Canadian Politics

[17to85]

18 minutes ago, Noeller said:

how do they figure they know the interest rates are going to spike 3 years from now?? Everything I've heard/read/seen, says that they're going to start coming back down in the final quarter of '23.....

Yeah it's not the prime rate, it's when people renew. You locked in at like 1.5% or whatever ridiculously low rate before the rate hikes you're going to jump to 5,6,7% on your renewal.

[GCJenks]

Your math doesn't compute. Try any mortgage calculator and it doesn't display that. I just did one on Globe and Mail's version 2% and 4.5% all other terms the same $1270.35 and  $1660.42. In 5 years the outstanding principal would be reduced and the increased rate would be put on a lower amount. Math doesn't lie, politicians do.

Try it yourself and see.

 

https://www.theglobeandmail.com/investing/personal-finance/tools/mortgage-calculator/?utm_source=paidsearch&utm_medium=GoogleAd&utm_campaign=traf_mkt&utm_id=FY2023Brand&utm_term=ROB&utm_content=Tools_Mortgage_calculator&gad=1&gclid=EAIaIQobChMI65mineCB_wIV7zjUAR2GCg3eEAAYAiAAEgL8efD_BwE 

[Noeller]

Yeah, there's no way to know that's true....about the uptick. We re-upped in '20 at (I think??) 3.49...... if prime has leveled off now, and is going to start coming down in the final quarter of this year, by '25, things should be sliding back to where they were before, unless you think it's going to be a non-linear situation, and there will be hikes and drops over that time...

[blue_gold_84]

20 minutes ago, Wanna-B-Fanboy said:

the figures they are pointing out are pretty accurate... if you took out a mortgage in 2020, it was like (average) 2.03% 2.43% - the mortgage rate projected in 2025 (after the 5 yr term is up) will be roughly 4.5 or higher. 

That is a serious increase in your mortgage payments...  so if you are paying around 1500$ a month now for your mortgage- you will be looking at 2500 to 3000$ payments per month.

Even so, how would any of that be the fault of the prime minister?

That shoddy narrative makes about as much sense as the Justinflation garbage he was spewing last year.

[voodoochylde]

I'm sorry but if you aren't considering what might happen if interest rates rise (when you purchase a home) that's on you.   Trudeau didn't force people to overextend themselves, people made that choice themselves.  The party of personal accountability conveniently neglects to point that out.

[HardCoreBlue]

What is weird for me in this current world of insanity is we usually aren't even try to defend people like Trudeau or one or any specific political flag for that matter.

It doesn't matter where absurdity, lunacy, insane drivel comes from, it has to be called out. I've been on both ends of this in my life but we currently are not dealing with normal political debate, we are dealing with very dangerous non-political absurdity and insanity. The two get jumbled together a lot of times and is seen as one resulting in a everyone's bad tone.

That's what makes my head spin on a daily basis.

   

[rebusrankin]

So is he going to step in as PM and force interest rates and thus mortgage rates to be lower? Pretty sure you can't do that.

[Wanna-B-Fanboy]

40 minutes ago, GCJenks said:

Your math doesn't compute. Try any mortgage calculator and it doesn't display that. I just did one on Globe and Mail's version 2% and 4.5% all other terms the same $1270.35 and  $1660.42. In 5 years the outstanding principal would be reduced and the increased rate would be put on a lower amount. Math doesn't lie, politicians do.

Try it yourself and see.

 

https://www.theglobeandmail.com/investing/personal-finance/tools/mortgage-calculator/?utm_source=paidsearch&utm_medium=GoogleAd&utm_campaign=traf_mkt&utm_id=FY2023Brand&utm_term=ROB&utm_content=Tools_Mortgage_calculator&gad=1&gclid=EAIaIQobChMI65mineCB_wIV7zjUAR2GCg3eEAAYAiAAEgL8efD_BwE 

Which is a ~30% increase...

Also, many people refinance their mortgages and lose out on reduced principal to pay off credit card debt. I expect to see more of this happening in 2025 and 2026.

Edited May 19, 2023 by Wanna-B-Fanboy

[Wanna-B-Fanboy]

35 minutes ago, blue_gold_84 said:

Even so, how would any of that be the fault of the prime minister?

That shoddy narrative makes about as much sense as the Justinflation garbage he was spewing last year.

Agreed, it's not trudeau's fault at all.  I was just clarifying it for @Noeller.

[Tracker]

Any federal government could, in theory, force interest rates down by fiat. The problem with that currently would be that capital would flee to any country with significantly higher interest rates and the economy would flatline due to inabilities to borrow for mortgages and so forth. The answer tot hat which will never happen is for a capital transfer tax but that would have to be initiated by most, if not all G7 countries. 

[Tracker]

1 hour ago, HardCoreBlue said:

Eeyore here. Will it though? With the dumbing down of society I'm not confident with the bolded part of your sentence.

The alternative is to accept that we are already approaching the precipice at a gallop with no chance of stopping. My background as a sociology major (back in the stoned age) leads me to believe that history does show that people are capable of great growth and selflessness, particularly if a leader presents an ideal.

[WildPath]

10 hours ago, rebusrankin said:

So is he going to step in as PM and force interest rates and thus mortgage rates to be lower? Pretty sure you can't do that.

No. He'll go all in on Bitcoin! Oh, wait.

[SpeedFlex27]

12 hours ago, Noeller said:

how do they figure they know the interest rates are going to spike 3 years from now?? Everything I've heard/read/seen, says that they're going to start coming back down in the final quarter of '23.....

Look back to the 70's & 80's with high inflation & high interest rates because of it. That should give you some idea. People were walking away from mortgage renewals of nearly 20% when 5 years earlier their mortgage rate was 5%. In 1990, we bought our first home with a 5 year rate of 13.75%. Luckily, rates were comimg down & our rates were less as the 90's & 2000's went on 

[17to85]

37 minutes ago, SpeedFlex27 said:

Look back to the 70's & 80's with high inflation & high interest rates because of it. That should give you some idea. People were walking away from mortgage renewals of nearly 20% when 5 years earlier their mortgage rate was 5%. In 1990, we bought our first home with a 5 year rate of 13.75%. Luckily, rates were comimg down & our rates were less as the 90's & 2000's went on 

I really dislike the comparisons to the 80s going on. The world was a very, very different place than it is now. The difference in the price of houses alone makes even a slight bump in interest rates that much more significant. The economy was built on cheap debt, with that cheap debt I dunno how it keeps going. 

 

 

[SpeedFlex27]

37 minutes ago, 17to85 said:

I really dislike the comparisons to the 80s going on. The world was a very, very different place than it is now. The difference in the price of houses alone makes even a slight bump in interest rates that much more significant. The economy was built on cheap debt, with that cheap debt I dunno how it keeps going. 

 

 

So, it was the 80's. Things haven't changed fundamentally with the economy in 40 years. The Canadian government increased the money supply during the pandemic & it resulted in higher inflation. The Bank of Canada raised interest rates to try to slow the money supply & the spending of credit to bring down inflation. So, same ****, different decade. We had to pay thru the nose to buy our first house. We never could have afforded higher payments had the rates not come down when we renewed. You also forget that salaries were a lot lower in 1990 than today. Back then, I was making $27.000 a year. The same job now pays almost $50.000. My wife's job as an RN has more than doubled since 1990. 

Edited May 20, 2023 by SpeedFlex27

[Wanna-B-Fanboy]

23 minutes ago, SpeedFlex27 said:

So, it was the 80's. Things haven't changed fundamentally with the economy in 40 years. The Canadian government increased the money supply during the pandemic & it resulted in higher inflation. The Bank of Canada raised interest rates to try to slow the money supply & the spending of credit to bring down inflation. So, same ****, different decade. We had to pay thru the nose to buy our first house. We never could have afforded higher payments had the rates not come down when we renewed. You also forget that salaries were a lot lower in 1990 than today. Back then, I was making $27.000 a year. The same job now pays almost $50.000. My wife's job as an RN has more than doubled since 1990. 

https://themeasureofaplan.com/canadian-housing-affordability/

 

Cool site that gets you all the info you need. Make sure you use the drop-down menus above each graph:

 

In 1999-   the average cost of a house was $83,738  the average household income was $42,300

In 2022 the average price of a home was $364,300, the average household income was $82,900

 

The price of a home is nearly 4 times higher now and our household income has only doubled.

[WildPath]

4 hours ago, SpeedFlex27 said:

The Canadian government increased the money supply during the pandemic & it resulted in higher inflation

There's actually quite a few economists that have pointed to increased profits as the main driver of inflation. It is called a profit-price spiral. Prices have raised because of anticipated supply line issues and have continued to raise as markup has increased.

Quote

But empirical evidence suggests wages have lagged inflation – not caused it – by an average of 2.5 percentage points per year since early 2021. However, another component of production costs – profits – has grown much faster and further, and hence is more culpable in explaining the inflation surge. Corporate profits have swelled dramatically during the pandemic, to the highest share of GDP in history. And those profits are concentrated in the same industries that lead inflation: petroleum, real estate, building materials, car dealers and, yes, supermarkets.

Profits, Not Wages, Have Driven Canadian Inflation - Centre for Future Work

Second link is an interesting podcast (US) related to the discussion of the real driver.

What has been driving inflation? Economists' thinking may have changed : Planet Money : NPR

 

[17to85]

7 hours ago, SpeedFlex27 said:

The Canadian government increased the money supply during the pandemic & it resulted in higher inflation

Yes Mr. Pollievre. That's why we see global inflation. Because the Canadian government prevented people from going homeless and businesses from shutting down during the pandemic.  It's not war in Ukraine putting stress on global good supplies, it's not a loss in productivity because of all the shutdowns, its not blatant corporate greed. 

[Mark F]

4 hours ago, WildPath said:

There's actually quite a few economists that have pointed to increased profits as the main driver of inflation.

the price gouging that's happening is remarkable.

other industries must have looked at what people would tolerate with the price of gas at the pump, and thought, "we can do that too."

two avocados .... five dollars.

avocado field worker.... 100 pounds... five dollars.

 

 

[17to85]

Every time I hear about loblaws saying they're not gouging because their profit margins haven't changed... go **** yourselves, you're making billions while people are struggling.  You can take a hit on the profit. 

[HardCoreBlue]

2 hours ago, 17to85 said:

Every time I hear about loblaws saying they're not gouging because their profit margins haven't changed... go **** yourselves, you're making billions while people are struggling.  You can take a hit on the profit. 

Capitalism at it’s finest. Hey our profit margins didn’t go up conveniently not talking about the many issue with their existing profit margins. They’ll throw out the supply and demand rationale when it’s convenient for them (i.e high demand) but a different tune when high supply low demand i.e we’re too big too fail we need government bailouts or people will lose their jobs don’t you care about the people mr and mrs politician?

Yea I know I’m missing some complexities on both sides here but it isn’t as black and white as some of my capitalistic friends and family members put it. I find they interpret some things out of convenience not fact and complexities involved. They’ll usually just end and say it’s the best model we have and we go back to talking sports.

[GCJenks]

On 2023-05-19 at 10:56 AM, Wanna-B-Fanboy said:

the figures they are pointing out are pretty accurate... if you took out a mortgage in 2020, it was like (average) 2.03% 2.43% - the mortgage rate projected in 2025 (after the 5 yr term is up) will be roughly 4.5 or higher. 

That is a serious increase in your mortgage payments...  so if you are paying around 1500$ a month now for your mortgage- you will be looking at 2500 to 3000$ payments per month.

 

On 2023-05-19 at 11:45 AM, Wanna-B-Fanboy said:

Which is a ~30% increase...

Also, many people refinance their mortgages and lose out on reduced principal to pay off credit card debt. I expect to see more of this happening in 2025 and 2026.

Still waiting for you to show your work on how that 1500/month payment becomes 2500-3000/ month…

Using home equity to pay off other debt is not a function of the interest rate changes or inflation, it is personal choice and bad money management. I’m no angel and have made bad financial decision but other than work travel expenses the balance on my credit card is always less than the balance of my operating bank account. 

If people bought with a new mortgage in the last few years they amount of their mortgage was stress tested to ensure they could afford the house if the interest rates went up, if I remember correctly the rate of the stress test was increased as inflation started to drive costs and rates up. While no fan of Trudeau the man, I can admit his government has done a reasonable job of managing the national economic situation during a global crisis.

 

 

[GCn20]

Not sure any government can do much about interest rates, what they can do is a lot more to ensure a reliable affordable housing market. Interest alone isn't keeping first timers out of the market, super heated real estate markets are.

1. Put caps on house flipping profits to cost plus 10%.

2. Limit rental incomes to cost plus 10 for the first 5 years of ownership.

 

Edited May 20, 2023 by GCn20

[Mark F]

31 minutes ago, GCn20 said:

what they can do is a lot more to ensure a reliable affordable housing market

you mean the government should try to influence  and regulate the "free " market?

radical.

scratch a right winger, and find  lurking there, a socialist. 

Edited May 20, 2023 by Mark F

[GCn20]

1 hour ago, Mark F said:

you mean the government should try to influence  and regulate the "free " market?

radical.

scratch a right winger, and find  lurking there, a socialist. 

Whatever. I have never stated that the government should not regulate some aspects of the free market. I guess that's the centrist in me. Are you against the idea...or just beaking off. The prices of real estate and the rental market require government intervention. That much is abundantly clear. De-incentivize this and incentivize new development instead. I am not sure why the Liberals are being so dense on this issue.

Edited May 20, 2023 by GCn20