The FED looks like they’re not gonna cut this year the US economy seems resilient. That 25 to 50 basis point difference will be huge for CAD vs USD. And if that happens I think inflation in Canada will go higher.
Queue the FOMO. I don't think the cuts will be rapid once they start, complete opposite. Elevator up, stairs down. They will be very measured as they can only diverge so much from the Fed and they won't want to use up that small margin till the economy really needs to be stimulated. Don't think it's needed yet at the risk of driving up inflation otherwise we're right back in the same boat and they'll have to raise again.
@@TomStorey sorry, I should've said "queue the FOMO pumpers". I don't believe buyers are waiting for cuts, they're waiting for 2025/26, at least this buyer is. We're entering hyper supply phase to be followed by recession phase IMO.
Yes totally. If things are like this in 25/26 still, there will be many more deals. By then the condo market will be demolished and start to spill over to detached with the “infinity and beyond” mortgage renewals.
When the first rate cut happens, some people will react as if it is the end of times and the inflation will hit 10%+. Some people will react as if property values will double in the next couple of weeks. In reality, nothing will change much this year...
In June, there is a 75% probability of a rate cut. The key question is the magnitude: either a 0.50% or a 0.25% reduction. If the cut is 0.50%, it is likely the only adjustment for the year. However, if it is 0.25%, we can expect an additional similar rate cut within 2024. It is prudent not to expect too much.
First cut happens > people FOMO and buy up what limited good inventory there is > prices jump up slightly > sellers see this and list, asking a premium vs 1yr ago > more inventory floods the market > banks give mortgages to move up buyers and new buyers as rates and bonds fall > larger offers are made > prices go up more. Won't take more than a year to hit a new average price peak. Transactions have been suppressed for too long. Governments starving for that tax rev at this point.
Reason why house is up now is. Higher interest means less new construction means less supply, higher price. Less ppl quality for mortgage, so more renters competition. Higher borrowing cost is passed down to renters, that need to accept because they don't qualify for mortgage. Therefore.... Higher rate means higher housing.
Hey tom...im up for renewal August 1st, what do you recommend: Fixed or variable? What would be a conservative term length knowing rate changes are coming eventually? Im leaning towards 3 yr fixed to ride out the political storm in the next 1.5 yrs and 1.5 yrs before any new conservative policies have an affect on the economy.
I just took a 3 year fixed. if rates come down, many banks will allow an early renewal 2.5 years in with no penalty. But please confirm with your mortgage broker.
So Wowa mortgage rate forecast is predicting that by end of 2028 BOC rate will be 3.25. But they are predicting that the 5 year fixed mortgage will hardly change. Why.. because bond yields will stay high. The current rock bottom 5 year fixed mortgage is 4.59%, they predict a 4.55% in December 2028. Just think about that when you consider all those who have to renew and how high prices are right now.
Feds pit up $300 Billion in mortgage backed bonds few months back. In March 2024 near $50 billion foreign investment pulled out. No buyers for the $300 billion mortgage backed bonds. Our Feds bought them and forgot to tell you they " borrowed" the money.
Based on major banks forecast of overnight rate by end of 2025. Ranging from 2.75% (TD) to 3.5% (BMO). Projections are rarely 100% correct. But they all seem to think it’s at least going down 1.5% by end of 2025.
Some will buy once rate cuts. Some won't due to economic down turn, job security concerns, high prices and high interest rate limiting how much they can borrow. We will see what the result is as no one knows today how all of these factors will impact the demand.
As buyers you have to understand negotiations and given the market evaluations there is much wiggle room. So no cuts are coming, so pump the brakes. Learn the power of negotiations.
BTC can disregard techincals when in a bull, did that in 2020 when it crossed previous ATH... stayed there a few weeks and continued pumping like crazy to 60k. Also, there is one constant... when around 90 on monthly RSI, the end is near. And don't expect crazy price targets of 500k... expect around 100k at most and be happy if there's more after that. If you believe big boys and CEO's of big invesment firms saying targets like 1M this cycle.. you deserve to be their exit liquidity..It's not about guessing the market's next move; it's about playing it smart and steady during trading...managed to grow a nest egg of around 2.3B'tc to a decent 21B'tc in the space of a few months... I'm especially grateful to Linda Wilburn, whose deep expertise and traditional trading acumen have been invaluable in this challenging, ever-evolving financial landscape.
Trading without professional guide... Huh I laugh you, because you will remain where you are or even make huge losses that will stop you from trading, this has been one of the biggest problem to new traders.
So rates were high for two years. Housing prices continued to go up or stay. If rates go down prices will increase. How is someone in their 20s supposed to buy a house?
Rate cut or not.....its not going to get buyers back in the market. Yes some areas in the GTA area getting more activity than the average. But the rate cut is not going to put buyers in the purchase mode, if buyers are able to afford and accommodate no doubt, but there is no SHOCK....lol, its a cycle remember we are no experts
I don’t think the BoC governor cares about people mortgage rates !! … he cares about inflation. And he wants to be in lock step with the US feds. Inflation in Canada is still high … if he cuts rates it will devalue CAD. Inflation will get ramped up again since we import a lot from the US. Anyway Canada needs to stimulate economic growth real estate is dead money for an economy. It’s a bad business model. Well time will tell what happens.
Expect first rate cut to be a big nothing burger. Fixed rates are at a discount to variable, and fixed rates won't change, so why would this push more people into the market? The real question is whether the BOC drops rates significantly enough to drive up prices more, over the next 12 months, before the Libs get the boot, cons crash the immigration rate, and the rental market cools. If immigration tanks before fixed rate mortgages drop below 4% we might actually see a lot of hot air coming out of this housing market.
To me, this is just a drop in the bucket. I am selling my house, in the next month and I am going to live in Nicaraguan, buying something there where life is more affordable, enjoyable and where they don’t take economic migrants, like Canada.
@@SteveKarrasch i have been in Nicaragua many times and I never have a problem! Yes, some areas are to avoid, but Canada is getting more and more dangerous, especially in big cities and they lost control over immigration, or by design! I am in contact with few friends down there and they are waiting to see me coming and take a good beer together!
The BOC have to cut right now in order to cut less later one, if Canada goes into a recession like most economists is predicting now they will have to be aggressive in their cuts which will create the same problem it did in 2020.
I don’t think there will be a rate cut this year. The banks need higher rates for their bond yields due to all the bad paper they are holding and with the upcoming renewal storm this will. Be hard for rates to be cut. Prices have come down a little but mostly to people needing out of their current house due to upcoming renewal. After that it will and still is business as usual. The economy is weak with layoffs, inflation still the Liberals lie on this one and investment leaving Canada because of the liberals capital gain or aka inheritance tax which will affect everyone.
What is normal interest rate? Would you lend out your money at 3% return? If you won't, we shouldn't expect to be able to borrow at that rate. The current rate seems about right...those who are averse to risk are able to earn 4 to 5 percent returns on their GIC. At this rate, retirees can sleep soundly.
Interest rates needs to stay there or even go higher to finaly burst this long Rotten real estate bubble If the interest rates go down the house prices will go higher as majority population using housing as investment not shelter for themselves. Low interest rates are very bad becouse causing high inflation and helping only rich to get richer and poor become more poor. Its better to have cheaper houses with higher interest rates then very expensive housing with low rates. People better need to learn how to save money before they buy affordable house rather to jump on something they can't afford but with low interest rates.
The Bof C may take the asleep at the wheel approach they took in 2021, 22. Too slow to move. Now is the time to cut rates. The economy is flat, GDP barely there, and businesses are taking the hit! Thanks JT!!
Why does there need to be a down payment??? We should be able to apply with the bank for the full mortgage with pay stubs and employment history , family income , expenses etc… and get a 20-30 year mortgage paying the full amount . 90% of renters pay more than what that mortgage would cost them monthly. This should be a referendum in the next federal election. Thoughts?
if they do lower interest rates it'll probably be because of a falling economy i wouldn't expect a ton of buyers to come out of the wood works for a small interest rate deduction if it does even happen anytime soon its all speculation. being a real estate agent probably isn't the best career path atm
I have to renew next month, what is your advice. For me jumping to 5% is going to hurt me. It's B.S. how the Bank of Canada can lend out at 2ish %, tell you they won't raise them and then double it. I don't care about the BS pandemic explanation. They should be capped on how much they can raise based on your previous amount, and vice versa. Say a 1% max or min depending on which way the needle moves. There are going to be a lot of people who have to renew and can't afford their homes anymore. I hate banks almost as much as this BS Liberal government..
For people who want 8% or 10% we will come back in 90th. In my country it was criminal and mafiozy move. People can die for peace of bread. If you want this, think about that twice, do you want to live in second Mexico.
Climate will end up killing owning a home. The insurance industry will collapse and end up not serving most areas as a result.house insurance will steadily go up until then.by 2030 it will be a renter based system with most not owning. Come back to my comment in the next yr or two to see how its going
Rapid is non sense in any direction! They are just going to make the same mistakes if they do that. Get it together!!! They have so messed up already. They better get it right this time and keep right for a while. And don’t ever say rates will stay low for a long time. That is what got is in trouble in the first place. Yet he pays no consequences. He should be fired for saying that. That is under handlingly giving advice……..isn’t it? How did he get away with it? Tired of all this skating around the issues.
Whether you like it or not rates are coming down. If not this year - then next year. Only uneducated people want rates to stay high. They can’t and they won’t so get over it please
.25 in 1 announcement 😂😂😂 not a chance maybe .50 by end of year the most...combined...when they do .15 cut the inflation will come right back causing a pause until spring 2025
Higher for longer
25 basis points is not even close to enticing buyers.
Common sense is not so common.
It’s a mental thing, a cut means rates are not going up
The initial .25 isn't
Let alone significantly improve the ability to qualify for adequate financing.
50 bps cut likely on June 5th
No cuts! Get em up to 8% , let's goooo
maybe next cycle, decade or so
F that. Cut it down to 2%
Curious....why?
Why stop at 8%?!
Says the broke a$$ guy
The FED looks like they’re not gonna cut this year the US economy seems resilient. That 25 to 50 basis point difference will be huge for CAD vs USD. And if that happens I think inflation in Canada will go higher.
Hi Tom - why do you say that when rate cuts start happening, the BOC will continue cutting rates? Won't that cause crazy inflation?
I think that’s what they’re worried about. Most of the big bank economists think they’re going to decrease pretty rapidly once they start.
once they start they will keep going, with pauses at times potentially (source: history)
We didn't have crazy inflation last time the over night rate was at 3%
BOC also knows that if the new Carbon tax and its effect on inflation is taken out of the equation we are at 2% already
Way below 2%.
Queue the FOMO. I don't think the cuts will be rapid once they start, complete opposite. Elevator up, stairs down. They will be very measured as they can only diverge so much from the Fed and they won't want to use up that small margin till the economy really needs to be stimulated. Don't think it's needed yet at the risk of driving up inflation otherwise we're right back in the same boat and they'll have to raise again.
Sales volume is very low. If fomo means getting back to the 10 year average, that’s not so bad.
@@TomStorey sorry, I should've said "queue the FOMO pumpers". I don't believe buyers are waiting for cuts, they're waiting for 2025/26, at least this buyer is. We're entering hyper supply phase to be followed by recession phase IMO.
@@pvwhatsup8539 I hope your strategy pays off for you. Thanks for commenting.
Yes totally. If things are like this in 25/26 still, there will be many more deals. By then the condo market will be demolished and start to spill over to detached with the “infinity and beyond” mortgage renewals.
When the first rate cut happens, some people will react as if it is the end of times and the inflation will hit 10%+. Some people will react as if property values will double in the next couple of weeks. In reality, nothing will change much this year...
Stop making so much sense.
But how many sideliners are going to hold out after the first cut expecting a better rate in 3-6 mos? Why jump in after one micro-cut?
No one should jump in the housing market. They should buy with a goal of owning for a long time. If they want to try and time it, I wish them luck.
In June, there is a 75% probability of a rate cut. The key question is the magnitude: either a 0.50% or a 0.25% reduction. If the cut is 0.50%, it is likely the only adjustment for the year. However, if it is 0.25%, we can expect an additional similar rate cut within 2024. It is prudent not to expect too much.
No cuts will happen in June
Interest rates don't affect me because my house was paid in full at the get-go. I don't rely on credit cards for purchases.
Super smart, me too. Didn't fall into the trap...
Thanks Tom, great information as always ❤
That was extremely well said! Will improve consumer perception..
First cut happens > people FOMO and buy up what limited good inventory there is > prices jump up slightly > sellers see this and list, asking a premium vs 1yr ago > more inventory floods the market > banks give mortgages to move up buyers and new buyers as rates and bonds fall > larger offers are made > prices go up more. Won't take more than a year to hit a new average price peak. Transactions have been suppressed for too long. Governments starving for that tax rev at this point.
Even in the face of a recession? Cheap money era has sailed and consumers are over leveraged. Don't expect a 2021 2.0
Reason why house is up now is. Higher interest means less new construction means less supply, higher price. Less ppl quality for mortgage, so more renters competition. Higher borrowing cost is passed down to renters, that need to accept because they don't qualify for mortgage. Therefore.... Higher rate means higher housing.
Hey tom...im up for renewal August 1st, what do you recommend:
Fixed or variable? What would be a conservative term length knowing rate changes are coming eventually?
Im leaning towards 3 yr fixed to ride out the political storm in the next 1.5 yrs and 1.5 yrs before any new conservative policies have an affect on the economy.
I just took a 3 year fixed. if rates come down, many banks will allow an early renewal 2.5 years in with no penalty. But please confirm with your mortgage broker.
So Wowa mortgage rate forecast is predicting that by end of 2028 BOC rate will be 3.25. But they are predicting that the 5 year fixed mortgage will hardly change. Why.. because bond yields will stay high. The current rock bottom 5 year fixed mortgage is 4.59%, they predict a 4.55% in December 2028. Just think about that when you consider all those who have to renew and how high prices are right now.
Feds pit up $300 Billion in mortgage backed bonds few months back. In March 2024 near $50 billion foreign investment pulled out. No buyers for the $300 billion mortgage backed bonds. Our Feds bought them and forgot to tell you they " borrowed" the money.
Thanks Tom ...I'm on variable getting screwed last 2 years ..do u think by end of this year ...I should lock in a 5 year rate
If you're going to lock in, I would do 3 year fixed.
Ok thanks Tom
Hi Tom, why do you think there will be more cuts to rapidly come after the first one starts?
Based on major banks forecast of overnight rate by end of 2025. Ranging from 2.75% (TD) to 3.5% (BMO). Projections are rarely 100% correct. But they all seem to think it’s at least going down 1.5% by end of 2025.
@@TomStorey ohh I hope so. I’m one of those people who’s just surviving. Thanks for another great video!
@@TomStorey The banks are always dovish. The market (BAX contract) is forecasting 4.00% end of 2025.
@@Jo-mf2vu and I'm sure they will both be somewhat wrong.
Some will buy once rate cuts. Some won't due to economic down turn, job security concerns, high prices and high interest rate limiting how much they can borrow. We will see what the result is as no one knows today how all of these factors will impact the demand.
As buyers you have to understand negotiations and given the market evaluations there is much wiggle room. So no cuts are coming, so pump the brakes. Learn the power of negotiations.
BTC can disregard techincals when in a bull, did that in 2020 when it crossed previous ATH... stayed there a few weeks and continued pumping like crazy to 60k. Also, there is one constant... when around 90 on monthly RSI, the end is near. And don't expect crazy price targets of 500k... expect around 100k at most and be happy if there's more after that. If you believe big boys and CEO's of big invesment firms saying targets like 1M this cycle.. you deserve to be their exit liquidity..It's not about guessing the market's next move; it's about playing it smart and steady during trading...managed to grow a nest egg of around 2.3B'tc to a decent 21B'tc in the space of a few months... I'm especially grateful to Linda Wilburn, whose deep expertise and traditional trading acumen have been invaluable in this challenging, ever-evolving financial landscape.
Trading without professional guide... Huh I laugh you, because you will remain where you are or even make huge losses that will stop you from trading, this has been one of the biggest problem to new traders.
What happens to the value of BTC when the USD is worthless. BTC base value is in USD
So rates were high for two years. Housing prices continued to go up or stay.
If rates go down prices will increase. How is someone in their 20s supposed to buy a house?
Crash the market, real estate cheap, interest rate higher. Save money, buy house.
Rate cut or not.....its not going to get buyers back in the market. Yes some areas in the GTA area getting more activity than the average. But the rate cut is not going to put buyers in the purchase mode, if buyers are able to afford and accommodate no doubt, but there is no SHOCK....lol, its a cycle remember we are no experts
They ain’t gonna cut. Data just doesn’t show it.
I don’t think the BoC governor cares about people mortgage rates !! … he cares about inflation. And he wants to be in lock step with the US feds. Inflation in Canada is still high … if he cuts rates it will devalue CAD. Inflation will get ramped up again since we import a lot from the US. Anyway Canada needs to stimulate economic growth real estate is dead money for an economy. It’s a bad business model. Well time will tell what happens.
Expect first rate cut to be a big nothing burger.
Fixed rates are at a discount to variable, and fixed rates won't change, so why would this push more people into the market?
The real question is whether the BOC drops rates significantly enough to drive up prices more, over the next 12 months, before the Libs get the boot, cons crash the immigration rate, and the rental market cools.
If immigration tanks before fixed rate mortgages drop below 4% we might actually see a lot of hot air coming out of this housing market.
To me, this is just a drop in the bucket. I am selling my house, in the next month and I am going to live in Nicaraguan, buying something there where life is more affordable, enjoyable and where they don’t take economic migrants, like Canada.
What you wont pay for in housing your will pay for in personal security.
@@SteveKarrasch i have been in Nicaragua many times and I never have a problem! Yes, some areas are to avoid, but Canada is getting more and more dangerous, especially in big cities and they lost control over immigration, or by design! I am in contact with few friends down there and they are waiting to see me coming and take a good beer together!
The BOC have to cut right now in order to cut less later one, if Canada goes into a recession like most economists is predicting now they will have to be aggressive in their cuts which will create the same problem it did in 2020.
You nailed it. All of the realtors have already create their TH-cam thumbnail with the :0 look ready to go
I guess I should start working on mine 😱
I don’t think there will be a rate cut this year. The banks need higher rates for their bond yields due to all the bad paper they are holding and with the upcoming renewal storm this will. Be hard for rates to be cut. Prices have come down a little but mostly to people needing out of their current house due to upcoming renewal. After that it will and still is business as usual. The economy is weak with layoffs, inflation still the Liberals lie on this one and investment leaving Canada because of the liberals capital gain or aka inheritance tax which will affect everyone.
Good thing Tiff is running it and not you
😂
What is normal interest rate? Would you lend out your money at 3% return? If you won't, we shouldn't expect to be able to borrow at that rate. The current rate seems about right...those who are averse to risk are able to earn 4 to 5 percent returns on their GIC. At this rate, retirees can sleep soundly.
Interest rates needs to stay there or even go higher to finaly burst this long Rotten real estate bubble
If the interest rates go down the house prices will go higher as majority population using housing as investment not shelter for themselves. Low interest rates are very bad becouse causing high inflation and helping only rich to get richer and poor become more poor. Its better to have cheaper houses with higher interest rates then very expensive housing with low rates.
People better need to learn how to save money before they buy affordable house rather to jump on something they can't afford but with low interest rates.
The Bof C may take the asleep at the wheel approach they took in 2021, 22. Too slow to move. Now is the time to cut rates. The economy is flat, GDP barely there, and businesses are taking the hit! Thanks JT!!
Interest rates already historically low, they cannot go lower it will be disaster again.
Wish you could purchase these in Canada!
Why does there need to be a down payment??? We should be able to apply with the bank for the full mortgage with pay stubs and employment history , family income , expenses etc… and get a 20-30 year mortgage paying the full amount . 90% of renters pay more than what that mortgage would cost them monthly. This should be a referendum in the next federal election. Thoughts?
There will be a bank hike before a bank cut. 110% positive on that Only realtor's want a lower rate period.
I like those odds.
Are things slow Tom? See its time to pump the FOMO. TO THE MOON BABY......
No. We’re having a great year. Thanks for asking.
@@TomStoreywow. Some of these broke a$$ keyboard pirates make me laugh. What l0sers!
@@TomStorey😂 I'm not sure it's been a great year for the RE operatives. But, I'm glad you're doing awesomely.
Tom is a genius, his TH-cam presence likely drives more than half his business
Shelter inflation, wage inflation, some other inflation measures are 4-5%. They would be crazy to cut interest rates now
Hard to put that inflation genie back in the bottle.
Great, now that song is stuck in my head.
People have enough paying high taxes that they do not want another high fee with condos .
Problem with most buyers is they wait to jump in when everyone else is buying then get upset by the competition.
if they do lower interest rates it'll probably be because of a falling economy i wouldn't expect a ton of buyers to come out of the wood works for a small interest rate deduction if it does even happen anytime soon its all speculation. being a real estate agent probably isn't the best career path atm
Rate cuts are not the end of the cycle rates go down then goes the economy
Keep them high for 4 years so housing can keep up with the demand out there
I have to renew next month, what is your advice. For me jumping to 5% is going to hurt me. It's B.S. how the Bank of Canada can lend out at 2ish %, tell you they won't raise them and then double it. I don't care about the BS pandemic explanation. They should be capped on how much they can raise based on your previous amount, and vice versa. Say a 1% max or min depending on which way the needle moves. There are going to be a lot of people who have to renew and can't afford their homes anymore. I hate banks almost as much as this BS Liberal government..
You start dropping interest rates and people will start spending on credit and it will be a real mess on our economy
For people who want 8% or 10% we will come back in 90th. In my country it was criminal and mafiozy move. People can die for peace of bread. If you want this, think about that twice, do you want to live in second Mexico.
I want prices to go up at all times...
LOL
Climate will end up killing owning a home. The insurance industry will collapse and end up not serving most areas as a result.house insurance will steadily go up until then.by 2030 it will be a renter based system with most not owning. Come back to my comment in the next yr or two to see how its going
Investors have left the market. The numbers don’t pencil.
They have.
Salty renters will never buy even if rates went back to 1%
Election coming may be the reason for a rate decrease. Those struggling may find this decrease reassuring. The decrease will be short lived.
Khanada has become a 3rd world I’m very ashamed of how native children were treated on their land which is up for grabs to the most sinister minds
I suspect it will be a gradual slow series of rate cuts over the next couple of years.
Agreed.
Hi Tom,
Just a bit of constructive feedback: it would be great if you could get to the point sooner in your videos.
Fair. I will work on it.
Rapid is non sense in any direction! They are just going to make the same mistakes if they do that. Get it together!!! They have so messed up already. They better get it right this time and keep right for a while. And don’t ever say rates will stay low for a long time. That is what got is in trouble in the first place. Yet he pays no consequences. He should be fired for saying that. That is under handlingly giving advice……..isn’t it? How did he get away with it? Tired of all this skating around the issues.
Whether you like it or not rates are coming down. If not this year - then next year. Only uneducated people want rates to stay high. They can’t and they won’t so get over it please
they'll shock when they announce a rate hold =D
Very possible.
if they hold in june everyone will just expect july. no shock at this point.
Everyones waiting for a rate cut to sell. Will be a race to the bottom in terms of price. Wait and see.
Maybe
Where's the shock? I don't see anything shocking in what you just said. Bait and switch?
.25 in 1 announcement 😂😂😂 not a chance maybe .50 by end of year the most...combined...when they do .15 cut the inflation will come right back causing a pause until spring 2025
Lowering rates now will lower the Canadian dollar and raise inflation. Not good. Canada is headed in the wrong direction.
comments not going to be happy about today's cut, lol
theres a first time home buyer out there? doubt it
This is what you get when you vote liberal