Interest rates / Canadian real estate

[Even Steven]

beats me how your equity can help you out right now ?

Oh, it has nothing to do with HELOC or vacations. Basically, one of my mortgages is almost paid off. The value of the property is way more than the mortgage. Another mortgage I have has a higher mortgage. So, the plan is to re-finance the first mortgage (meaning increase the overall amount), pull the money this creates, and dump it into the second mortgage paying it off. It doesn't change the amount I owe, it basically shifts debt around, but two reasons to do that: A. The first mortgage is slightly cheaper (a percent point, but still), and B. it's tax-deductible for me.

[raft-cove]

People borrowed significant amounts at low cost, then overpaid for RE.

Yet, they made significant amounts in equity. RE is still the safest thing you could invest in to shield your money from the inflation. As evident by the demand over the last couple of years.

When a person cannot assess interest rate risk and the intrinsic value of the asset they are purchasing, there is nothing $afe (& Effective) about the "Investment"

Paying $1mm for a $600k house, that's not $afe.

That's a bagholder aka Debt Slave.

[Patron]

beats me how your equity can help you out right now ?

Oh, it has nothing to do with HELOC or vacations. Basically, one of my mortgages is almost paid off. The value of the property is way more than the mortgage. Another mortgage I have has a higher mortgage. So, the plan is to re-finance the first mortgage (meaning increase the overall amount), pull the money this creates, and dump it into the second mortgage paying it off. It doesn't change the amount I owe, it basically shifts debt around, but two reasons to do that: A. The first mortgage is slightly cheaper (a percent point, but still), and B. it's tax-deductible for me.

smart thinking- but there's many people out there that used every dime of their equity for other things and now have both debts on their shoulders to carry, these interest rates are definitely going to thin the herd in the future

[raft-cove]

"Thin the herd"

Nice way of suggesting Overleveraged Speculators about to be slaughtered.

Loss of capital, can't afford interest carrying cost of purchase.

[Mazdatruck]

They didn't hike rates today. The collective sign of relief around Canada should tell everyone how screwed this country is. These are NORMAL interest rates and Canada is addicted to cheap debt as if it was crack cocaine.

Inflation is getting hotter unfortunately because if you break down the last couple months week-by-week it shows that it's hotter and not slowing. They paused now because another rate hike will be coming.

This is all about emotions now.

"Forward guidance" = lying to the public to change their emotional state.

The Bank of Canada needs to cool the economy. If the Bank feels that everyone is waiting to pounce on real estate once rates drop the Bank will keep on raising rates until people get it through their head that the party is now over. If they dropped rates back to 1.5% and told everyone the coast was clear what would happen? We would have bidding wars on houses and grocery stores jacking their prices the next day. Do we want to double the price of a average house in Canada every 6 years?

This river only flows one way now. The party is over.

[JohnstonOwen]

It's indeed an interesting and concerning situation. The dynamics of interest rates and their impact on the real estate market can be quite complex. The Bank of Canada's decisions certainly have ripple effects throughout the economy.
I couldn't agree more about the importance of informed "forward guidance." Clear communication is crucial in helping the public understand the economic landscape and make sound financial decisions.
When it comes to navigating these uncertain times, I typically consult with a Mortgage Broker in Harlow. They've been a reliable source of guidance, especially in the ever-changing world of real estate and finance.

[oldtrucker]

It's indeed an interesting and concerning situation. The dynamics of interest rates and their impact on the real estate market can be quite complex. The Bank of Canada's decisions certainly have ripple effects throughout the economy.

And thats why everyone can expect a interest rate drop sooner than what some may think. As soon as there is nationwide measurable drop in prices, that's when rates will drop.

[raft-cove]

Well, I'll be calling my mortgage company this week, trying to refinance and pull cash out of my property to pay as much as possible with the other.

Wish me luck lol.

Anyone who gets their foot into equity is just fine.

Sounds about right. All this negative equity setting in now after prices falling, triggered by mortgage costs rising. The Landlord crowd really got their foot in something.

Speculators forgot, leverage works both directions.

Leverage while prices falling, ouch, that's the recipe for bankruptcy. Again, they leveraged their foot into something. I recommend a car wash bay to clean off that foot covered in negative equity.

Can't walk away from your -15% to -25% LOSSES.

The bank won't let you.

[raft-cove]

There's almost $1 Trillion in mortgage renewals coming up over next 4yrs.

Trillion, with a T.

The RE leverage game is over. And BoC mislead the herd. Playing Landlord is about to come crashing down hard on speculators.

[BC Landlord]

Leverage while prices falling, ouch, that's the recipe for bankruptcy. Against, they leveraged their foot into something. I recommend a car wash bay to clean that foot covered in negative equity.

RE is a long term investment. And it's really hard to get into a negative equity when you have to put in 20% cash up front. Then, mortgages are not that big of a problem anymore.

[raft-cove]

Leverage while prices falling, ouch, that's the recipe for bankruptcy. Against, they leveraged their foot into something. I recommend a car wash bay to clean that foot covered in negative equity.

RE is a long term investment. And it's really hard to get into a negative equity when you have to put in 20% cash up front. Then, mortgages are not that big of a problem anymore.

Lol

Across the country, volume of sales declining, prices falling.

Cost of borrowing today sent shockwave through markets.

Like I said, almost a Trillion dollars of refinancing.

This is price discovery.

When it's over, prices will be 20-30% from the top.

Not sure about you, but overpaying by $200k to $300k sounds like a "get broke quick" strategy implemented by the greedy and ignorant.

Shave a decade off your life and never pay off the mortgage. The bank thanks you.


People playing hot potato in RE. Music is stopping soon. Don't be a bagholder.

https://vancouversun.com/news/local-new ... -crackdown

[BC Landlord]

Across the country, volume of sales declining, prices falling.

Cost of borrowing today sent shockwave through markets.

Again, investors won't be affected by interest rates as much as some homeowners and first-time buyer might.

When it's over, prices will be 20-30% from the top.

Which "top"? Doomsayers have been preaching that "collapse" for over two decades, as far as I remember. It has never materialized. There has always been a top over the top. And short of some hypothetical cataclismic event, there are no indications that this time around it would be any diferrent. It's still good to invest in RE.

[raft-cove]

Across the country, volume of sales declining, prices falling.

Cost of borrowing today sent shockwave through markets.

Again, investors won't be affected by interest rates as much as some homeowners and first-time buyer might.

When it's over, prices will be 20-30% from the top.

Which "top"? Doomsayers have been preaching that "collapse" for over two decades, as far as I remember. It has never materialized. There has always been a top over the top. And short of some hypothetical cataclismic event, there are no indications that this time around it would be any diferrent. It's still good to invest in RE.

Looking in the rear-view mirror does not tell you where you're going. Any "investor" worth their salt, with any common sense, understands that. Even high school dropouts understand that.

[BC Landlord]

Any "investor" worth their salt, with any common sense, understands that. Even high school dropouts understand that.

Agreed! But no sell-offs, yet. And that's because RE is still one of the safest markets to park your money in this economy. Smart money does not go by prophecies.

[raft-cove]

Any "investor" worth their salt, with any common sense, understands that. Even high school dropouts understand that.

Agreed! But no sell-offs, yet. And that's because RE is still one of the safest markets to park your money in this economy. Smart money does not go by prophecies.

No sell-offs?

I see early signs of a major selloff in parts of Ontario.

What market are you referring to?