1.89% Mortgages Plaguing Canada Again Despite Government Efforts!

[Economy 53,076]

My aunt got a mortgage using this broker company http://monstermortgage.ca/?gclid=CPvWjb-pyNMCFVSewAod1LsMYw and got a mortgage below 2% though it was slightly above the lowest 1.89% they advertize

 

Last year mortgages went as low as 1.4% but went above 2% as the Canadian Government made some additional rule changes to pressure banks to become more conservative

 

However falling Bond Yields recently have pushed the cheapest mortgages back below 2% again possibly adding yet more heat to the Housing bubble 

[Economy 53,076]

@Luc u said Netherlands has a housing bubble also. Curious to know what ur rates are

[Luc 4,776]

11 hours ago, Economy said:

@Luc u said Netherlands has a housing bubble also. Curious to know what ur rates are

As low as 1.20%

 

[doppelganger 4,022]

Wow, it's currently around 4.5% in Malaysia. 

 

edit: are the rates only for local buyers? 

[Economy 53,076]

2 hours ago, Luc said:

As low as 1.20%

 

Dam 😳

 

Does the ECB still have negative rates and QE? That may explain it

[Economy 53,076]

1 hour ago, doppelganger said:

Wow, it's currently around 4.5% in Malaysia. 

 

edit: are the rates only for local buyers? 

U mean ppl who live here? I guess so

[Saint Laurent 4,862]

Do you have a base rate in Canada or is it at the discretion of the lender?

Our base rate in England is 0.25% then anything above that is at the lenders discretion. Average rates are 3.5% in England.

[Computer 10,980]

Why isn't the central bank raising rates?  There is wayyy too much money sloshing around up there.

[Economy 53,076]

7 minutes ago, Computer said:

Why isn't the central bank raising rates?  There is wayyy too much money sloshing around up there.

I think they would have already if the housing market and consumer debt was the only thing to consider

 

But theres also business and Corporate credit and their business investment, inflation, currency etc to also consider

 

Housing market and consumer spending suggests we need higher rates, everything else does not

 

So they keep rates low and Government has just been trying to cool credit and housing with regulations. But regulations cant seem to over-power the effects of cheap credit 😬

[Economy 53,076]

24 minutes ago, Saint Laurent said:

Do you have a base rate in Canada or is it at the discretion of the lender?

Our base rate in England is 0.25% then anything above that is at the lenders discretion. Average rates are 3.5% in England.

Pretty much every Country does. We call it the Overnight Lending Rate, or the Benchmark Rate which is pretty much the same thing

 

Its set at 0.5% right now

 

We actually raised it after recession to 1% but had to start dropping it again

[Computer 10,980]

3 minutes ago, Economy said:

I think they would have already if the housing market and consumer debt was the only thing to consider

 

But theres also business and Corporate credit and their business investment, inflation, currency etc to also consider

 

Housing market and consumer spending suggests we need higher rates, everything else does not

 

So they keep rates low and Government has just been trying to cool credit and housing with regulations. But regulations cant seem to over-power the effects of cheap credit 😬

How can the economy be so divergent?  Are corporate taxes too high?  Why do corporations etc need more liquidity when the consumer rates can be so low.  Seems strange.

[Economy 53,076]

7 minutes ago, Computer said:

How can the economy be so divergent?  Are corporate taxes too high?  Why do corporations etc need more liquidity when the consumer rates can be so low.  Seems strange.

Our Corporate taxes are 15% one of the lowest im the world

 

The reason for divergence is simple

 

Started in 2009. We already had a housing boom going on since 2000 but it accelerated when rates dropped after recession (our recession was more mild than most Countries so it didnt affect housing market and consumer spending much)

 

Then because our economy was sound relative to others our currency started to surge (at its peak it went 14% above US Dollar). That was a really bad time for currency surge cause global demand was weak. Our manufacturing couldnt handle such a quick surge in currency at the exact same time demand globally for our products dropped and so many exporters went bankrupt

 

Ever since our economy relied on Oil (which since 2014 dropped a lot in price) and other resources, The Corporate sector, and Housing/spending. But we lost a lot of non-energy exports

 

Our businesses know consumer debt went high with big trade deficits (our consumption hardly dropped but exports dropped a lot) and many are reluctant to invest as they know things could turn south. We keep rates low to try and encourage them to spend and invest

 

Our housing market and consumer spending never fell in recession and because rates have stayed low, no correction has occured yet