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Thread: Bank Of Canada : Reduces Interest Rate to 0.75 % - Good For Variable MTG.

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    http://business.financialpost.com/20...ll-on-economy/

    I think its a crazy move. People are already in debt & they want encourage more borrwing with low interest ?

    The house prices are further going to sky rocket especially in GTA & Vancouver , the loonie is going to further slide down.

    I see a loonie at below 80 cents soon & oil at $ 40 per barrel soon.
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    I have to agree... I so miss the interest rates of the 80's. I think it was 20%.
    http://www.tradingeconomics.com/cana...k-lending-rate

    It's like they want to see another 2008 meltdown when there was too much easy credit.

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    many countries are scrambling to stabilize their economies. I wonder if Poloz was trying to get a leg up by doing this VERY unexpectedly. It really did take the whole world by surprise. It will help exports and possibly make up for some jobs we've been losing.

    I read that while they ARE very concerned about Canadian's debt levels, it was a choice over that or recession.

    I too am very concerned about debt issues, but at what point do we all just grow up and take care of business?? Seriously, it doesn't take a genius IQ to know where debt could lead one to.

    Unfortunately for Alberta or any energy sector, they will not see real estate go up, but it may stabilize prices at least a little bit.

    Hopefully SCer's will take advantage of this rate drop to "save" money and/or pay down debt.

    I'm seriously considering selling my property and renting (or buy something cheap that could be flipped to a rental) for a while and just waiting for property values to deflate.

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    Quote Originally Posted by MortgageQueen View Post
    I'm seriously considering selling my property and renting (or buy something cheap that could be flipped to a rental) for a while and just waiting for property values to deflate.
    @MortgageQueen , do you think the values of homes will drop drastically?
    A coworker nearing retirement sold their home and rented for a few years. They found it a lot of work selling off some furniture, paying to store other furniture and moving a few times to find a nice rental. They have bought a house again but did not feel settled during these few years.

    Do you think renting is worth it for a short period if people plan to buy again in a few years?
    Thx

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    People are buying houses & condos they can't even afford, especially in Toronto & Vancouver.

    They neither have the salaries or job security to buy these kind of ridiculously over priced real estate. The only reason they can buy & afford them is low downpayment required + the low interest rates. Its giving them a false sense of security that they can afford the house, but honestly they can't.

    Someone can buy a house for just 5 % down with a 25 yr amortization at ridiculously low variable rate MTG. When the rate goes up slightly or a job loss here & there, they will be just days away from a foreclosure & power of sale.

    Their house , car ..pretty much everything is on credit.
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    Quote Originally Posted by Shwa Girl View Post
    @MortgageQueen , do you think the values of homes will drop drastically?
    A coworker nearing retirement sold their home and rented for a few years. They found it a lot of work selling off some furniture, paying to store other furniture and moving a few times to find a nice rental. They have bought a house again but did not feel settled during these few years.

    Do you think renting is worth it for a short period if people plan to buy again in a few years?
    Thx

    Hi SHwa,

    No I don't think prices will drop "drastically". Sorry. Did not mean to panic anyone.

    You make very good points Shwa. This type of move really has to fit in with one's goals and priorities. I have a very large property which I love BUT it's getting a bit labour intensive for me, so I was already contemplating selling in the next few years. That said, I would rather do it strategically than not.

    I do believe the economy is quite shakey (hence the Gov'ts rather desperate move dropping the rate) Since I somewhat follow world economy, I see maybe the big picture isn't so great and I'm trying to predict what will happen in the real estate industry. I see that we will likely get a bit of a surge at least for Spring and summer this year, due to lowering rates. The lower rate will slightly increase demand, which will likely increase prices in certain areas. That's what I'm hoping for.

    What I'm thinking of (for myself personally) is to sell and either buy cheaply (something I truly like) or rent a year and wait for prices to drop again. . .which they are very likely to do. Basically a sell high/buy low scenario on a smaller scale. I read in a few financial posts that we could very well slip back into a mild recession again.

    All that said, I would address what you mentioned. First, I welcome purging and selling a lot of stuff. Good riddance! I haven't bought much of anything new in years, so if I do end up buying stuff later, I would be happy with that.
    I don't mind being "unsettled" for a year or so if it means I will save (or you could even consider it income) thousands of dollars.

    My one and only downside is transitioning my pets, which bothers me. My dogs would be ok, but my cats would probably not be happy.
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    Another rate cut of 0.25 % is coming in April -2015 , So the bank of Canada's rate is going to be only 0.5 % & its expected to stay there for the next 2 years

    That's how bad the Canadian economy is doing, and how much the oil prices are affecting the economy.
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    I thought about selling now too but renting doesn't make sense for me at the moment (children/dog) I can't be at the mercy of a landlord and honestly I am living way below rent costs in my area. I can't imagine paying someone rent or buying a house with problems (I'm so scared of this) Decisions
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    Quote Originally Posted by tjthemanto View Post
    Another rate cut of 0.25 % is coming in April -2015 , So the bank of Canada's rate is going to be only 0.5 % & its expected to stay there for the next 2 years

    That's how bad the Canadian economy is doing, and how much the oil prices are affecting the economy.
    Just curious where you read or heard this, I watched the news tonight and they didn't mention this. thanks
    2019 is the year that we continue to save before we buy!!!

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    Quote Originally Posted by jasperandchar View Post
    Just curious where you read or heard this, I watched the news tonight and they didn't mention this. thanks
    I actually saw a panel on CBC. There were 3-4 senior economist discussing it..most working for the top Canadian banks.

    One of them was actually an ex- Bank Of Canada senior level employee. He was almost guaranting it..I guess he probably knows the inner workings of BOC.

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    It will be interesting to see, but they have to be careful about the Loonie dropping "too" low.

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    Schedule for 2015

    Did you know that there are 8 FIXED dates each year when the Bank Of Canada announces changes or not to the rate.


    In November 2000, the Bank introduced a system of eight fixed dates each year on which it announces whether or not it will change the key policy rate.

    Dates
    Publications
    21 January Interest rate announcement and Monetary Policy Report
    4 March Interest rate announcement
    15 April Interest rate announcement and Monetary Policy Report
    27 May Interest rate announcement
    15 July Interest rate announcement and Monetary Policy Report
    9 September Interest rate announcement
    21 October Interest rate announcement and Monetary Policy Report
    2 December Interest rate announcement

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    Interest rate cut, plummeting oil price, low inflation... it's all starting to remind us of 2008! http://inflationcalculator.ca/should-we-fear-deflation/

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    RBC recently receded their 5 year fixed mortgage rate to 2.84%, it would be nice if all lenders started lowering their rates as well
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    The next announcement on March 4 , there won't be any change , it will remain at 0.75 %

    But April 15 , the announcement after that , I see the rate going down by 0.25 % more ..so effective rate will be 0.5 %.

    Statistics Canada
    ( Stats Can ) will be releasing lot of key reports in Feb , March ..like employment numbers , general economy numbers , inflation numbers, import - export numbers , consumer confidence , housing numbers etc ..all these numbers are not going to be pretty. They will clearly show lots of job losses , recession etc.

    Bank Of Canada ( BOC ) will react to these poor numbers & further reduce the interest rate on April 15.


    Quote Originally Posted by tjthemanto View Post
    Schedule for 2015

    Did you know that there are 8 FIXED dates each year when the Bank Of Canada announces changes or not to the rate.


    In November 2000, the Bank introduced a system of eight fixed dates each year on which it announces whether or not it will change the key policy rate.

    Dates
    Publications
    21 January Interest rate announcement and Monetary Policy Report
    4 March Interest rate announcement
    15 April Interest rate announcement and Monetary Policy Report
    27 May Interest rate announcement
    15 July Interest rate announcement and Monetary Policy Report
    9 September Interest rate announcement
    21 October Interest rate announcement and Monetary Policy Report
    2 December Interest rate announcement

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