Real Estate

Some Mortgage Rates rising Sunday at midnight

  • Last Updated:
  • Feb 28th, 2021 10:25 am
Member
Mar 22, 2007
209 posts
172 upvotes
Westmount
Kinda...it’s been up and down for the month of January. Although it is up MOM Q4 2020. Keep in mind the 5 year bond yield was hovering around 0.40-0.45 for the last few months and there was no real significant movement until February. The 5 year bond yield had not breached 0.6 since almost March 2020. So taken together this weeks movement has been significant.

Tl:dr for the last year bonds moved about 0.10, while this week we saw a 0.15 sustained increase over one week.
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
mikebob wrote: Kinda...it’s been up and down for the month of January. Although it is up MOM Q4 2020. Keep in mind the 5 year bond yield was hovering around 0.40-0.45 for the last few months and there was no real significant movement until February. The 5 year bond yield had not breached 0.6 since almost March 2020. So taken together this weeks movement has been significant.

Tl:dr for the last year bonds moved about 0.10, while this week we saw a 0.15 sustained increase over one week.
5 year has been hovering but 10 and 30 have been racing... I think 5 year gets there.

I don’t even look at anything under 1 year cause those rates are being manipulated by uncle tiff.... but once he pulls off the pedal to the metal (which is in the fall since b of c would effectively own 50% of the bond market which is what they want to avoid) those rates are going to explode and that’s when variable rates will be at risk.

Bank of Canada is screwed. The thought was just print and if needed just lower rates to negative but that’s impossible now. Inflation doesn’t announce or knock on the door when it arrives...it kicks down the door and it just has started to do that right now with all of the money printing.
Deal Addict
Jul 3, 2007
4153 posts
4626 upvotes
Toronto
Sanyo wrote: Cause without real estate what does Canada have? Trudeau for the last 6 years has poured gasoline to the fire with all his spending and this covid is what is finally going to make it explode
Yep, and the whole country is in for a rude awakening when the increased carbon taxes hit this decade....

I havent heard trudope mention one thing about how he intends to create jobs in this country..... he sure knows how to get rid of them
Deal Guru
Feb 9, 2009
12381 posts
11307 upvotes
joepipe wrote: bond market controls fixed rates....

Inflation is about to hit , big time.... gas is already 1.20 for regular and climbing..... food bills are next

The scary thing is hyperinflation is here right before our eyes and people are shrugging...
Deal Addict
Jul 3, 2007
4153 posts
4626 upvotes
Toronto
Sanyo wrote: The scary thing is hyperinflation is here right before our eyes and people are shrugging...
because 99% of Canadians are totally clueless about finance or having a competent government.... they just bid up homes and hope it all works out
Deal Addict
Mar 14, 2018
1480 posts
1584 upvotes
GTA
Inflation is going to get worse once Biden's 1.9T stimulus bill hits.

the Fed is f*cked.
Banned
Apr 5, 2013
5810 posts
3019 upvotes
keenland
if history shows us anything...a 1% hike (being generous @ current 2% rate) over a 2 year span and good bye RE values...but 30-40% lower from current, is just bringing back normalcy. There will be a lot of hurt though imo
Jr. Member
Nov 13, 2020
116 posts
183 upvotes
Toronto
Anyone think people are buying houses/condos as a shelter for inflation?
Deal Expert
Feb 22, 2011
16521 posts
21871 upvotes
Toronto
jackfrags wrote: Anyone think people are buying houses/condos as a shelter for inflation?
Yes, that is one of the major advantages
Deal Expert
Feb 22, 2011
16521 posts
21871 upvotes
Toronto
clutch31 wrote: Inflation is going to get worse once Biden's 1.9T stimulus bill hits.

the Fed is f*cked.
That's just the emergency one, they have more planned. It's going to be a long 4 years.
Deal Fanatic
Jul 30, 2015
5100 posts
4404 upvotes
Toronto, ON
dc200 wrote: Well that was quick. Is it normal for lenders to increase rates without waiting for BoC?

Either way thanks for the heads up!
Fixed goes up and down with bond yields. Variable goes up and down with BoC rate. Fixed is going up, so has no relation to BoC's rate.
Member
Mar 22, 2007
209 posts
172 upvotes
Westmount
This coming week I would keep an eye out on Tiff Macklem’s speech on February 23 and if there is some update on the US stimulus package.

Also, regarding variable rates and bond yields. Variable rates are primarily driven by fluctuations in the interest rates, but the discounts applied to the rates may in part be determined by the bond yield. So if you currently hold a variable rate mortgage you are probably fine. However new variable rate mortgages may increase
Deal Fanatic
User avatar
Jul 4, 2005
9018 posts
2816 upvotes
Ottawa
canoek wrote: Fixed goes up and down with bond yields. Variable goes up and down with BoC rate. Fixed is going up, so has no relation to BoC's rate.
Interesting but banks set their own prime rate, so what’s stopping them from also increasing it and thus, affecting VRM.
Deal Guru
User avatar
Sep 8, 2007
10978 posts
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Way Out of GTA
Sanyo wrote: Pork up 16% in 4 days

RIP pepperoni pizza
A $1.9T stimulus bill requires copious amounts of pork yo.....

Not sure when it hits, but there’s a reality check due for asset markets at some point.
Deal Addict
Mar 2, 2017
3841 posts
7803 upvotes
Toronto/Markham
Just curious, what's everyone doing as an inflation hedge?

I already own crypto and am thinking of buying more btc even at these high levels as part of an inflation hedge. I've been hoarding some cash to deploy, but with asset prices equities/RE being where they are I am unsure how to deploy. Still leaning towards RE, just might go for a lower valued property to lower exposure (might lean towards areas that are cashflowing rather than chase appreciation), still want dollars working rather than eroding.

What's everyone else doing or am I asking in the wrong thread? This has been on my mind for a while.
RE Broker
Member
Mar 22, 2007
209 posts
172 upvotes
Westmount
There is talk about specific equity classes being overbought due to low returns on fixed income or bonds. This includes crypto and to some real estate (although real estate has other tangible benefits...being a home and all). Technically if you wanna hedge bets on inflation you should invest in bonds until the markets are no longer overbought. But this is only an opinion. Hard to say!
Deal Addict
Oct 27, 2012
3063 posts
4997 upvotes
Toronto
5 year fixed mortgage rates definitely on the uptick with bonds. I think the discount number to Prime on variables is going to shrink too, remember in the early days of COVID where variables were Prime plus X?

I don't see prime materially increasing soon given that it's tied with the greater fortunes of the economy, and things here are not going too well.
Deal Addict
Jan 5, 2020
1067 posts
1532 upvotes
RichmondCA wrote: Just curious, what's everyone doing as an inflation hedge?

I already own crypto and am thinking of buying more btc even at these high levels as part of an inflation hedge. I've been hoarding some cash to deploy, but with asset prices equities/RE being where they are I am unsure how to deploy. Still leaning towards RE, just might go for a lower valued property to lower exposure (might lean towards areas that are cashflowing rather than chase appreciation), still want dollars working rather than eroding.

What's everyone else doing or am I asking in the wrong thread? This has been on my mind for a while.
At this point, I am looking to buy things that are not hyped up. I think bank stocks are a good bet. They have proven to generate strong earnings in a low interest rate environment and will do even better if and when interest rates rise.
Jr. Member
Feb 6, 2008
174 posts
212 upvotes
Toronto
Can you please educate me on real estate hedging. If hyperinflation happens and mortgage rates skyrocket to over 10% it would mean that people who overpaid on their homes and took huge mortgages can’t afford it anymore and will be forced to sell. Hence price goes down, isn’t it what happened in 80s? So how owning re gives you a protection?

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