Why Rates Are Rising While Prime is Falling
April 5, 2020
Rate Update – Meet the New Boss, Same as the Old Boss?
June 3, 2020
The Bank of Canada left rates unchanged today, but the real news of the day was the announcement of a new credit facility allowing the BOC to step into the treasury market and start buying provincial and corporate bonds. This is great news since this section of the bond market has experienced a significant spike in the cost of credit while the government of Canada bonds have been at all-time lows.
The good news is this will free up the credit log jam and translate into cheaper mortgage rates in the next 7 to 14 days. And the opportunities that this could create has the potential to make COVID a distant memory once we get some distance – from social distancing.
To find out more scroll on down …
Key Points From The Bank of Canada Announcement
- BOC flexes it’s muscles with bond buy backs
- Inflation is at 0 percent
- No clear path to recovery given the unusual times
- Commodities impacted by lower demand which is providing strain on the Canadian dollar
How Your Mortgage Is Impacted
- Bond Yields moving up from their bottom
- Fixed rates expected to return to begining of March levels
- Rate holds available until just past BC Day!
Opportunities Rarely Come Wrapped In A Bow
So where are these opportunities I’m alluding to? I feel the following quote by Benjamin Graham, the father of value investing who started his career in investment banking during 1914 sums it up best…
“The intelligent investor is a realist who sells to optimists and buys from pessimists.”
I thought it was relevant given that Graham’s career spans a time frame that we seem to be drawing parallels to these days.
Here’s the thing, the news is going to get worse. Trump is going to be Trump, Wuhan may get worse and maybe cases of COVID may start increasing in the next two weeks because social distancing over Easter was just too hard for some people. And the media will make it all front and centre.
But here’s the other thing … everyday at 7 pm the indomitable nature of the human spirit rings true. So with that, I challenge you to make every minute of the day a personal “7pm” in your head, in your heart and in your body. And with that mindset, the opportunities will present themselves.
Having said that here is where I think the opportunities will be over the next 90 days:
- Capturing the value of your home:
- Home values may dip down for a period, given that home sales have slowed. If you want to capture your home’s current value, now might be the time to consider refinancing and have that money working for you in other areas.
- Get ready for opportunities:
- If you’ve been considering buying an investment property now might be the ideal time to get ready.
- Or if you want to take advantage of the opportunities in the stock market, now is a great time to simply buy and hold the S&P and Nasdaq index – super simple and super cheap.
- Is your mortgage coming up for maturity?
- Don’t rush to sign that renewal. Rates could be decreasing in the next 30 to 60 days. Give us a call to review what your options are in the context of your financial situation. Don’t get sucked into the “take it or leave” it renewal call that the banks are famous for these days.
- Don’t forget we have access to lenders that can avoid the stress test.
Here is a couple of books I am reading again to help keep me focused during these unusual times.
The Happiness Advantage – Shawn Achor
The Obstacle Is the Way: The Timeless Art of Turning Trials into Triumph
I own both books in the audio version (via Audible.ca), and I would highly recommend you download them, throw on some headphones and go for a 1.5 hr stoll each day. You could be done both books in less than a week and I guarantee your mindset will be in a different place.
I know this post was more of a pep talk than a rate update so if you have any questions, don’t hesitate to give me a call. My team is still here, and if you need us, we can get everything done digitally.
On a side note, feel free me a call even if you want to discuss something other than mortgages. In times like these we all need stick together, and if you’re reading this – then you’re a part of my tribe!
Stay well, stay safe and keep an ear out for me at 7pm.
Did you Like this post? Then you’ll Like my Facebook Page. It’s filled with current news on what’s going on in the world of real estate.
