# prime rate remains unchanged



## kubatron (Jan 17, 2011)

the first expected rate hike is in july, at the earliest.

then again, further unexpected world events could either hold off more hikes OR bring them on. 

FYI


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## Jungle (Feb 17, 2010)

Careful with that bubble. Might pop.


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## HaroldCrump (Jun 10, 2009)

Yep, the cheap money insanity continues....


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## NotMe (Jan 10, 2011)

kubatron said:


> then again, further unexpected world events could either hold off more hikes OR bring them on.
> 
> FYI


And this just in, Charlie Sheen may or may not be on cocaine in the next 30 seconds to 30 years....

FYI


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## LondonHomes (Dec 29, 2010)

The Bank of Canada has been itching to raise rates since the start of 2010. I'm surprised that they may be willing to hold off again until July. I'd wager when they do raise rates it will not be another 0.25%, it will probably be at least 0.50%.


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## the-royal-mail (Dec 11, 2009)

The bank is not stupid and neither is the finance minister. Both know that any increase in rates, due to people who don't manage their personal finances properly, will sink this country into further recession. Things are too fragile right now.


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## HaroldCrump (Jun 10, 2009)

the-royal-mail said:


> The bank is not stupid and neither is the finance minister. Both know that any increase in rates, due to people who don't manage their personal finances properly, will sink this country into further recession.


But this is simply serving to re-inforce that whole behavior.
When money is cheap, people will just continue buying on credit.
Consumer goods, cars, houses, everything.
And that's already causing inflation in essential goods, in addition to other problems.
It's like Charlie Sheen on drugs....


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## Sampson (Apr 3, 2009)

the-royal-mail said:


> will sink this country into further recession.


I think we've technically been out of recession for quite some time now. Jobs have returned, GDP growth last month was above 3%, commodities are on fire!

Doesn't mean we would sink into a new recession, however, my feelings are mixed here. Our economy is not as dependent on household spending as the Amercian economy, so even if interest rates rise, some housing loans go bad, as long as the World continues to buy our commodities, people should stay employed in most sectors.


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## Cal (Jun 17, 2009)

HaroldCrump said:


> But this is simply serving to re-inforce that whole behavior.
> When money is cheap, people will just continue buying on credit.
> Consumer goods, cars, houses, everything.
> And that's already causing inflation in essential goods, in addition to other problems.
> It's like Charlie Sheen on drugs....


Agreed. The gov't needs to stop this easy debt everyone can't stop themselves from getting. Yes, it may ruin a few people. You've got to crack a few eggs to make an omlette.

We already have a high dollar, so higher rates won't be a huge surprise to manufacturers who are already dealing with that.


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## sprocket1200 (Aug 21, 2009)

it'll be before july. i love the talk of .5%. get your cash ready...


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## Jon_Snow (May 20, 2009)

Can't wait for rates to rise... .5% would be a beautiful start.

Going to be mortgage free soon and ready to vultch homes from overextended homeowners... a bit harsh and insensitive yes, but I've been diligently saving and living in a financially responsible manner, ready for a higher rate environment - I've set myself with alot of available cash, and very little debt... imagine, GIC's that actually pay something meaningful... those suckers are going into my TFSA.


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## marina628 (Dec 14, 2010)

I would love to see a 7% GIC again


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## mcu (Dec 6, 2009)

I was really hoping for a rate increase! We sold our home for top $$ and are on the sidelines now waiting to pick up some deals. I am starting to get nervous and wondering if I made the wrong choice and if the real estate market in canada is even in a bubble like I thought. The agents keep telling me prices are going up....they are trained to say that stuff, but screws up your mind seriously!!


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## marina628 (Dec 14, 2010)

Even in these markets there are deals ,get yourself a real estate agent ask them to send you only VACANT homes , this is where you will find the bank power of sales.Banks will always give you a good deal ,they just want to sell fast.


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## mcu (Dec 6, 2009)

We are in montreal are there are hardly any repos or vacants. There are also much less new listings than usual this time of year. My agent says in 15 years that she does this, she has not seen such little new inventory and such high priced junk. I have to agree with her. I am not a regular yearly buyer, but I have bought over 10 properties in the past 12 years


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## Taxsaver (Jun 7, 2009)

I was wondering what the significance of a such a "small" increase. Well, until I made calculations. For a mortgage of $500,000, that is $2,500 in nterest each year. So that's about $210 more in expense each month.


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## marina628 (Dec 14, 2010)

Yes I realize not all markets are the same.Imagine what 2% will do!


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## sprocket1200 (Aug 21, 2009)

Taxsaver said:


> I was wondering what the significance of a such a "small" increase. Well, until I made calculations. For a mortgage of $500,000, that is $2,500 in nterest each year. So that's about $210 more in expense each month.


not sure which calc you used or which amortization period. really the payment will change less if that is equal, but it will take them forever to pay off.

the real game changer is they can't defer forever anymore. massive impact to them when they renew unless prices fall.


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## mcu (Dec 6, 2009)

how long do you think before we start seeing some people losing homes because of rates or unable to keep up with the bills. I don't wish bad on anyone, but I am also anxious to get a deal for my family. Are we look at anything as soon as 6 months or only 2-3 years?


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## HaroldCrump (Jun 10, 2009)

Taxsaver said:


> I was wondering what the significance of a such a "small" increase. Well, until I made calculations. For a mortgage of $500,000, that is $2,500 in nterest each year. So that's about $210 more in expense each month.


And mortgage is not the biggest thing it affects.
A rise in central bank rate gives the opportunity for other lenders like car loans, credit cards, unsecured LOC, even HELOC to raise the rates.
Car loans, credit card rates etc. can often go up more than what the central bank raised.
That has a bigger impact on household debt that mortgage interest, which is usually the cheapest debt.


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## Kim (Jan 10, 2011)

I had thought for sure rates would rise - surprised they are still holding. There are certainly arguments for each decision - I don't mind that they went this way for now.


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## sprocket1200 (Aug 21, 2009)

2-3 yr time frame. the pressure has to increase until the people on the edge just can't take it anymore.


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## kubatron (Jan 17, 2011)

quick!

pop quiz!

what is the current default rate in canada?

less than 1%
1-5%
5-10%
10%+?

anyways where I'm going with this is for people like mcu who are "waiting on the sidelines for a deal for their family", I just have to laugh at such strategies.

keep.

waiting.

and waiting.

and.

waiting.

_man_ this board is full of bears isn't it? or let me guess, you're all "realists", right?


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## marina628 (Dec 14, 2010)

Less than 1% ? I do not have patience to play waiting game , BTW in 2 years I have made a $200,000+ profit in real estate.While these guys are waiting ill probably make another $100,000.I thought rates would go up this year which is why i locked in for 3.49% for 5 years and 3.69% on one rental probably.But now I think we may get a 1% rate increase at best on the 5 year in 2011.Not enough to topple the markets.Also supply and demand will always play a part in tight markets which mcu spoke about.


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## andrewf (Mar 1, 2010)

I'm skeptical that prices can rise much or quickly. Incomes need to catch up.

I wouldn't be so smug. Everyone laughs at the bears until the market falls apart. This time is different.


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## marina628 (Dec 14, 2010)

I guess time will tell but I think the situations in Middle east and price of oil have given us a bit more time to enjoy the lower interest rates.Lower Interest means homeowners get to build equity which then becomes a safety net when rates rise.Investors now have to put 20% down which was not always the case.
A year ago they added new rule which reduce the borrowing equity from 95 to 90%.CMHC also required investors to put 20% ,now the rules have tightened once again starting March 18.I think they on on right track and this tightening of rules will help prevent too much of an issue with the future real estate markets.
Honestly I would not be surprised if in 2012 they change it back to a 25 year amortzation.
I would not be selling my home and sitting on cash in hopes of a market crash this year.


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## kubatron (Jan 17, 2011)

@marina those numbers are staggering and I congratulate you on your wins. Do you mean you've gained because you've sold or you've gained and not sold yet? Paper gains are worth crap. But you've probably sold so kudos to you.

I have never made that much. I'm in my early 30s and have seen staggering amounts made by peers in my group but not me. Oh well, at the same time I haven't lost.

I'm not laughing at the bears. I'm laughing at the people who wait and wait. I just can't imagine renting a house right now, no way. To me it makes no sense. Our house would cost $2500 to rent which is what it costs me to own. 

Yes the answer is less than 1%. If people think that a 1% or 2% increae in prime rate means people will walk up and leave their homes they are sorely mistaken. Most of my clients can afford at least a 2% increase in rates, at least. 

Yes - there have been many rule changes and the idiots at CREA are crying foul, but agents overall are stupid. So are most people, though - especially buyers right now. RUSHING for 35year mortgages like they were $100 bluray players at walmart.

Anyways, I don't care if the markets fall or drop. Won't affect me unless I had to sell, which I _hopefully_ won't barring a major medical disaster.


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## kubatron (Jan 17, 2011)

recap

first 0-down mortgages and 40 year amortizations and 95%ltv equity refinances were allowed in the late 2000s

then reduced to 35 year and 90LTV and biz for self tightening. also , qualifying for variable was made much tougher - also no more 0-down mortgage financing

now reduced to 30 year, 85% refinance..

so in 2 years we've seen drastic changes that will stabilize the market


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## marina628 (Dec 14, 2010)

kubatron said:


> @marina those numbers are staggering and I congratulate you on your wins. Do you mean you've gained because you've sold or you've gained and not sold yet? Paper gains are worth crap. But you've probably sold so kudos to you.
> 
> I have never made that much. I'm in my early 30s and have seen staggering amounts made by peers in my group but not me. Oh well, at the same time I haven't lost.
> 
> ...


We sold one house and a portion of the land we also owned so this is cash in hand profits.We bought the land in Jan 2009 and sold off a portion just December 2010.The house we bought about same time and kept it 17 months
but we felt that we could do better with a smaller investment property ,our tenants actually bought that house from us , we gave them a 4% credit as we didn't have to pay an agent.Another house we also bought in 2009 has gone up about $50,000 according to our agent but that house we will keep long term.
Since banks have to qualify people on the 5 year posted rates ,people getting mortgages now can afford that 1-2% rate increase.


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## marina628 (Dec 14, 2010)

kubatron said:


> recap
> 
> first 0-down mortgages and 40 year amortizations and 95%ltv equity refinances were allowed in the late 2000s
> 
> ...


Thanks for that post i forgot about the zero down part, I have a friend who did the 40 year mortgage when she up sized her house and mortgage by $100,000.Interesting fact ,she had to do the 40 year to qualify but as soon as she qualified they changed payments to a 21 year amortization.Why can she do this because the family is very frugal ,she is married with three kids ,she works part time as a care giver for elderly but they never eat out .She cooks every meal or her daughters will cook as they are 19 and 21 and still live at home.The newest family car is 9 years old and I have seen her wear some of the same clothes the 8 years i have know her.


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## andrewf (Mar 1, 2010)

It seems that these rule changes are firstly going to bring forward some demand as people try to buy before the change, and secondly price some people out of the market or reduce their buying power. If you don't think this will act as a drag on prices in the next 5 years, I think you're being optimistic.


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## kubatron (Jan 17, 2011)

your assumption is right.

the city of toronto is going through surreal estate right now.

33 offers on a home in etobicoke. 45 in leaside. 

it'll be over soon and we'll return to normal. the people with +20% down are being screwed because they are not faced w/ the 35-yr mortgage rule change. those are only cmhc-backed mortgages that cannot exceed 30 years.

if I were a buyer, I'd wait 2 months til the dust settles.


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## kubatron (Jan 17, 2011)

marina628 said:


> Thanks for that post i forgot about the zero down part, I have a friend who did the 40 year mortgage when she up sized her house and mortgage by $100,000.Interesting fact ,she had to do the 40 year to qualify but as soon as she qualified they changed payments to a 21 year amortization.Why can she do this because the family is very frugal ,she is married with three kids ,she works part time as a care giver for elderly but they never eat out .She cooks every meal or her daughters will cook as they are 19 and 21 and still live at home.The newest family car is 9 years old and I have seen her wear some of the same clothes the 8 years i have know her.


so she's cheap then?

hey, cheap is good. let's call a spade a spade. is frugal the same thing as cheap? i don't know.


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## marina628 (Dec 14, 2010)

Yes she is cheap about many things but knocked 18.5 years off her mortgage so maybe add smart as well.I can`t do cheap or frugal so thank God we can afford to live well.For Instance we are going on a cruise in two weeks , I have a beautiful ball gown I bought in 2009 for another cruise wore once ,I won`t wear it because another couple of friends will be on this cruise and they seen the dress before.My husband said I am giving their memory too much credit lol


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## andrewf (Mar 1, 2010)

lol

So what if they've seen you wear a dress years ago?


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## marina628 (Dec 14, 2010)

Andrew it`s a girl thing ,I told my husband I will wear it this evening and lay on the Chaise and he can feed be chocolate covered strawberries and Champagne lol.
He said to get his money worth out of the dress I have to wear it to Mcdonalds too lol


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## andrewf (Mar 1, 2010)

Women are crazy!

So, you know how women tell you their problems, but get upset when you suggest solutions? You're supposed to just commiserate with them. 

But women should realise that men are wired to fix things, and expecting them to not want to fix your problems when you tell them to us is unreasonable. I know better now what to do, but it drives me crazy biting my tongue.


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## marina628 (Dec 14, 2010)

ANDREW I will go on another cruise without my friends and wear the dress hahaha.I feel maybe you have a problem you now want to talk about.I have no problem ,I will get a new dress or two and some shoes and everything will be fine


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## Plugging Along (Jan 3, 2011)

kubatron said:


> so she's cheap then?
> 
> hey, cheap is good. let's call a spade a spade. is frugal the same thing as cheap? i don't know.


I think there's a difference but a fine line. Frugal becomes cheap when your actions start to negatively impact others or when your own needs are no longer being met because you do not want to spend the money you have.

I consider myself frugal, but seldomly cheap. I will try and find the best deals for things, but if it's something I really need, or really want, then I will get it if there is no less expensive way to get the same value. Cheap would not to get it all even if I really needed it.


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## Taxsaver (Jun 7, 2009)

sprocket1200 said:


> not sure which calc you used or which amortization period. really the payment will change less if that is equal, but it will take them forever to pay off.
> 
> the real game changer is they can't defer forever anymore. massive impact to them when they renew unless prices fall.


Do as if I never posted this...


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## andrewf (Mar 1, 2010)

marina628 said:


> ANDREW I will go on another cruise without my friends and wear the dress hahaha.I feel maybe you have a problem you now want to talk about.I have no problem ,I will get a new dress or two and some shoes and everything will be fine


I don't mind that you're getting a dress, I just don't understand the issue that you can't wear a dress that someone else has seen before, even a few years ago. It's not like wearing the same outfit every time you see someone.


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## MikeT (Feb 16, 2010)

I'd like to remind everyone that it wasn't interest rates that caused the collapse in the housing market in the US. Mortgage rates only rose 1 percentage point.


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## I'm Howard (Oct 13, 2010)

We now do 90% of our shopping in the U.S, No H.S.T, much better selection, great sales, staff light years ahead of Canadians in providing service.

Yesterday we bought a comforter set, normally $400, on sale for $179, less 10% because we used their card, less 10% because we had an International Discount Macey's offers,less $20 because we had another deal card they sent us, less 3% for exchange.

Total Cost about $135 for a $400 set, and only 7% sales tax

Rates in Canada will stay low as long a Bernanke says so, the higher the dollar, the more people will shop elsewhere, the less Exports we will have, the more imports.

Plant Closures will accelerate, I know one factory that will soon close and the production will all move to their U.S Plant..


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## GeniusBoy27 (Jun 11, 2010)

I agree with Howard. The rate increases have to take into consideration the pace of the US recovery. Remember 90% of our trade is with the US, so that moving the interest rates could lead to significant trade imbalances quickly, if the US doesn't ease up on its interest rates, and their economy recovers. Carney's main concern isn't household debt, it's making sure that he doesn't destablize Canadian economic growth with changes in monetary policy.

I don't think we're getting a large shock north with interest rates. It isn't in his interest to do so until he's sure the US economy is on a definite upturn. When will this occur? I don't know, but I think it'll be later than people are saying presently.


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## HaroldCrump (Jun 10, 2009)

GeniusBoy27 said:


> I don't think we're getting a large shock north with interest rates. It isn't in his interest to do so until he's sure the US economy is on a definite upturn. When will this occur? I don't know, but I think it'll be later than people are saying presently.


It seems to me that the govt. (in cohorts with the central bank) is making a conscious choice to let inflation run in the interest of protecting the CAD and the interest rate based housing market.

They are so risk averse w.r.t. the housing market that they don't want to even nudge the slumbering beast of housing price correction.

Instead, they are willing to subject Canadians (retired and working, across the board) to hardships related to rampant inflation, higher taxes, etc.

As a result, like primitive pre-historic tribal communities, they have created a fetish out of the housing market and are now worshipping and offering sacrifices at the altar of the Great Housing Bubble.


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## Sampson (Apr 3, 2009)

MikeT said:


> Mortgage rates only rose 1 percentage point.


Not for subprime mortgage holders.


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## I'm Howard (Oct 13, 2010)

HC, Canada is a Commodity Country, our $ has shown a rapid appreciation against ALL Major Currencies, creating strong head winds for any company that relys upon Exports.

It does not matter what Carney does, it is non relevant, the price of our Dollar is out of his control and raising rates just crates hardships for any individual who needs to borron.

22% Rates on CC, 4% Rates on SECURED HELOC, what do you ant 15% prime and a major recession??


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## HaroldCrump (Jun 10, 2009)

I'm Howard said:


> 22% Rates on CC, 4% Rates on SECURED HELOC, what do you ant 15% prime and a major recession??


No, of course not.
However, I don't want 15% inflation either.
The emergent economies are already experiencing that (China, India).

So if we are headed that way because of all this tremendous expansion of money supply, then 15% prime rate is what may be needed.
If we have screwed up our money supply so much that it's going to need a prime rate at 15% to maintain sanity, then it has to be so.

Keep in mind that once inflation gets to a point where the govt. can no longer hide it, deny it, or cook the numbers (IMHO that is what they are doing at this time), the markets will adjust.

Bond yields will shoot up, regardless of whether the central bank does anything or not.
And with that, up go the mortgage rates, credit card rates, unsecured loan rates...pretty much everything.


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