July/22 8.1% (peak)
August 7.6%
September 7.0%
October 6.9%
November 6.9%
December 6.8%
January/23 6.3%
February 5.9%
March 5.2%
April 4.3%
May 4.4%
June 3.4%
July 2.8%
Aug 3.3%
Sept 4.0%
Oct 3.8%
Nov 3.1%
Dec 3.1%
Jan/24 ???
Levelling off in the 3.0-3.5% range? Not good enough
Yeah and despite the rate of inflation appearing stagnant on a monthly basis, when you dive a little deeper things are slowing. I think that when you remove energy and food from the calculation (because they're more volatile, not part of a grand conspiracy!), you get something like 1.87% per month.
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Inflation rates are slowing and relatively stagnant, the interest rate hikes have done their job, though I find it really odd how Canadians banks were so quick to price in interest rate cuts just because the US feds hinted at rate cuts, Canada 5 year bond went from 4.36% to 3.17% and 5 year fixed mortgage rates dropped
Canada's situation is much more precarious than the US's due to our government's poor policies and our interest rates are a full 50 points below the US. It makes zero sense to cut rates right now.
I mean TD is predicting 6 BoC cuts this year based on forecast, that's ridiculous.
Inflation rates are slowing and relatively stagnant, the interest rate hikes have done their job, though I find it really odd how Canadians banks were so quick to price in interest rate cuts just because the US feds hinted at rate cuts, Canada 5 year bond went from 4.36% to 3.17% and 5 year fixed mortgage rates dropped
Canada's situation is much more precarious than the US's due to our government's poor policies and our interest rates are a full 50 points below the US. It makes zero sense to cut rates right now.
I mean TD is predicting 6 BoC cuts this year based on forecast, that's ridiculous.
Well the data up here is also much weaker, which is why you're seeing that kind of projection. That, and I think that before the rate hikes the biggest prediction (that I saw) was 8 hikes. That seemed pretty crazy at that time, and it was also way under what happened.
Predicting interest rate hikes is fraught with difficulty and really tough. I would look at these more in the directional area as opposed to magnitude because there are a lot of factors and a lot of variance.
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Inflation rates are slowing and relatively stagnant, the interest rate hikes have done their job, though I find it really odd how Canadians banks were so quick to price in interest rate cuts just because the US feds hinted at rate cuts, Canada 5 year bond went from 4.36% to 3.17% and 5 year fixed mortgage rates dropped
It's not banks setting the yields, it's investors. And the market thinks rate cuts are happening relatively soon. But anyone who's confident that the market is wrong could easily make a lot of money by shorting bonds if their prediction turns out to be correct. But no one seems to be doing that, or else yields would be rising.
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Canada's situation is much more precarious than the US's due to our government's poor policies and our interest rates are a full 50 points below the US. It makes zero sense to cut rates right now.
I mean TD is predicting 6 BoC cuts this year based on forecast, that's ridiculous.
Precarious economic conditions are when you cut rates. Weak growth in Canada combined with inflation only being held up by the policy rate is exactly why the bond market is predicting so many cuts.
Aren't like 90% of US homeowners on 30 year fixed mortgages?
Yep, they are subsidized by the Fed. There is a reason no where else in the world has them at competitive rates.
In the US market though this puts the brakes on the economy faster in some ways because people with good mortgages don’t move so demand for new housing goes down torpedoeing the construction Industry.
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Aren't like 90% of US homeowners on 30 year fixed mortgages?
Yes, which would be phenomenal in a sense, but really ties you down in times like these. Regardless, if someone wanted to give me a massive loan @ ~2% for 30 years, who am I to say no?
Yep, they are subsidized by the Fed. There is a reason no where else in the world has them at competitive rates.
In the US market though this puts the brakes on the economy faster in some ways because people with good mortgages don’t move so demand for new housing goes down torpedoeing the construction Industry.
Canadian law stipulates that any mortgage is cancellable after 5 years with only a 3 month interest penalty. Mortgages with terms longer than 5 years therefore expose the banks to interest rate risk, for which they must charge a premium. This makes them financially unattractive to both banks and consumers.
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10 (1) Whenever any principal money or interest secured by mortgage on real property or hypothec on immovables is not, under the terms of the mortgage or hypothec, payable until a time more than five years after the date of the mortgage or hypothec, then, if at any time after the expiration of the five years, any person liable to pay, or entitled to pay in order to redeem the mortgage, or to extinguish the hypothec, tenders or pays, to the person entitled to receive the money, the amount due for principal money and interest to the time of payment, as calculated under sections 6 to 9, together with three months further interest in lieu of notice, no further interest shall be chargeable, payable or recoverable at any time after the payment on the principal money or interest due under the mortgage or hypothec.
Yep, they are subsidized by the Fed. There is a reason no where else in the world has them at competitive rates.
In the US market though this puts the brakes on the economy faster in some ways because people with good mortgages don’t move so demand for new housing goes down torpedoeing the construction Industry.
Well it doesn’t totally sink home builders though, because they do deals where they “buy down” the rates for purchasers. So, buying a new build can be much easier than a home for sale because (A) they’re available and (B) you might get a better interest rate.
Canadian law stipulates that any mortgage is cancellable after 5 years with only a 3 month interest penalty. Mortgages with terms longer than 5 years therefore expose the banks to interest rate risk, for which they must charge a premium. This makes them financially unattractive to both banks and consumers.
That's not why they don't exist here but do in the US. Most US mortgages are cancellable at any time without any kind of penalty, so lenders there have an even higher interest rate risk than in Canada.
The reason they can exist in the US is because the US government effectively guarantees them through Fannie Mae and Freddie Mac, allowing lenders to offload their risk to the government which then allows them to have viable 30-year rates.
If all of the sudden the CMHC told banks that they'd buy up any 30-year mortgages that banks originated and then sell them as mortgage backed securities like Fannie Mae and Freddie Mac do in the US, we'd see low-rate 30 year mortgages here too. But that's a risk that our government doesn't want to take on, for good reason.
And all that said, because US mortgages aren't portable when someone sells their house, virtually none of them end up lasting 30 years. Most mortgage-backed securities are treated as having a 7-year average duration among their pooled mortgages, which isn't all that different from 5-year loans in Canada.
I think the key is that in an increasing rate environment people will hold longer than average and in a decreasing rate environment will hold shorter than average. Thus increasing rates hit the purchasing side of the market without the same affect on holders
