green zone/zoning issues now!

As an aside, I think there are two types of money laundering and (imo) they're different. Someone who earned some money in China and doesn't want that money subject to CCP capital controls is breaking (one of the many unjust) Chinese laws but not Canadian law and I don't see why that is a problem for us. That's different than a "proceeds of crime" type situation where someone with a drug/human smuggling business uses Canadian RE to launder their money.

[Azure]

It puts a ban on foreign buyers, but does nothing to stop foreign buyers from forming a Canadian holding company to keep buying the real estate.

The Maloney report said real estate accounted for, in a cautious estimate, $5-billion of the total amount of money believed to have been laundered through B.C. in 2018. The province estimates based on this that money laundering boosted the benchmark price of a typical home (including detached houses, condos and townhouses) in the Vancouver region by $50,000. However, the authors of the two reports said on Thursday that it may be higher, as the five per cent estimate was averaged out across the province.

https://www.theglobeandmail.com/cana...d-home-prices/

[Johnny199r]

Originally Posted by Azure

It puts a ban on foreign buyers, but does nothing to stop foreign buyers from forming a Canadian holding company to keep buying the real estate.



https://www.theglobeandmail.com/cana...d-home-prices/

Yup, the ban had more holes than swiss cheese.

[Yoho]

BOC raises rates .25% as expected.

https://twitter.com/user/status/1618262585438003205

[Paulie Walnuts]

So how exactly is this going to help keep raising the rate without any proper time given to get evidence that it's working?

[Azure]

Another rate hike from the Bank of Canada this week risks pushing the Canadian economy into a deep recession that could cost hundreds of thousands of people their jobs, a growing number of economists worry.

The Bank is set to announce Wednesday morning whether it will be raising its key overnight lending rate for the eighth straight time, and markets are already pricing in a 25 basis-point (quarter of a percentage point) hike.

That increase, said economist Jim Stanford, would be a grievous mistake for a simple reason: The economy still hasn’t felt the full impact of the seven rate hikes in 2022, and is already struggling.

“I’m still convinced we’re likely facing a recession this year and it will be all the deeper if the Bank of Canada continues this single-minded crusade,” said Stanford, chief economist at the Centre for Future Work.

“Even if they don’t raise rates, we’re going to see increasing slowdown from the rate increases that are already in the pipeline. So adding more would obviously make that even worse,” said Stanford.

If there’s a mild “technical” recession — two straight quarters of shrinking GDP — there might not be many jobs lost. But a deeper recession could mean 300,000 people losing their jobs, and the unemployment rate hitting nine per cent, said Stanford.

Bank of Canada governor Tiff Macklem has made it clear, said Stanford, that he’s committed to bringing inflation down to the Bank’s target of two per cent. Despite last year’s series of hikes, the Consumer Price Index — a broad-based measure of inflation — was 6.3 per cent higher in December than it was a year earlier, Statistics Canada announced last week.

“The Bank has said, quite clearly, they’re going to get inflation down to two per cent no matter what. And while headline inflation has come down, it’s nowhere near two per cent,” said Stanford.

Macklem has also expressed concern that the relatively low unemployment rate is pushing inflation. That means, said Stanford, that the Bank is actively pushing for people to lose their jobs, making an interest rate hike Wednesday almost a certainty.

“Tiff Macklem has been explicit in saying that five per cent unemployment is too low,” said Stanford.

https://www.thestar.com/business/202...ists-warn.html

I mean I'm optimistic and want job rates to increase, unemployment to go down, wages to go up, but at this point we should all hope those things don't happen because it will all just lead to another rate increase.

Hard to imagine anyone in the Federal Government who is watching this isn't extremely concerned with this tunnel visioned approach.

[Table 5]

Anyone know how long it typically takes for banks to adjust their GIC rates after the interest rate increase? I'm looking to lock in a GIC, but wondering if today's rate hike would already have an effect, or if there's a delay.

[Harry Lime]

What are the new Canadians supposed to do when they get here if the unemployment rate goes up. Generational Canadians with no language hurdle, or fewer housing issues are going to have the leg up on a dwindling supply.

[bizaro86]

Originally Posted by Table 5

Anyone know how long it typically takes for banks to adjust their GIC rates after the interest rate increase? I'm looking to lock in a GIC, but wondering if today's rate hike would already have an effect, or if there's a delay.

GICs are priced based on longer interest rates (ie 5 year GICs are based on 5 year rates). The banks raise GIC rates more slowly than mortgage rates, but a change to the short rate doesn't necessarily affect the long term rate - it's mostly based on the expectations for future rates.

[Izzle]

Originally Posted by Table 5

Anyone know how long it typically takes for banks to adjust their GIC rates after the interest rate increase? I'm looking to lock in a GIC, but wondering if today's rate hike would already have an effect, or if there's a delay.

Banks take the elevator up when it comes to raising mortgage rates. But they tend to take the stairs up when it comes to raising GIC rates. I'd probably wait for a bit. EQ Bank 1 year GIC is 5%, which is the same back on Jan 11, 2023 the last time I checked.

[bizaro86]

Originally Posted by Izzle

Banks take the elevator up when it comes to raising mortgage rates. But they tend to take the stairs up when it comes to raising GIC rates. I'd probably wait for a bit. EQ Bank 1 year GIC is 5%, which is the same back on Jan 11, 2023 the last time I checked.

5 year bond rates are actually down about a quarter percent since then though. The market has started to assume the BoC is just about done raising and will start cutting, whereas previously more raises were baked in.

The 5 year government bond rate is actually below 3%.

https://www.marketwatch.com/investin...countrycode=bx

[I_H8_Crawford]

Anyone have experience rolling your mortgage into your RRSP?

Planning ahead for when my mortgage has to renew. Originally figured we would just buy out the remainder if rates were significantly higher, but then remembered that this could be an option too.

[blankall]

Originally Posted by Harry Lime

What are the new Canadians supposed to do when they get here if the unemployment rate goes up. Generational Canadians with no language hurdle, or fewer housing issues are going to have the leg up on a dwindling supply.

Plenty of new Canadians have cash, and there are plenty of existing Canadians born into families that don't have large amount of assets and real estate.

The combo of ultra high real estate and high interest rates really kills social mobility. If you don't have parents to give you a massive amount of cash or you graduate from school with more debt, it's a much harder road to the middle (not even the top) than it's been in long time.

[Geraldsh]

My son is shopping for a mortgage and asked for a 5 year fixed rate. The bank advised him to limit the fixed term to 2 years - what would you advise?