The Bank of Canada Threatens To Break The Housing Market- The Loonie Hour Episode 35
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- เผยแพร่เมื่อ 9 มิ.ย. 2022
- The Bank of Canada Threatens To Break The Housing Market - The Loonie Hour #035
More hawkish rhetoric from the Bank of Canada as they prep for another rate hike. Mortgage rates in Canada are now at their hightest levels in 2008 and some banks are pulling the cord. Meanwhile, the Euro Zone preps for to hike rates to zero as inflation surges
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Its between rock and the hard place. Inflation itself can trigger recession. Increasing rates rapidly and too high will also trigger recession since business activity will get stagnated. I think mortgage prime will settle somewhere around 5 percent causing a reality check in housing market. 20 percent real estate increase every year is unsustainable and unhealthy for economy.
What an awesome episode!! BBQing and sitting in the sun listening to this wonderful discussion, jokes, but still business. Will try to get out to ones of these gatherings , in Toronto a but tough. Thanks guys for sharing your knowledge. Makes me feel more confident. Obliged!
Love the show but I don't believe we are seeing peak inflation yet. Can't see energy or food decreasing anytime soon only getting worse. Time will tell and hope your right. Keep up the good work gents, cheers.
Another great, informative show guys. Love seeing the growth of your show with over 14k views! 🎉👍
Banks are not a borrowers friend. The only time they are your friend is when you don't need them. Banks reducing the time that a mortgage is pre-approved tells you that the bank believes that the housing market and prices are going south fast!
Break the housing market? It’s already been broken for 10+ years 😂. Hopefully the Bank of Canada finally does what needs to be done to fix it. It’s been exhausting to see so much criminal activity take place with our housing market. Let’s finally put an end to this madness.
you make some good points!
well said！the industry needs some serious regulation in all aspects.
The government gets more taxes when homes are expensive.
@@Observer168 the government should freeze rents and triple property taxes to make homes less expensive 😂
Sadly, it ain't gonna happen. The economy has now evolved into a different kind of model. I don't think it is going to "balance itself out". But this criminal activity is not a new thing, nor is it unique to Canada. The USA has a similar problem, money laundering is like a silent part of the economy no one likes to talk about.
Interest rates that were too low for too many years have broken the housing market. The government printing too much money, due to the pandemic etc...has also caused rates to rise. Interest rates rising coupled with higher inflation will result in a recession which will cause house prices to fall etc....
Record these on Fridays! (end of weeks! ) 😁 I enjoy this podcast lots!
The housing market has been broken for wage earners long ago. Investors riding the inversion of constantly lower interest rates has made if way too easy to add that 7th or 9th property. Pendulums swing in two directions and it’s clear the direction of prices now
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Great show & special thanks to Rich for that last segment bit!
I'd just add:
- crypto for the sentiment bucket
- biggest stock indexes for each major economy as a birds-eye snapshot of capital market sentiment. SSE Composite for china, S&P and Nasdaq for USA, Hang Seng for hong kong, FTSE in the UK, Nikkei for Japan, Mumbai Sensex for India
You guys are true pros…. Thanks for your hard work.
Upcoming show idea.
Spend 5-10 minutes and chat about each area in Canada (maritimes, Quebec, Ontario, prairies, BC) and discuss there specific housing market what can cause it to better or worse than the others.
Just a thought with so much going on right now.
I live in king city but from PEI and Nova Scotia. They are very different markets.
Great episode!
Regarding the rate hold rug pull: I think that rate holds only apply to fixed rate mortgages, right? So if 15 days is really not viable for the customer, does that bank steer the customer to its variable product, perhaps even via some sort of fast track procedure?
Are you seeing a lot of significant impact due to this event (particularly in the Vancouver area)? I imagine that a lot people are taking out variable mortgages nowadays so the impact might be limited? Or am I totally off?
Haha. 3.3% 5 year bond in Canada, CPI break out in US. Good luck with that Central Bank intervention. Real estate getting crushed.
Good discussion.
Every "investor" bought property with a minimal downpayment is a massively leveraged bet. When this really unwinds we as a country must make banks and their shareholders eat part of the loss with debt writedowns as opposed to throwing everyone out of their homes.
Great content as usual. I look forward to every single video you make. Thank you for helping all of us stay on top of the market. A lot has changed and that's on everything but the truth is I don't even care much about bullish or bearish markets anymore because my portfolio manager has the best signal for the stock.
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Funny how Justin has completely disappeared from the discussion about the economy. But of course he did say he doesn't think about monetary policy.😂😂😂😂
Rasism is his main topic🤣
@@helenajennings4912 or people with unacceptable views
@@dwightcarlson7136 yes
The swag on Acorns' website is pretty cool. That Thomas Sowell shirt is my favorite.
I could not find which bank dropped rate hold from 90 to 15 days
Aww, wish I was in Calgary, so I could get a drink with my fav boomer :)
Gentlemen, I think it’s time for the ultimate twinkie bet. Tiff has shown he has balls of steel. If he gets to 8/8 rate hikes like one of the big banks suggested, that’s 3 twinkies each. If BoC gets to 3%, that’s another 2. If he holds for a year at 3%, that’s another 5.
I love how in the background of boomers set is a picture of him on the beach in the same clothes he’s wearing for the podcast.
That version makes it even better. In reality, the photo is of me mountain climbing a few years back. I'm above the clouds here, it was a beautiful day.
I sold my townhouse in South Surrey last month at a high price, and I was incredibly lucky. A few more units at the same complex were listed right after and none got offers. I literally caught the last chance. If I had waited for 2-3 weeks longer I wouldn't have sold it for that high price. Now the question is will the rates drop by the spring of next year when I am about to put the rest of the money into my brand new house. Fingers crossed.
good job. Curious, I'm in a similar position, and not sure what to do with the cash in the meantime. I guess 12 month GIC's look pretty good now.
@@BrentsTreehouse I have put the funds into GIC, I simply didn't care because I've already locked in the price for my next house. I am now only hoping this will not be a problem if interest rates go really high, like 7-8%. I am not really curious if those 40-year mortgages will come to Canada. I believe they will, sooner than we think.
Hey guys great content! I was wondering do you think of boomers start losing their rrsp’s and house price assets for retirement and start trying to get jobs again, will the bank of canada start reversing interest rates as we have a squeeze on unemployment?
What bank is Steve talking about with the rate holds?
Which bank changed rate hold to 15 days?
This current monetary cycle is about switching the Inflation/Deflation battle into the Inflation/Disinflation battle. Real rates will never be positive again. Negative real rates in perpetuity is the new normal.
If Canadian Real Estate can not take 2% discount rate it is better that it folds sooner rather than later. Zombiestate stagnation is not good for anybody.
I haven’t spoke with Tiff in weeks hopefully he’s okay
I would increase rates only for people that are buying their second + property not intended for living but for renting. Why penalize first time owners too?
Hey Rich, can you share me your product website pls?
Keith where will you be in Calgary? I’m a young 20 something and would love to gain some insight from you!
send me an email to connect.
I haven't seen any articles of any banks in canada making changes to approval rate holds...thats wild if true
Which bank is it? Green, red, blue, orange red or the yellow blue
@@bilko_4732 Source?
@@bilko_4732 Thanks. Strangely no mention of it online... two days after Steve learned about it.
Which bank dropped rate holds from 90 to 15?
Also interested
@@polskipolak1 Cant find it online... would love to know too
Great insights as always. I also believe that the BoC and other central banks only cure for inflation will be recession...sadly.
Is there another way for central banks to lower the flood of liquidity and high tide created through monetary policies?
Appears they may be prepared to drain the tank?
there has been recession since 2008, depression comes next....
I guess it's too long ago for most to remember but the rich jumped ship for better returns in other countries, years ago. That's why the BoC has kept rates so low. The only market left for employment is construction. Party's over with inflation going through the roof.
WHICH BANK DROPPED ITS RATE HOLD PERIOD??
YESS
Why would u not name the lender doing 15 day rate hold?
We need that 3.75 interest rate. Go full Volcker.
Is the rate hold for existing/previously approved mortgages or 15 day hold for new/upcoming mortgage holds?
I also googled to try to find out which bank has reduced rate hold to 15 days without success.
Same, couldn’t find it.
Couldn't find mention of the bank either.
I don't get it why more people don't port their mortgage if it's portable, if they are buying and then selling again.
i have in the past as long as the mortgage is the same amount or less you are fine
Inflation hits a 40 year high in the US.
Rate hold change from 90 to 15 is on existing pre-approvals? I guess rate holds have no contractual obligation? This will make people question the value of a hold period, if it can just be pulled with no recourse.
If there's no contractual obligation, or repercussions for breaking, sounds like a rate hold will soon not be worth the paper it's printed on.
yeah you got that right!😂
I doubt the existing pre-approvals are impacted. My guess is the new 15 days applies to new approvals.
Keith is taking random listeners out for a beer? Let me know when you are in Ottawa bud we got some good boomer restaurants here. I will invite Tiff Macklem as well.
I'll be there!
I think inflation is much worse than a collapsed housing market. The BOC knows this and must induce a recession if they have any chance of maintaining any value in regards to our currency. I prefer short term pain for a long term gain. I'm also not leveraged therefore my point of view is bias. Not being leveraged was a choice.
You can "have" everything, but "own" nothing. Welcome to Canada.
Banks offset their risk by being the real owner of your home.
Canadian Central Bank make choose to lower the interest rate and benefit the asset. US may not, if the matter is trust/confidence in the US dollar. As the world reserve currency, nothing matters compare that status, nothing.
Very interesting that comments are not populating on my TH-cam for this video on my phone or browser
inflation will never come down withiut a digutal curreency that does not rely or use paper ledgers, paper is inflated income esitmates, which is obviosuly both pro cons for markets.
Banks have party on extra interest people must pay for their mortgages.
Steve, we purchased a detached home in the suburbs of ON for $880k in January, I put 20% down with a variable rate 0.85% off prime, I work in law enforcement, partner in nursing, should we sell now and move back with the folks? Or wait this out? Our home is adequate for a life with a family, but would it be worth leaving and getting back into the markets in 2 years?
Where is it? If you bought in Markdale, and try and rent local wages won't support it.
You may have to sit on it.
My friends family bought in Honeywood in 92, they had to wait until 2005 to move or they would have been under water.
Each situation is very different ... if you can handle higher rates cash flow wise, why not keep it?
ya your a month or so too late ... prices have already dropped ... you'd be panic selling at this point and take a bath
Don't look at comps for a few years and live your life as you planned when you moved in.
Did u fomo into this?
Y'all should get Greg Foss on too for an episode! Double boomer attack!
Banks are taking advantage of inflation to have more interest revenue.
If this rate drop is a fact and public Info, why not name the bank?
Lol Steve is mad that BoC is increasing rates. Looks like someone is afraid to be out of job.
You mean : to correct the housing bubble? To end this BS ? To help people , especially young first timers and new families to be able to afford a home without paying a mortgage for the rest of their lives after they take away their parents life savings for a down payment? If that's the case , PLEASE , CRUSH this shit show!!!
Home prices are reasonable. You just have to move out of the GTA or lower mainland.
I'm going to be like 40 years old before I can't even afford to buy a house after all this nonsense. Btw I'm 35 struggled getting life and family together. This isn't smart. These ppl are really dumb or bad at their job or crazy tho, planned chaos. Last 2 years or so feels like they created this Bear trap for new home buyers. These new buyers won't keep these fresh new homes.
Hey mate, your video is trending on mortgage professional Facebook pages at the moment, For the comment you made at 5:25 about a large bank bringing down rate holds to 15 days.
There are no banks in Canada that brought down the rate holds to 15 days, and they are all kind of ridiculing what you said. Just want to give you a heads up incase someone gave you wrong info about a major bank decreasing rate holds as it’s actually not true. Don’t shoot the messenger!
Nuclear energy! Uraniummmmmmm!
I'm not really seeing the housing panic in Alberta. The prices actually make sense compared to the lower mainland and the island.
If anything, there's a huge supply shortage in the desirable communities now.
Got it right! Alberta's market is based on hard commodity oil and gas, unlike Vancouver built on fluff and posturing...
Supply shortage because of mass speculation... Have you looked around? SO much new construction has happened over the last few years (more supply)
It;s already broken...they just want to put it back in line which will suck for A LOT of IDIOTS
LMFAO - In less than a year of your podcast, you guys have flipped your narrative on bonds. I thought inflation wasn't transitory?
😂😂I know right. They flip flop a lot.
cheap energy.. is over. how do you service millions of debts with out it. ..
You don't.
The end of cheap energy means the end of the population boom, we will start seeing a decline in population
Well people know never trust the bank
Great discussion today. Thanks. Can you guys please spend a little more time discussing inflation? How long will it remain elevated (over 6%)? Why did it stay elevated in the 1970’s for a decade (perhaps inflation is a bitch once it gets rolling… like it is now)? Were central bankers back then idiots or was something else responsible for the duration? Why did it take Volker level interest rates (and 2 recessions) to bring it back under control (you guys seem to think inflation today is going to magically disappear on its own)? Why are all three of you so confident inflation will be coming down in the coming months? You all sound like Tiff Macklin back in 2021 (firmly in the ‘inflation is transitory’ camp)? What if inflation is still running at 6% at year end… and well onto 2023… do you still think a Bank of Canada rate of 3% at YE is ‘insane’? (A -3% real yield sounds insane to me.) When you all talk about inflation you sound like you are book smart (you know the simple definition) but you do not sound street smart (how it actually works through the economy). More meat on inflation… please. Love the show! :-)
Legendary American economist Milton Friedman summed up inflation perfectly in his famous 1963 quote. He warned “Inflation is always and everywhere a monetary phenomenon.” I'm not sure how much "new money" did BoC inject in the system over last two years buying government and mortgage bonds , I think that they at least doubled balance sheet, but Fed injected almost $5 trillion dollars, so QT will start in June, at $47.5b per month for a quarter before doubling to its terminal velocity of $95b monthly in September. Even at that pace a mere half-unwind would take 25 months! it's going to be ugly in next few years!!!!
when volker raised rates in 1980 the national debt was 1 trillion, NOW it is 30 TRILLION......huge difference
@@bonniejohnson1518 i agree, the amount of total debt in the system makes the current situation very different from the 1970’s. So it will likely take a much lower level of interest rates to crater the economy (or cause something in the financial system to break). Bottom line, both the Bank of Canada and the Fed are starting to understand that they HAVE TO GET INFLATION UNDER CONTROL. Housing, stocks and bonds are on their own… for now. Brave new world.
Reset = Wake Up. Inflation will go up 15%.
Corporate debt (and by extension the equity market) is far far more sensitive to interest rate increases than the housing market. You will be jobless before you are homeless.....especially since most people are already pre-qualified at higher rates.
Equity markets can easily drop another 20-40% and the housing market would barely move (aside from housing over 1M that is also rate sensitive)
What do you think will happen to the housing market if people became jobless?
@@sharinglungs3226 amount of jobless people have to >>> immigration+new buyers for there to be any real downside to the general market (not the high priced stuff already coming down).
There already is a chronic undersupply of housing and with the increased financing costs/construction costs, new supply is going to 0 for a while, so buyers have to fight over current inventory.
As a realtor, I tried to warn my family and friends that this housing market us a bubble.
Totally man made, and it will crash.
You know what people said to me, "That I was crying wolf and that I was crazy"
Well guess what, nobody is saying that nowadays.
Where are all these people making videos on TH-cam talking about the housing bubble and realestate crash before?
Hindsight is 20/20.
It easy to say the realestate market is a bubble now, when it's happening right in front of us.
Talk about closing the barn door after the horses has already gone out.
I'll copy and past what I wrote couple of years ago.
---------------------
The housing bubble is absolutely men made.
It's totally created by the people with most to gain. The #1 thing realtors are suppose to be is "fiduciary" looking out for your best interest and putting you first.
That is "bologna"
Most realtors and financial people are looking to pad their own wallet above anything else.
5 major reasons that drove up and inflated the fake realestate market. There are more but we don't have time for everything. There are more but we don't have time to go into those other issues.
1. Endless money printing by the governments from thin air. All that money had to go somewhere.
Injecting liquidity into housing.
2. Historically record low mortgage rate, artificially pushing the realestate market.
3. People where afraid of covid, they didn't list their homes because they didn't want strangers that possibly carried the virus to come into their homes.
Also did not list their homes because of all of the uncertainties that came with the Covid-19 pandemic.
Now that the world is years into the pandemic, people are waking up to realize that covid is no where near the deadly virus that the governments around the world told us. Most people bought what they heard about covid hook, line, and sinker.
Now a lot of the fear has evaporated.
4. Fear of missing out (FOMO)
When people hear daily that the houses are going up, what are they gonna do? At the same time people couldn't spend money where they usually did before covid.
Things like travel, eating out, parties, movies, sports games etc.
All the things where they use to spend their money is now off limits.
On top of all that, the government is handing out free money (stimulus cheques)
Where is that money gonna go?
People shouted "hay, let's buy a house"
So everyone jumped on the bandwagon.
5. (The biggest one) realestate board in every province simultaneously going on news everyday telling people the housing market will be going up by double digits yearly.
What do you think the average person on the street who knows nothing about the financial markets are going to do?
(Go buy a house, that's what)
Imagine if the realestate board told everyone that the housing market will be going down instead of up.
Than no one will be buying houses.
The realestate market and people are being played like a guitar.
People in realestate tell you what you want to hear.
Asking a realtor if it's a good time to buy a property is like asking a alcoholic if it's a good time to have a drink.
Most greedy people deserve to go bankrupted.
That's their return on playing the market, like gamblers at a casino.
We know people that took out second and third mortgages on the primary residence that were already paid off so they can get more loans to buy more properties in order to flip it and make more money.
They ask my wife to ask me to join in a group purchase.
I told her "are you kidding"
There is no way I'd do that.
I would have to be blind, dumb, and stupidly crazy to join them.
Now those people are stuck.
Good for those greedy people.
You are right. Unfortunately, people are pretty delusional. Canada is in trouble and a lot of wealth has sold up and left the country with the events of the past 2 years. The government relies heavily on taxation and when high earners leave, there will be a significant loss to the government. Inflation is not near over and people are getting more squeezed as time goes on.
it was am amazing run for a long time, too long. A lot of people made so much money for so little work. Our central banks moved heaven and earth to help the gamblers win over and over, and now finally it is over. It is long past due. BTW, I don't think realtors have a fiduciary responsibility to their clients.
"....some kind of a slow down....????" WTF man, say it like it is. A CRASH IS COMING!!!!
i watched an interesting video about interest rate hikes. It was all based on the russian ukraine war, which is pretty interesting as it makes a lot of sense, but also likely just coincidence. But basically by killing demand, it drastically reduces russian exports which will slowly hurt their war funding effort and cause them to retreat is the quick summary of it. Do you think there is any truth at all to this or its pure coincidence? Just saw it as an interesting take on the subject. Maybe it has a small %
You were way off on your interest rate predictions.
got any ?v= URLs and timecodes to back that up?
@@freezerlunik Look back about 6 months ago. You will find it.
Woo hoo raise those rates!
Woo hoo raise those rates!
Woo hoo raise those rates!
wow, great contribution!
Pump it up!
@@roseoverdose6451 Oh well, if you know, you know. Great contribution yourself! It's called a comment section and we are all part of the community.
@@DustinTime101 oh, "it's called the comment section". You must be a computer scientist. Thank you for all you do for the community.
@@roseoverdose6451 You win the Community watch comment section award! Now take it and move the hell on... Jokes
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