5y bond above 4%, first time since 2007.
Posted Jul 7, 2023, 1:06 PM UTC
103118
I don't know how people don't see it. They think the BOC will back off because interest costs are a major component of inflation in recent data. "You stay until the job's done".
45
That's precisely a big problem for Canada. The service cost for Canada's government debt is ballooning, so they'll have to print money to cover the interest while Trudeau and his gang on the fiscal side are also adding money to the supply. I don't see how we can reduce inflation with the way things are.
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"Trudeau and his gang" didn't make any homeowners take on debt. That debt in a rising rate environment is what is driving that component of inflation up.
Those holding that debt will have to capitulate. They will sell. First those who are forced, financially. They will take losses. Then those at the fringe, on renewals or once they realize their money would be better off elsewhere.
Once folks realize the Bank of Canada has no intention of blinking, sentiment will shift.Prices will continue to go down. Real estate only going up will no longer be dogmatized. That component of inflation will reduce without reducing interest rates.
8†
You completely side stepped the above comment which is talking about government debt, not personal.
The government cannot afford its own debt at these rates, and when the provincial and federal bonds roll over there's going to be a shit storm if rates are still this high.
That's why many predict the BoC will back off.
10
I didn't side step it. I ignored it.
I was speaking to personal debt loads and the real estate market.
To be clear, I'm saying the BOC will take care of the inflation due to interest costs by bringing over leveraged owners to the brink. Their interest costs will disappear once they dont have the house and the mortgage anymore.
Once this happens, then rates can go down. While the government's deficit is a problem, it's on a different time scale. It's not a consideration for July 12th or any other policy announcements this year.
-2
Anyone providing negative to inflation interest is asking people to take debt up to their titties
2
Actually - no, it's not.
Most the Canada's nation debt products were converted to longer-term instruments before the 2021 election. (if you're looking for something to be angry at that for - they knew it was coming)
Need to look at the regular BoC auctions to see what the gov't is paying, and look at volume. Market rates don't (directly) mean anything to what the gov't is paying.
5
I remember reading a good chunk of government debt renews with 3 years.
1
Once you read "The creature of Jekyll Island." you will know that nobody cares about the normal class. All that really matters is profit today.
We've already since a long time sold the future generations.
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TIFF in panic mode, not over inflation, but rather home prices
Toronto homeowners have him by the balls
-13
Lol i think he has over leveraged home owners by the balls
11
Mortgages start with a 6 now. Values will drop noticeably
36
Institutional investors are not putting their money in RE anymore. Bonds are actually cash flowing vs shitbag Toronto real estate.
29
For sure. Risk free money above 5 percent. Albeit cant get leverage but real estate is no bueno for a while
14
You can get 90-97.5% leverage on government bonds if you want. They have a high margin value.
7
What do you borrow at?
1
Unless you're buying government bonds, they aren't risk free. If real estate is no bueno, then all the bonds backing mortgages are also at risk.
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That is literally what they are talking about. Government bonds.
7
When people say bonds, they are all talking about government bonds. What is this RE overpayer cope. Nobody's touching your shitty real estate bonds.
1
Values already dropped (and likely bottomed last January). At this point we are deep into the rate hiking cycle, with the terminal rate becoming clear. The fear has already passed at this point. The market may tread sideways for a few months, but any whiff of the hiking cycle’s end will ignite the market upward once again, like it did earlier in the year.
3
We shall see
1
Maybe posted rates. But can still get say low 5’s
-1
Maybe not in 30 days
3
Rates will drop to pre 2020 prices. This bubble was so unsustainable, you do not want to be the last buyer who overpaid before this bubble popped.
There will be a race for the exits this winter season.
-11
Agreed. Its going to be a great time to buy next year
-4†
6 is laughable
You weren't around when rates were 20% in the 80's lol
-24
It's ain't the 80's chump.
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Sick, you got any of those $75k houses then?
17
In Ukraine you currently can buy a 3-room condo starting at CA$35000, at 25% interest rate.
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20 is laughable!
You weren’t around for the original feudal serfdom in the 800’s lol
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Loool bro that was half a century ago. No one gives a shit about the 80s.
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Lol. Okay
1
RaTeS tO bE cUt sOON
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Do you remember all the comment saying "rate cuts will happen the summer of 2023!"
Pepperidge Farms remembers.
17
Do you have a job? How are you always posting?
Feel free to attack me, I know you will.
But honest question.
10†
He is a realtor. Free as a fly.
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All realtors are either pre or post rehab for cocaine. What else are they supposed to do with all those KEYYYYS
4
Nope. As in real estate, the key to a successful career is leverage.
-1†
following
1
Bullish
Economy is strong, people have jobs, no new supply as builders move to the sidelines due to high financing costs, record breaking new immigrants
keep em rate hikes coming
8†
u/REALchessj is this you? RIP Canada 5 Year Bond Yield
According to you...
The bond yield goes down = bullish
The bond yield goes up = bullish
41
It's true. It's all about the population.
2
So then why is u/REALchessj constantly talking about rates if they have no impact on the market? He should just be posting population stats.
4
Then why are prices down from their high?
3
Temporary noise.
3
They are barely down 5% from peak in my hood based on June data that just came out
3
New highs will be made soon. Corrections are normal.
2
It's all about total pain to push people out of the market. Interest rates + prices.
Population still keeps coming in though, so that counteracts the interest rate campaign (almost, that's why we are down, but not by much). On top of that housing starts are down due to interest rates.
1
Cdn RE is so decoupled from economic reality it’s ridiculous either way
Nothing is gonna stop it unless a massive crash, but our feds will never let that happen
1
It's funny how people believe only extremes are possible. Values will moon or crash.
It is very possible for values to stagnate.
1
Yes it is me, but the reality is that the only thing that can stop the RE market is mass job losses. As long as people have jobs the mortgage payment will be made.
The interest shock from last year had it's desired effect in bringing prices down. That shock is over and cannot be replicated by the boc. People are now used to higher rates and there are plenty of people with plenty of money that can handle these rates
-8†
What person, flush with cash, looks at the Canadian housing market and says “now’s my chance”
5
says “now’s my chance”
You don't think an asset that gives you 6% in dividends, increases at least 3%/year on average in value, and that you can borrow against at 80% TVL without margin calls is a good deal?
Even index ETFs only give you 35% margin and don't protect you against margin calls.
1
Remember when people thought 4% of rate hikes would crash the market 😂😂
6
Well it would of done more damage if not for amortization extension loopholes and these quasi-bailouts. Let's not kid ourselves there.
13
Well, it would have done no damage if TIFF didn't lie by telling people rates would not go up until 2023
7
Woulda coulda shoulda
1
When rate hikes started average values across canada dropped 20%.
And historically bubbles always last way longer than they realistically should. Look at what happened during the dot com crash or rate hikes in the 80’s.
People always think it’s gonna be different but the bubble will pop eventually. Our economy runs in boom and bust cycles approximately every decade
1
The 50% crash is coming soon, trust me
1
I'm calling for rates to hit 6.5% (if not more). They are trying to undo 15 years of poor monetary policy where money was essentially free. It was never going to be this easy. Never in modern financial history have they been able to beat inflation without having to raise rates above the peak of the core inflation rate, which for this time around was 6.3%.
-3
Best I could do are pauses and 0.25’s
3
Full realization of these rates is at what? Like weee not even half way through five years and 65% are fixed so only half of mortgages have been affected and the other half coming down the pipe is getting even worse rates
1
LOL no they are trying to massage inflation back into 2% and it is currently at 3.5. We already have interest rates above inflation.
2
Well the BoC is saying they are seeing signs of sticky core inflation:
Bank of Canada deputy governor Paul Beaudry says recent economic data suggests the risk of sticky inflation has gone up. Beaudry said economic data released since April “tipped the balance” for the central bank. “We've had an accumulation of evidence – on many fronts, over time and across a whole set – that tell us that inflation seems to be more sticky and it's going to be harder to get it down to that 2 per cent," Beaudry said. Beaudry says the rapid rise in consumer spending took the central bank by surprise, while buyers appear to be returning to the housing market. “When we looked at the dynamics in inflation combined with excess demand, that really has increased the risk that we are not going to be able to get inflation down without a bit more monetary tightening,” Beaudry said
Getting core inflation from 6.3% to 3.7% today was the easy part, getting it back down to 2% is going to be an absolute grind. This BoC looks at core inflation the most, headline is always all over the place because of oil.
1
Gosh, it really would suck if those numbers were a lie...
1
Right. I know people that had 20% in the 80's and celebrated if they renewed at 18% lmao
-6
Yup. On a $32,000 mortgage, when the family income was $60,000/year.
The horror lol give yer head a shake
3
Yeah, it was just as expensive then to buy a home as it is now
5x family income in 1988, same as today. 200k family income gets you in at 5x
So you're saying these people below were full of shit?
1
It's unfortunately very true... the most brutal rate hike in our history had only little impact on real estate to date.. now that we are approaching inflation target range, and the economy is still strong, this means the soft landing is indeed possible. In other words, real estate affordability is only going to get worse.
5
Banks just saying time to move away from the big city everyone!
1
Economics aside, can we not agree that Toronto fucking blows?
1
Here for the desperate hopium, delusional fantasies, and to collect some downvotes. Send em!
7
Lord, Krishna, Allah, whoever please have some mercy on us!
3
This is fine
2
rates could be as high as 100% and it wouldn't have much of an impact on RE prices if billions of people want to move to the GTA but only a few thousands houses are on sale but theyre delusional.
2†
Agree
All-cash payments don't care what the rate is
6
for primary residences kind off, but for investors obviously because higher discount rates mean more opportunity cost when buying extremely low cap rate properties
5
Us just posted low Job numbers
2†
Back down to 3.9.
2
Coming soon to Toronto, house prices from 2007.
2†
I wish, but I doubt it.
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That charging power is is pretty good deal
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That battery looks like a good deal 💵
2
Dark and cold winter ahead.
get your portable power bank for 35.95 now with free 2 day shipping!
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Double top
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1
Whats up overleveraged bagholders?
Are you ready for upcoming super-hike?? LOL
1
This is bullish for RE
-6
Double the the CPI policy!
CPI = Chinese, Persian, and Indian immigrants
As a Indian with Persian descent who identify myself as a Chinese I find this very funny.
Parsi born in Hong Kong?
You just went there 💀😂
Well the immigrants have realized the scam. It's the students now who will turn into immigrants....that's where the gravy train is. Here's how this model works. We are step 2 , approaching step 3 already.
dnt forget the refugees