*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[Firebot]

The irony is that with rates continuing to go up as they have, and with housing continuing to rise, housing has never been more expensive. Here in Calgary specifically, we are still going through the roof as we are still seen as 'affordable' compared to Toronto and Vancouver markets.

I thought housing was going to take a dip last year with interest rates providing some common sense, how wrong I was.

Meanwhile Trudeau has committed to 1 million immigrants a year which only exacerbates the crisis.

Mortgage rates go up, housing goes up, rent goes up. Inflation goes up. It's a self destructive prophecy where government policies conflict with BoC policies. Theoretically, housing should be going down, yet it isn't, and BoC is trying to force it to contract which may not actually happen.

Even those who are locked in at low mortgage rates, eventually will need to renew. But at least they and variable rate holders have a house and can sell high if desired if unable to make payments. Younger generation and renters again is the one getting the short end of the stick

[greyshep]

[QUOTE=Mr.Coffee;8774717]I really wouldn't listen to any mortgage broker.

Truth is- nobody knows what's going to happen. Do what you feel is good / right. If you're like me then you can rest easy trusting you'll make the wrong decision.[/QUOTE]

Exactly! This is the first time we have ever gone variable. Wife is super conservative and we have always done 5yr fixed. I finally had her agree to make the switch. Groan.

[nik-]

Originally Posted by greyshep

Exactly! This is the first time we have ever gone variable. Wife is super conservative and we have always done 5yr fixed. I finally had her agree to make the switch. Groan.

Hope you have a comfortable couch.

[wwkayaker]

I bet you could afford a really comfortable couch if you didn’t have all that extra money going to your variable rate mortgage.


Full disclosure, I’m in the same boat.

[Firebot]

Originally Posted by greyshep

Exactly! This is the first time we have ever gone variable. Wife is super conservative and we have always done 5yr fixed. I finally had her agree to make the switch. Groan.

In hindsight we can always look back and think of mistakes. I'm sure you have investments you wished you sold at the peak as well.

I don't regret whatsoever going to variable during the start of pandemic and breaking my fixed rate early and absorb the penalty. We feared the worst of losing jobs with the uncertainty and tried to secure new terms. This turned out to be an amazing decision both at the time and in hindsight.

I also had variable on my 2nd property that I got in 2018 when rates were being touted to go up and up, needless to say that variable was a godsend there as the rates dropped to historical lows. Both saved us tons of money at the time we needed the most.

Increase in rates suck for sure and in hindsight I should have gone fixed last year but last year personal situation was also very different where it made zero sense to lock in. Life happens.


Yet at the same time, property value has gone up at least 50-100k in the past year. It's a wash in the end.

Look at these crazy numbers.

Market Report Summary for June 2023
Updated July 4th, 2023
Calgary home prices reached a new record high while the pace of rise in prices slowed.
At 3,146, Calgary’s number of sales saw an 11% yearly rise and a 0.8% monthly increase in June 2023.
Detached home average price increased by 9.4% year-over-year to $730k.
Semi-detached home average price increased by 16.0% year-over-year to $628k.
Townhouse average price increased by 15.8% year-over-year to $409k.
Condo apartment average price increased by 7.9% year-over-year to $302k.

[Old Yeller]

Originally Posted by greyshep

Exactly! This is the first time we have ever gone variable. Wife is super conservative and we have always done 5yr fixed. I finally had her agree to make the switch. Groan.

Oh you poor bastard. I was in a similar boat converting my wife to the variable side of things, but I did it 6 years ago so at least I can still point to that as reference that I'm not always wrong.

[Sylvanfan]

Well I'm not feeling too bad about switching from variable to that 4.19 fixed back at the start of May now. In the 4 months for renewing early, I might save enough interest there.

That said I should have taken the 4.38 offered to me on my rental back in mid May when it was offered. Might have to try and sell that one off now as I'm definitely not covering the interest on that mortgage now....renews on September 1. Have a really good tenant in there right now. I'll have to increase the rent at least a bit. But I don't think I can get enough of an increase to cover my costs...after two good tenants...not sure I want to risk bringing in a new one...who might be a dud.

[Paulie Walnuts]

I guess if you have a large cash balance doing nothing put it in a savings and get higher interest rates and pay some capital gains to the government on half of what you make.

[Slava]

Originally Posted by Paulie Walnuts

I guess if you have a large cash balance doing nothing put it in a savings and get higher interest rates and pay some capital gains to the government on half of what you make.

Interest income is taxed as full income, not capital gains.

[opendoor]

Originally Posted by Slava

^If the BoC had stopped raising rates, we'd be at about 2-2.5% inflation I think and very close to their desired figure. That's specifically due to the increased shelter figure.

It'll be interesting to see if they stick to their 2% target while mortgage interest inflation is so high. Because after the basket re-weighting they just did, mortgage interest inflation alone is adding 1.1-1.2 percentage points to the headline number and about 1.5 points to the core number. So it'll basically be impossible to hit 2% overall without pushing everything else towards deflation. And continuing to raise rates will just exacerbate that.

[Slava]

Originally Posted by opendoor

It'll be interesting to see if they stick to their 2% target while mortgage interest inflation is so high. Because after the basket re-weighting they just did, mortgage interest inflation alone is adding 1.1-1.2 percentage points to the headline number and about 1.5 points to the core number. So it'll basically be impossible to hit 2% overall without pushing everything else towards deflation. And continuing to raise rates will just exacerbate that.

Well, I still think that they eventually move the goalposts and say that they're good with a 2-3% range. I'm pretty sure I posted that somewhere here before, perhaps in this thread. There was a long time where the bank had that stated policy, so it's not a huge departure from where they were.

At the same time, their comments this morning (that I saw, but admittedly I could've missed something because I don't hand on their every word), did nothing to allay concerns about future rate hikes to come. They didn't say anything about this being the last for a while, which doesn't mean that they're increasing again next time, but the door is open for that.

[Leondros]

Originally Posted by Slava

Interest income is taxed as full income, not capital gains.

Money market ETFs are paying more than savings accounts anyway and distributions are made in the forms of dividends.

[Izzle]

Originally Posted by Leondros

Money market ETFs are paying more than savings accounts anyway and distributions are made in the forms of dividends.

Money market ETFs like CASH.TO?

[Slava]

Originally Posted by Leondros

Money market ETFs are paying more than savings accounts anyway and distributions are made in the forms of dividends.

Yeah, it depends on what you use for sure. I mean really, you could buy a bond and get a capital gain return for a chunk of return and come out further ahead as well.

[Torture]

Originally Posted by PeteMoss

Everyone who flips out at upzoning should go visit these neighbourhoods in the GTA.

My grandparents used to live there, when I was a kid the entire neighbourhood was old 1930s type houses with giant yards. Now every 3rd one is torn down and some new modern house is built.


There is zero neighbourhood aesthetic when you've got smaller bungelows built in the 1930s with a huge yard next to some giant double garage new build right on the road with zero yard. If you chuck some apartment building on the street - its not going to throw anything off.

Example here:
https://www.google.com/maps/@43.3959...l=en&entry=ttu

Yeah, on my street you have basically all infills and a couple post-war bungalows that are hanging on. The post-war bungalows are falling apart and one is a literal crack house. Nothing of value is lost by upzoning that. People get paniced about parking or their sight lines, but really, a townhouse or rowhouse is not much bigger than the infill next door. It's not like you're building a 10 story apartment building in the middle of the street like some of the nimby's seem to argue.

Originally Posted by you&me

In regards to upzoning, I think it makes sense to do it in stages, rather than a single, city-wide blanket like (I think) GGG was proposing.

Let's be realistic - it's not like Calgary has such a shortage of underused or brownfield sites that we need to start upzoning across the city so we can teardown corner lots in Edgemont or (*GASP*) Bonavista to develop 4 townhomes.

I believe the city implemented a "Main Streets" upzoning policy recently, where properties along arterial roads are upzoned... Let's work our way through that a little bit first before we get on with something like blanket 4-stories-everywhere zoning.

This is basically what the Guidebook for Great Communities had proposed but it was made politically untenable by the nimbys. The residents of Elbow Park and the suburbs spent pretty much a whole day protesting the loss of "neighbourhood character" and "good god, everywhere in the City is going to turn into Marda Loop!!" at council.

[topfiverecords]

Originally Posted by PeteMoss

Everyone who flips out at upzoning should go visit these neighbourhoods in the GTA.

My grandparents used to live there, when I was a kid the entire neighbourhood was old 1930s type houses with giant yards. Now every 3rd one is torn down and some new modern house is built.


There is zero neighbourhood aesthetic when you've got smaller bungelows built in the 1930s with a huge yard next to some giant double garage new build right on the road with zero yard. If you chuck some apartment building on the street - its not going to throw anything off.

Example here:
https://www.google.com/maps/@43.3959...l=en&entry=ttu

That's not really upzoning. It's more like downzoning.

[DoubleF]

Seems like more reason to pay down my mortgage ASAP.

[opendoor]

Originally Posted by Leondros

Money market ETFs are paying more than savings accounts anyway and distributions are made in the forms of dividends.

Really? The ones I'm familiar with distribute primarily as Other Income (which is taxable at marginal rates) with a little bit of Return of Capital (which lowers the Adjusted Cost Base, eventually resulting in capital gains taxes all else being equal).

[powderjunkie]

Originally Posted by Fuzz

https://goo.gl/maps/XCV5QeYui8bXDP1t9


This is a decent 4 unit that just went in. But wow, I see the bin problem! Sillyness.


https://goo.gl/maps/dc7DhX4PaMtzn6G46


This one combined 2 50 foot lots for what looks like a 8-plex.

It is fun that Street view lets you see what preceded

This view of the first one is particularly good with the decrepit old camper parked there, while you can see nice houses in the background

https://goo.gl/maps/tVy8E8reLKrYphL86


The houses replaced in second example didn't look too bad before, but across the street was also infilled, so God only knows where that early 90s Caravan is parked now!

https://goo.gl/maps/3uVnBpUz51KzYZzs9

[bizaro86]

Originally Posted by opendoor

Really? The ones I'm familiar with distribute primarily as Other Income (which is taxable at marginal rates) with a little bit of Return of Capital (which lowers the Adjusted Cost Base, eventually resulting in capital gains taxes all else being equal).

I'd be very interested in getting an example of a money market fund that pays eligible dividends...