*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[Bring_Back_Shantz]

Originally Posted by Yoho

It was simply an informative post.

Can we get Yoho a custom user title?
Maybe something along the lines of
"Presented without context or comment"
Then maybe a winky emoji?

[monkeyman]

Personally, I find it funnier seeing the responses(over reactions) to a post with no context.

[bizaro86]

Originally Posted by Johnny199r

But I thought rates would never go up! I'm being taken advantage of!

I think if there is outrage directed at anyone it could reasonably directed at the BoC which promised to leave rates low for years.

It's not totally unreasonable for consumers to accept an interest rate forecast when that forecast comes from the people in charge of setting interest rates.

All that said, that letter from RBC is completely reasonable. If they switched the payments without notification people would be upset about that, and it definitely isn't their fault interest rates are going up (although they could give back the margin to prime they added on the way down...)

[Johnny199r]

Originally Posted by bizaro86

I think if there is outrage directed at anyone it could reasonably directed at the BoC which promised to leave rates low for years.

It's not totally unreasonable for consumers to accept an interest rate forecast when that forecast comes from the people in charge of setting interest rates.

All that said, that letter from RBC is completely reasonable. If they switched the payments without notification people would be upset about that, and it definitely isn't their fault interest rates are going up (although they could give back the margin to prime they added on the way down...)

No doubt Tiff is an idiot. Maybe that will be a lesson to some that you can't believe what the government, or some quasi-government intuition says in the future.

People threw caution to the wind years ago piling on debt. This is an important lesson that we need to leave ourselves some financial wiggle room in our decisions. Some people who went through this in the 80s have been saying it forever, but others didnt want to hear it.

[calf]

Originally Posted by Bring_Back_Shantz

A courtesy letter, written in a professional, matter of fact tone, advising someone that the contract they signed, that included the risk that their payments might go up has now reached a point where that exact scenario is happening?

The horror!
The Bastards!

Assuming that person got a Prime Minus 1 interest rate which is currently at 4.95%, and that they're making their payments monthly, that's a $775k mortgage balance. Let me grab my tiny violin.

[GordonBlue]

I'd like your opinions on a mortgage issue.
I'm locked in for 1 more full year.

Do you guys think it's better to wait the year, and hope for rate decreases, or would it be better to do a "blend and extend" right now in anticipation of a years worth of increases to come.

[Locke]

Originally Posted by bizaro86

I think if there is outrage directed at anyone it could reasonably directed at the BoC which promised to leave rates low for years.

It's not totally unreasonable for consumers to accept an interest rate forecast when that forecast comes from the people in charge of setting interest rates.

All that said, that letter from RBC is completely reasonable. If they switched the payments without notification people would be upset about that, and it definitely isn't their fault interest rates are going up (although they could give back the margin to prime they added on the way down...)

Yeah, I dont really see what to complain about there. Interest rates increased, your mortgage rates increased accordingly. Furthermore water is wet and when night fall it gets dark.

[MillerTime GFG]

Originally Posted by Bring_Back_Shantz

A courtesy letter, written in a professional, matter of fact tone, advising someone that the contract they signed, that included the risk that their payments might go up has now reached a point where that exact scenario is happening?

The horror!
The Bastards!

I wouldn't be so sure there was any mention of a "trigger rate" in the commitment letter they would have signed up front. I imagine it must be mentioned somewhere in their disclosure docs, but I don't think this possibility was as plainly obvious as you think.

This is the difference between an adjustable rate mortgage vs variable rate mortgage. In this case, it was a true VRM, where payments are static...until the trigger point is met.

[MillerTime GFG]

Originally Posted by GordonBlue

I'd like your opinions on a mortgage issue.
I'm locked in for 1 more full year.

Do you guys think it's better to wait the year, and hope for rate decreases, or would it be better to do a "blend and extend" right now in anticipation of a years worth of increases to come.

I'd wait if it were me. You may end up renewing for another year at that time, but I wouldn't blend and extend. Keep in mind that most blend and extend rates include a penalty built into your new blended rate. So while it's not out of pocket up front, you are paying for it.

[bizaro86]

Originally Posted by MillerTime GFG

I'd wait if it were me. You may end up renewing for another year at that time, but I wouldn't blend and extend. Keep in mind that most blend and extend rates include a penalty built into your new blended rate. So while it's not out of pocket up front, you are paying for it.

I've been able to blend and extend without an embedded penalty (and I've checked the math to be sure) multiple times when dealing with balance sheet lenders (ie uninsured mortgages at the big banks).

Monoline mortgage companies not so much.

[MillerTime GFG]

Originally Posted by bizaro86

I've been able to blend and extend without an embedded penalty (and I've checked the math to be sure) multiple times when dealing with balance sheet lenders (ie uninsured mortgages at the big banks).

Monoline mortgage companies not so much.

Yes that's correct, which is why I said "most". Even without penalty, I do find blend and extends through balance sheet lenders are not great as they know they don't need to be as competitive in rate. I'd be curious what the blended rate was vs market rate when you did so. Not to say it's never a good option, but usually not so much.

[GGG]

Originally Posted by GordonBlue

I'd like your opinions on a mortgage issue.
I'm locked in for 1 more full year.

Do you guys think it's better to wait the year, and hope for rate decreases, or would it be better to do a "blend and extend" right now in anticipation of a years worth of increases to come.

Id think of it from a risk perspective. If mortgage rates rise 2% over the next year can you afford to keep making the payments? If the answer is no then locking in now might be reasonable.

If you decide to not extend start making payments to yourself based on what your mortgage payment increase today so you have a cushion if things get worse.

As for market timing I don’t think anyone knows.

[bizaro86]

Originally Posted by MillerTime GFG

Yes that's correct, which is why I said "most". Even without penalty, I do find blend and extends through balance sheet lenders are not great as they know they don't need to be as competitive in rate. I'd be curious what the blended rate was vs market rate when you did so. Not to say it's never a good option, but usually not so much.

I haven't done one for a couple of years (was late 2020 to lock in super low rates) but the rate they used for the blend was the same as the First National 5 year insured rate, which is generally what I use to check if a rate is competitive.

[The Fonz]

https://www.reuters.com/markets/rate...ts-2022-12-01/
BoC to keep up pace with 50 basis point December rate hike -economists

"Just over half, 16 of 30, of the economists polled over the last few days expected a half-point rise on Dec. 7 to 4.25%, matching a move in October and in line with current expectations for the U.S. Federal Reserve's December meeting.

Fourteen said the BoC would dial down its pace to 25 basis points. Markets are pricing in an over 80% chance of 25, which would be a third straight reduction in rate hike size by policymakers from a peak of 100 in July.

Of the large Canadian banks, Scotiabank, CIBC and National Bank expected a 50 basis point move with no further hikes afterward. RBC forecasts a 25 basis point hike and then a pause, while BMO expects 50 and then another 25 in early 2023."

[powderjunkie]

Bold prediction: 0.375

At least if this were an NHL arbitration case...

[bizaro86]

Originally Posted by powderjunkie

Bold prediction: 0.375

At least if this were an NHL arbitration case...

And then the banks all raise their prime by 0.5 anyway

[The Fonz]

https://www.cbc.ca/news/business/ban...nada-1.6677004
Bank of Canada raises rate another half percentage point, to 4.25%

The Bank of Canada raised its benchmark interest rate by 50 basis points, to 4.25 per cent. The move was widely expected by economists, who were anticipating a rate hike of either 25 or 50 points. Canada's central bank has raised its rate seven times this year in its fight to wrestle inflation into submission.

[The Fonz]

For reference, rate was 4.50% in the 2008 and 5.75% in the 2001 economy/market crashes, and subsequently was slashed by 4% each time.

Not saying I expect that same 4% drop coming - I don't. Just saying though, hold onto your tits.

[Johnny199r]

It's ironic how many people are complaining about these rates saying they are crippling the economy/homeowners, yet this range of rates is historically where rates usually sit.

People have such short memories. Same with the stock market running wild the last few years. Some people thought it would never come down again and severely over-leveraged themselves. Financial cycles have a way or repeating themselves.

[The Fisher Account]

Welp, this one stings the family finances... again. Hope these cease at some point.