We were fixed for 5 years, variable was lower the entire time, then we moved to variable, and about 3 months later rates skyrocketed. My payments went up almost $800/month. I’m happy things are finally coming down, but in the last 2ish years I’ve spent an extra $18k on interest rates. 18k means a lot to most people.
If it’s any consolation, the fixed rates moved lower in the past few weeks in anticipation of this cut. Unlikely that the announcement will affect fixed rates much.
You didn't actually lose out on anything. The fixed rate is based on future rate expectations, and the rate cut really isn't a surprise to anyone so it's mostly priced in. The fixed rate tomorrow will not drop 0.25% tomorrow just because BoC cut rates.
It’s not a bad thing for the majority of Canadians. Many are dooming about housing costs mainly, but those were terrible even with high interest costs.
Happy for the positive news about your debt
Unemployment is up a full percentage point over last year and I think rents could be in for a shockwave given the drop in international students basically every school is expecting come September.
It seems like a real possibility that this won’t change anything on the home pricing front.
The wholesale price is fixed but retailers can mark it up however they want. Milk is cheaper at Costco than Loblaws or your corner convenience store, for example.
> It’s close to a $200+ extra in spending power a month for a lot of households in Canada
really? i thought my mortgage was high but its only like a $70 difference for the month.
i guess if you have million dollar mortages and heloc that makes sense
Indeed. Thank goodness we will finally have some productive investment which will grow Canada’s economy instead of speculators looking for more opportunities to squeeze capital out of the working poor… or perhaps not.
Maybe? It depends how idiotic people get. They paused on the way up and people couldn't help but start the party again so had to keep going. If they drop too soon and inflation rises again they may have to at least pause for a while
I was working in vancouver on a temp job and they offered me fulltime and acted like I was insane for turning it down. I said the wage wasnt enough to even rent a 1 bedroom condo and live comfortably and they all said pretty much the same thing, so detached. Moved very rural and am happy with my decision.
Should’ve asked if the price was $800k+.
The prices baffle me at times, if it’s a decent area at the outskirts of the city then it’s still above $700k for a tiny townhouse.
My sister is almost 3 hours away from Toronto and the houses across from her are almost 800k. Its madness. They are singles (she has a semi) but that far is 800k? Like fuck me.
I'm probably 2+ outside of the city proper and 800k is the START of what single detached houses are out here. And this is the middle of fucking nowhere.
Haha fortunately I don't have to work downtown much, my wife never does, and the GoTrain isn't far. Plus I have a lot of control of when I have to go to work so I miss the worst of rush hour if need to drive.
Otherwise pretty spot on
>The prices baffle me at times
Bought a rowhouse/store in Hamilton back in 2001 or 2002. It was a literal crackhouse. Like, I found actual needles in the multiple layers of carpet. Took me a year to renovate and I took it down to the frame. 2/3s of the building ended up in the dump before I finished demoing it. Total cost of purchase and materials was about $80-90K. I did the labor myself otherwise it would have been more. Anyway, sold it a few years later and moved away. I checked on it recently and it had sold last year for almost $1M.
That's just bananas.
>I bought a townhouse at your age on the same salary.
Mike Harris started the Sunshine List and published all salaries of $100K **in 1996**.
Today, we use the same $100K threshold and it is used to bully down and dox public servants.
Accounting for inflation, the $100K threshold today would have been $55k back in 1996 when the Sunshine List started. Or the other way, the Sunshine List should be >$180K today.
Salary has not remotely kept up either. They probably did have the same salary back when they were your age, meaning you employer has actually hired you from a fraction of the cost they hired them.
My grandmother built a cabin in Quesnel back in ‘95 on crown land, just sold a few years ago. They had 4 separate 2000 sqft permanent structures on their property.
I know somebody who was granted a plot of crown land along the Nechako river in the 70s. Within a single lifespan we've moved from "giving it away" to "nonsensically unaffordable."
My mother was a school teacher and father was/is a photographer. They were able to buy a 2 car garage detached house with a pool on a golf course on their salary along with provide a comfortable life.
I, with my wife, are earning 2x what they are earned and my house is 5x the cost of theirs in 1992, we am barely affording something that is 3x smaller. Insane
Depending on how you quantify "awhile", we actually haven't been. Over the last 5 years home prices have increased 50%.
https://www.crea.ca/housing-market-stats/mls-home-price-index/hpi-tool/
In 2019 homes were radically more affordable. Its only recently that we've entered this death spiral.
But it’s not just the house prices. This is, what, the third “once in a lifetime” economic crisis that millennials have had to endure since hitting adulthood? No other generation in living memory has experienced that kind of instability. The only thing that isn’t unstable is wages which have been stagnant our entire lives.
All the other crises (the incidentals that just “happen sometimes,” like natural disasters, pandemics, and ecological collapse) are amplified by that instability. And it’s likely going to be worse for younger generations. We’ve been cooked since day one.
Your insurance company doesn’t care how much your house is worth to sell it, they want to know how much it will cost if there’s a fire and the thing needs to be torn down and rebuilt to todays standards. Trade labour cost has increased significantly.
I know people think this means improved housing affordability but it's likely not going to help because it will increase demand. Tons of people sitting on the sidelines waiting for the first interest rate cut to buy. It's probably going to result in a big return to bidding wars.
Rate cuts can't improve house affordability because the number of units available is less than the number of people who want them.
This means that fundamentally, when supply is depleted, everything remaining will, by necessity, be unaffordable. If it were not unaffordable, then it would indicate additional supply capable of being consumed.
When you increase the the ease to buy homes without increasing the supply, this doesn't change. Maybe on the very margins a few unoccupied units with sellers who were waiting for a specific threshold to sell are satisfied, and occupancy efficiency goes up a tiny bit.
But the only solution for house affordability generally is to increase the supply faster than we increase the need for new homes. We seem to be doing the opposite.
If you have 10 homes, and 20 families, buying a home will be too expensive for 10 people or more.
Even if you made it much cheaper to borrow money, so one of the families without a home could buy the cheapest one from one of the families currently living in the home, the family previously living in the home who just sold couldn't reasonably afford to buy the same home back for the same price they accepted for it, nor would the family that bought it be willing to sell it for the same price they just sold it for. So you're still in the position where 10 families can't afford a home.
This is what pissed me off about the Liberal's plan to fix housing affordability by forcing landlords to report your rent payments to the credit bureau to improve your credit score. This just adds another burden to landlords and property managers, potentially increasing the cost of renting. Credit score has very minor impact on what kind of mortgage you can secure, but even if it was a big difference, it doesn't cause housing to become more affordable.
The best way to make housing affordable is to first limit the new entries into Canada, then to reduce the barriers and expenses to building new homes.
If the goal is to promote immigration, then encourage building additional capacity and then invite people in based on that additional capacity.
This key interest rate lowering could mean more builders will build because they can borrow money to buy supplies at a cheaper rate. Which could actually ease homebuying in time, when the houses are eventually built. Though it seems what we really need is direct funding of home building from taxpayer dollars. Or maybe make some special "loans" that don't accrue interest, as long as the money goes towards building homes.
This issue is these are are coulds akin to trickle down reagonomics. The facts are we have millions more people, and housing isn't increasing in any kind of meaningful capacity.
Also, where was mega home production when money was literally free? So.. if it didn't happen then...why would that happen with small cuts.
>Also, where was mega home production when money was literally free? So.. if it didn't happen then...why would that happen with small cuts.
It's true that home production rates weren't good enough with low interest rates, but it's also true that building slowed even more as rates went up.
I agree that one small cut probably won't make a big difference tho
>Also, where was mega home production when money was literally free?
That question leads us all they back to Mulroney. Before early '80s, we had a Crown Corporation (CMHC) that had a major development branch that was building a lot of homes. Small, functional, homes. They did not control a massive market share, but enough that they impacted overall industry and set trends. CMHC used to rent >40,000 rental units to seniors/veterans and they were a leader in high density development.
After Mulroney decimated and privatized that entire segment of CMHC, new housing starts dropped 40% from what was built in '70s. Private industry did not step in and fill the gap left in '80s. They did not surge in any period following, including our ultra low rate decade. There are a lot of limiting factors, like municipal process, but a primary issue is that for-profit interests always seek to maximize profits, and that means the largest (way oversized) most expensive home per lot.
Canada never caught up from Mulroney privatizing the CMHC development arm and even in the last decade we are producing 60% of the new housing starts per capita than we were in the '70s.
The solution is to go back to Crown Corp non-profit development. Flood the market with cost-recovered units and non-profit rentals. We absolutely cannot double our housing starts with current market trends (resources poured into huge detached homes) but we can if we stop leaving those decisions to for-profit drivers and focus on high density housing.
It may help with affordability in the medium term. The issue is that Canada is lowering the rate ahead of the US which means that the Canada dollar will weaken against the USD if the US doesn't follow suit. If there is an expectation that Canada will continue to lower rates ahead of the US then there is an expectation that all CAD denominated holdings will decreased in relative value. For investors, this means worse returns making the Canadian housing market less attractive.
Exactly this. Why would investors hold CAD when they're guaranteed a higher interest rate in USD? I wonder if this rate drop will have an impact. Sucks for all the businesses who trade globally (in USD). Think things are unaffordable now eh? Good luck everyone... But don't worry mortgages are marginally more affordable everything is saved. How much building supplies/fittings are bought from overseas in USD again? What global currency is manufactured goods, many foods, and oil and gas traded in again?
I don't know about that. I did the math yesterday to see what a 0.25 cut would do to my mortgage. It's about $60 per month, not nearly enough for people to jump into the market after just one rate cut. I would agree with you if it was a 2.5% cut.
The only way housing affordability improves is a drastic reduction in demand mid-long term.
This can be done through a reduction in immigration levels and strict real estate regulations.
None of this is news to anyone, but the political willpower to make it happen is not there.
Which is why we need to continually harass our political representatives about it.
It’s actually the opposite. For housing, demand is much more volatile short term than supply whereas the supply is induced long term. A drastic reduction in demand in the short term absolutely improves affordability, but in the long term the prices climb back up due to much less induced supply. The key to long term housing affordability is instead long term increase to supply.
In relation to interest rates, high interest rates improve affordability short term by reducing demand and low interest rates improve affordability long term by increasing supply.
I’m at the tail end of a 1.75% mortgage. Sucks what’s on the horizon. 😬 we are fortunate our house is not extravagant and is our mortgage is still fairly low but with rising costs in life it’s going to cause a squeeze.
Yes for sure it is. And we will revisit that at that time. I’d rather not as I am in my mid 40’s and would love to actually have my home paid off before I hit retirement age 🤣.
Tell me about it! I’m early 40s on my 3rd house and had to refinance due to a breakup. Only 29 more years and I’ll own it (and my car they had to write in just to qualify)…
Heh I feel that. I'm 38 and I'm 3.5 years into ours. We've decided that as rates come down here we're leaving the payment alone (we raised it along with the rates) try to get ahead of it since we're managing just fine at the higher payment.
On the bright side, the best time to have a 1.75 rate locked in is the beginning of your mortgage period.
idk how much you paid for the home in total, but rate wise you timed things almost perfectly
but its a clear sign that we already passed the top of the rate hikes and are now seeing downwards trajectory. people who were worried about how long the rates could stay high or go even higher now have some confidence that the rates will only continue to fall, even if it's a slow fall.
EDIT: Check the graph in the article, not the article itself.
[Check this out.](https://www.varinggroup.com/bank-of-canada-raises-interest-rates-to-1-5/)
I cannot post the pics in this sub, but it's never that simple. And you definitely don't want to look at 70s trend. Hopefully it's steady, but I wouldn't bet on it.
They’ve just completely fucked everyone. We were finally making it to the point where houses weren’t selling and the market was starting to show cracks, that’s now gone completely out the fucking window.
House prices will increase proportionately to the money saved with lower rates. People don’t understand that you buy mortgages, not houses so a lowering house price does not always mean more affordability.
Any measure that claims to "increases affordability" outside of building more housing than the growing population needs is only going to increase prices.
All the attempts to subsidy, relax lending regulation, first home buyer grants, using RRSP for downpayments, etc. has only made housing more expensive because it lets the buyer borrow more, and thus pay more.
The bank has decided that you can't get ahead in this country by actually WORKING hard, the only way to attain wealth now is via assets. Because they are devaluing labour by devaluing the currency (remember money is a "store of value"). Groceries are not getting more expensive, the value of your dollar is losing its stored value.
We do not have income inequality in this country, we have asset inequality. Cause earning $100K a year means nothing when assets explode in price.
totally, many people do not understand income is less and less important nowadays, owning a house is the ultra rich class. Housing price can appreciate more than 100K a year
You always needed assets to attain wealth. Go ask anyone even remotely wealthy, it wasn't their salary that did it.
If you think you're going to be rich and comfy without some form of investments where your money is the thing "working hard", I have some bad news for you.
This rate cut should’ve mostly been priced into fixed rates as it was expected. Still if they are not, call your bank, you should be able to add a 30day rate hold.
If you're going fixed rate, you want to look at the Canada 5 year bond yield. That's what influences fixed rate mortgages.
Take that number, add 2%, that's roughly the going 5 year fixed rate mortgage. Good credit? A little lower. Meh credit? A little higher.
https://www.marketwatch.com/investing/bond/tmbmkca-05y?countrycode=bx
The BoC rate does impact bond yields but indirectly.
all debt holders are jumping for joy for this rate cut while CAD continues to devalue agains USD. this is going to be a bumpy ride.
interest rate is a tool. rate increase is to discourage borrowing, rate decrease is to encourage borrowing. if they have to encourage borrowing, its probably because the economy is not doing that great. i would hold off on the celebration.
You can apply the “I would hold off on the celebration” line at every single moment the rate has changed.
Rates go up? Hold off on celebration, inflation is kicking in.
Rates go down? Hold off on celebration, recession is kicking in.
Maybe, just maybe, the interest rates moving is like you said: the tool being used to manage Canada’s economy.
This won’t fix the affordable housing crisis in Canada. Overhauling the market to exclude speculators, money launderers and private equity firms along with increasing the supply though all-income all-density public housing is the real long term solution.
This will start to help people who are renewing, not necessarily those who haven't purchased.
I think there is a recognition that a lot of people are renewing soon and yea, you can renew them at a high price and they can tighten their belts but they won't be helping the rest of the economy by dining out in restaurants or shopping in retail.
I'm due for a renewal in January...I have X amount left over with my budget, if I have decent excess income, I am more inclined to splurge on some meals out with wifey on date night or do home reno projects etc. If it's a high rate, I might put things off or do *all* of the cooking at home.
Lots of people here have this fantasy of raising interest rates to a point where people with mortgages are forced to sell, cratering prices, so they can buy houses for cheap. To make this sound less selfish, they hide this behind smoke-screens of helping the poor and punishing the greedy.
Go to the TorontoRealEstate sub
Half of them think a detached home in the city should be 10M and the other half will tell you it isn’t worth more than 200k.
I think it is more telling of the general economy eroding out the middle class and creating haves vs have nots
Bought my Calgary condo for $380, in late 2021. A modest 2 bed, 2 bath, 900 sqft, but has a killer reserve fund and is a decent part of downtown.
The building next to me which is the same, doesnt have the reserve fund, and has more condo fee cost, has a unit with 100 more Sq Ft for $565.
This was listed before this cut, I cannot wait to see what it fetches.
Honestly, if my condo hits $600K, Im outta this country because there is no way its worth that much.
You can really tell how big of a deal real-estate is in Canada by the number of threads discussing mortgage rates. If you are reading this, try to imagine significantly reducing our dollar value and the implications on imported goods.
And that is exactly why we can't just inflate wages to match housing costs. Housing prices need to come down, we can't just give each other raises to cover the extra expense.
The BoC can’t do anything about housing prices. Lowering rates makes asset prices higher but that just offsets the difference in financing costs.
It’s the government’s job to make home’s more affordable and well they’re doing a terrible job. But in fairness, lower rates helps get more supply built.
They have no incentive to build us into affordability but I’ll still gladly take 100 houses being built rather than 50 houses being built. We’re already outpacing housing starts with population growth and Id prefer us to bridge the gap in how many people vs housing units there are rather than do nothing about housing starts until it can be fully fixed. BOC can’t do anything other than change interest rates. Take your anger that you have for the BOC decision here and write your MP with it instead, as the government is who needs to implement policies and/or legislation to bring us to affordability.
I agree with you but it doesn't matter how much they build if our population keeps going up 1 million plus a year.
They literally can't build enough even if we had 0 for a rate.
I'm not really angry, i just see terrible governance leading to a shit future for future generations.
Well, housing and the massive immigration numbers are keeping the GDP positive. That's why neither will change if/when the Conservatives take power. Nobody wants to eat the recession headlines.
We are so fucked in this country - and it’s got nothing to do with interest rates and everything with shit financial literacy based on these comments… look at all these economists… and some of them might even be voting!
We might see ppl jumping back into real estate thinking this trend will continue which will pump up demand and homes will be sold at current prices or higher.
But there really was no good option. Keep it high market crash in a real estate one tool economy.
Drop it affordability crisis and slow and continuous standard of living decline.
Take your pick. Both sucked. We are just reaping what we sowed for decades.
And they have decided to pull up the ladder on young people again fuck me it will be a grind to even own a 500 sq ft condo one day.
Let the over leveraged homeowners fall if they bought something they can’t afford
I mean .25 isn't going to move the needle too much either way. It's not like interest rates are headed anywhere near as low as the 2020-21 zeitgeist regardless. The rate hikes were always meant to curb inflation not housing prices.
If you were relying on overleveraged homeowners creating power of sale opportunities that's already happening, housing prices aren't going to fall much with this level of demand.
This is signalling a decoupling to USD. Our interest rate just went below the US feds. Our dollar is gonna crash hard.
This is indicating our economy isn't strong enough to weather high interest rates. Our future outlook is grim. Crash is likely at this point.
This really means nothing to the average Canadian your mortgage is going down like $50 a week
For housing to become affordable again the Canadian government needs to :
1. Limit and target immigration
2. Heavily incentivize building homes and social housing
3. Adding a cap on the amount of residential properties a person can own
4. Out right banning corporations from owning residental properties
I'm very interested to see if this affects the Liberals polling numbers.
I know one thing doesn't have much to do with the other but they are getting burned by the old "it's the economy stupid" aspect of politics right now.
People here cheering for a bigger rate cut. Talking about housing specifically, It would not benefit a single person that isn't already a home owner. It could go back to 0.99, if anything it would make the problem worse (think back to 2021-2022).
Rates should stay high until the market stabilizes (more units built). This is coming from someone who owns a home (with the bank).
Now if you are a homeowner and you are happy with this, think twice, regardless of when you bought your home it has always been overpriced! Remember that your home is built of sticks and cardboard. The only durable thing you have is your driveway!
Long term it is much better to live on a place where homes aren't the hottest commodity.
Every major builder has stopped future projects due to the high rates. They are only finishing up the ones they already committed to.
Lower interest rates will hopefully incentivize growth. Major companies tend to borrow more in order to expand when money is cheap, which should stimulate the economy.
Obviously, there's a lot more to it, but that's a very high-level tidbit in regards to more units and interest rates.
.25 ain't gonna do shit for anyone.
Buyers "waiting for a rate cut" at 5.25 bank rate are still going to wait.
People who can't afford their upcoming renewal at 5.45, still can't afford 5.25.
Everyone on both sides are going nuts arguing about something that won't make any difference at all.
people who were waiting for the interest rate top have now seen downwards movement. it's about confidence in the direction of the rates more than the actual effect of a quarter point.
The conservatives aren't even talking about lowering immigration targets either
I'm all for immigration but lower it to like 0.75% of population per year
We are growing like some africian countries but we only have a fertility rate of 1.3
Immigration as just a “we need immigration so keep em
coming” is just as dumb as “we need to eat so keep putting stuff in your mouth, some of it will probably be food”
The way the future looks, I would go very bold and predict that countries with smaller populations will be better off in the future. Massive populations need employing, retirement, healthcare, services, and if one pillar collapses like say…AI replaces 30% of the jobs, just as a quick example…then you get favelas…do we need favelas?
Sooner or later, we will have to develop economic sensibilities around how to maintain a high quality lifestyle while enduring a decreasing population. We don't get to grow indefinitely forever. I am pro-immigration, but I also think that Canada is a resource-intensive place to live, and that we should take people on for the short run, but as the global population begins to decline we should encourage our citizens to emigrate to warmer, more hospitable climates.
The solution has always been technological innovation leading to productivity growth. Advancements in technology are deflationary - leading to more production of goods acting as a deflationary impulse. It is, however, constantly battling against poor fiscal policy which is why we're in the mess that we're in right now.
Canada will never get out of the situation it's in without a sharp correction in housing prices. Housing is cannibalising a serious share of capital which would be going towards other things. The ponzi scheme only lasts so long.
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5 years fixed? lol
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"Inverse Man".
Ah the Jim Cramer power lol
We were fixed for 5 years, variable was lower the entire time, then we moved to variable, and about 3 months later rates skyrocketed. My payments went up almost $800/month. I’m happy things are finally coming down, but in the last 2ish years I’ve spent an extra $18k on interest rates. 18k means a lot to most people.
$25k extra per year checking in over here.
Hey could you bet your life's savings I won't win the lottery tomorrow? I'll buy you a beer thanks.
If it’s any consolation, the fixed rates moved lower in the past few weeks in anticipation of this cut. Unlikely that the announcement will affect fixed rates much.
You didn't actually lose out on anything. The fixed rate is based on future rate expectations, and the rate cut really isn't a surprise to anyone so it's mostly priced in. The fixed rate tomorrow will not drop 0.25% tomorrow just because BoC cut rates.
The 3yr bond is 10% down since a week ago though
knee nutty many frighten lunchroom bake melodic lush spark unused *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Man I am going to eat soooo much Avocado toast. 🥑🍞
At least one whole slice!
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Just get YT Premium and setup a Plex server, boom, profit :D
\*would\* save you $53. In the past, the banks have often only passed about half the savings to the customers, pocketing the difference as profits.
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Correct, TD Prime should be 6.95% by tomorrow
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It’s not a bad thing for the majority of Canadians. Many are dooming about housing costs mainly, but those were terrible even with high interest costs. Happy for the positive news about your debt
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Unemployment is up a full percentage point over last year and I think rents could be in for a shockwave given the drop in international students basically every school is expecting come September. It seems like a real possibility that this won’t change anything on the home pricing front.
That'll fire up the economy! Right? Damned if they raise it. Damned if the lower it. Damned if the keep it the same.
It is more symbolic than anything. It indicates a change in direction in monetary policy. Realistically a 25bps decrease is not much at all.
It’s close to a $200+ extra in spending power a month for a lot of households in Canada
Not after loblaws raises the price of milk with $200
Touché
r/loblawsisoutofcontrol
Dairy cartel controls the price of milk.
Milk prices are fixed in canada
The wholesale price is fixed but retailers can mark it up however they want. Milk is cheaper at Costco than Loblaws or your corner convenience store, for example.
You're correct. The person could have chosen virtually any other food item and made the point.
Don't shop there, problem solved.
Not anymore. r/loblawsisoutofcontrol
Government monopoly milk boards set the price of milk.
Actually, the price of buying the milk from the farmer is at a set price. Stores can set the price to whatever they want.
> It’s close to a $200+ extra in spending power a month for a lot of households in Canada really? i thought my mortgage was high but its only like a $70 difference for the month. i guess if you have million dollar mortages and heloc that makes sense
It's about $100/mth savings for every $700k borrowed
thanks for the quick napkin math, yeah that makes sense
So nowhere close to $250/month for most Canadians
I was going to reply but you beat me to it. The person you are replying to is horrible at math...
Was gonna say...isn't this big for people that have been dealing with huge mortgages/etc???
I mean if you have a 1.4 mil mortgage, I would hope 200/month wasn't destroying you financially.
Yes, because it signals there are more cuts coming
Exactly. Real estate speculators, investors, and home buyers who have been waiting on sidelines are about to swarm.
Indeed. Thank goodness we will finally have some productive investment which will grow Canada’s economy instead of speculators looking for more opportunities to squeeze capital out of the working poor… or perhaps not.
and sellers will increase prices lock-step
Maybe? It depends how idiotic people get. They paused on the way up and people couldn't help but start the party again so had to keep going. If they drop too soon and inflation rises again they may have to at least pause for a while
People will always be maximum idiotic.
It's almost like there are economic factors beyond just borrowing!
Housing to the MOOOOONNN!
Lowering interest does tend to increase economic activity because it incentivizes lending.
TSX is up on the news
Young people in this country are so cooked.
Coworker flexed on me the other day saying I bought a townhouse at your age on the same salary. We are fucked.
I was working in vancouver on a temp job and they offered me fulltime and acted like I was insane for turning it down. I said the wage wasnt enough to even rent a 1 bedroom condo and live comfortably and they all said pretty much the same thing, so detached. Moved very rural and am happy with my decision.
Should’ve asked if the price was $800k+. The prices baffle me at times, if it’s a decent area at the outskirts of the city then it’s still above $700k for a tiny townhouse.
Dude I'm living an hour outside Toronto (without traffic) and in this tiny ass town, townhouses start at $750K. It's wild
My sister is almost 3 hours away from Toronto and the houses across from her are almost 800k. Its madness. They are singles (she has a semi) but that far is 800k? Like fuck me.
I'm probably 2+ outside of the city proper and 800k is the START of what single detached houses are out here. And this is the middle of fucking nowhere.
oh boy a savings of 300k! enjoy your 3 hour commute! you'll get to enjoy that house like one waking hour a day excluding weekends
Haha fortunately I don't have to work downtown much, my wife never does, and the GoTrain isn't far. Plus I have a lot of control of when I have to go to work so I miss the worst of rush hour if need to drive. Otherwise pretty spot on
Depends on where. A reasonable Calgary townhome near ring road can be have for $400ks
>The prices baffle me at times Bought a rowhouse/store in Hamilton back in 2001 or 2002. It was a literal crackhouse. Like, I found actual needles in the multiple layers of carpet. Took me a year to renovate and I took it down to the frame. 2/3s of the building ended up in the dump before I finished demoing it. Total cost of purchase and materials was about $80-90K. I did the labor myself otherwise it would have been more. Anyway, sold it a few years later and moved away. I checked on it recently and it had sold last year for almost $1M. That's just bananas.
>I bought a townhouse at your age on the same salary. Mike Harris started the Sunshine List and published all salaries of $100K **in 1996**. Today, we use the same $100K threshold and it is used to bully down and dox public servants. Accounting for inflation, the $100K threshold today would have been $55k back in 1996 when the Sunshine List started. Or the other way, the Sunshine List should be >$180K today. Salary has not remotely kept up either. They probably did have the same salary back when they were your age, meaning you employer has actually hired you from a fraction of the cost they hired them.
At this point I’m thinking my only hope is to get a crown land lease and build a cabin.
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Gonna have an Albert Johnson situation on their hands...
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Bro was literally Rambo a century before Rambo. Needs his own Heritage Moment.
My grandmother built a cabin in Quesnel back in ‘95 on crown land, just sold a few years ago. They had 4 separate 2000 sqft permanent structures on their property.
I know somebody who was granted a plot of crown land along the Nechako river in the 70s. Within a single lifespan we've moved from "giving it away" to "nonsensically unaffordable."
"Now homebuyers can save money every month on my overpriced run-down shack" 🤡
My mother was a school teacher and father was/is a photographer. They were able to buy a 2 car garage detached house with a pool on a golf course on their salary along with provide a comfortable life. I, with my wife, are earning 2x what they are earned and my house is 5x the cost of theirs in 1992, we am barely affording something that is 3x smaller. Insane
We were cooked for a while, no biggie.
We've been cooking for so long we're like pulled pork. Just add some BBQ sauce and we're good.
Depending on how you quantify "awhile", we actually haven't been. Over the last 5 years home prices have increased 50%. https://www.crea.ca/housing-market-stats/mls-home-price-index/hpi-tool/ In 2019 homes were radically more affordable. Its only recently that we've entered this death spiral.
But it’s not just the house prices. This is, what, the third “once in a lifetime” economic crisis that millennials have had to endure since hitting adulthood? No other generation in living memory has experienced that kind of instability. The only thing that isn’t unstable is wages which have been stagnant our entire lives. All the other crises (the incidentals that just “happen sometimes,” like natural disasters, pandemics, and ecological collapse) are amplified by that instability. And it’s likely going to be worse for younger generations. We’ve been cooked since day one.
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Your insurance company doesn’t care how much your house is worth to sell it, they want to know how much it will cost if there’s a fire and the thing needs to be torn down and rebuilt to todays standards. Trade labour cost has increased significantly.
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insurance goes up because construction labour costs are currently astronomical, and extreme weather is becoming more common.
We have also grown the population by like 4 million people since then, probably more.
yeah, you can stick a fork in it and say goodbye to home ownership.
The smart ones left for the US already.
I’m not smart trust me, just lucky sometimes.
Regardless of rates.
I know people think this means improved housing affordability but it's likely not going to help because it will increase demand. Tons of people sitting on the sidelines waiting for the first interest rate cut to buy. It's probably going to result in a big return to bidding wars.
No one thinks rate cuts improve house affordability because price increases are always proportionally outweighing any mortgage rate savings.
Rate cuts can't improve house affordability because the number of units available is less than the number of people who want them. This means that fundamentally, when supply is depleted, everything remaining will, by necessity, be unaffordable. If it were not unaffordable, then it would indicate additional supply capable of being consumed. When you increase the the ease to buy homes without increasing the supply, this doesn't change. Maybe on the very margins a few unoccupied units with sellers who were waiting for a specific threshold to sell are satisfied, and occupancy efficiency goes up a tiny bit. But the only solution for house affordability generally is to increase the supply faster than we increase the need for new homes. We seem to be doing the opposite. If you have 10 homes, and 20 families, buying a home will be too expensive for 10 people or more. Even if you made it much cheaper to borrow money, so one of the families without a home could buy the cheapest one from one of the families currently living in the home, the family previously living in the home who just sold couldn't reasonably afford to buy the same home back for the same price they accepted for it, nor would the family that bought it be willing to sell it for the same price they just sold it for. So you're still in the position where 10 families can't afford a home. This is what pissed me off about the Liberal's plan to fix housing affordability by forcing landlords to report your rent payments to the credit bureau to improve your credit score. This just adds another burden to landlords and property managers, potentially increasing the cost of renting. Credit score has very minor impact on what kind of mortgage you can secure, but even if it was a big difference, it doesn't cause housing to become more affordable. The best way to make housing affordable is to first limit the new entries into Canada, then to reduce the barriers and expenses to building new homes. If the goal is to promote immigration, then encourage building additional capacity and then invite people in based on that additional capacity.
This key interest rate lowering could mean more builders will build because they can borrow money to buy supplies at a cheaper rate. Which could actually ease homebuying in time, when the houses are eventually built. Though it seems what we really need is direct funding of home building from taxpayer dollars. Or maybe make some special "loans" that don't accrue interest, as long as the money goes towards building homes.
This issue is these are are coulds akin to trickle down reagonomics. The facts are we have millions more people, and housing isn't increasing in any kind of meaningful capacity. Also, where was mega home production when money was literally free? So.. if it didn't happen then...why would that happen with small cuts.
>Also, where was mega home production when money was literally free? So.. if it didn't happen then...why would that happen with small cuts. It's true that home production rates weren't good enough with low interest rates, but it's also true that building slowed even more as rates went up. I agree that one small cut probably won't make a big difference tho
>Also, where was mega home production when money was literally free? That question leads us all they back to Mulroney. Before early '80s, we had a Crown Corporation (CMHC) that had a major development branch that was building a lot of homes. Small, functional, homes. They did not control a massive market share, but enough that they impacted overall industry and set trends. CMHC used to rent >40,000 rental units to seniors/veterans and they were a leader in high density development. After Mulroney decimated and privatized that entire segment of CMHC, new housing starts dropped 40% from what was built in '70s. Private industry did not step in and fill the gap left in '80s. They did not surge in any period following, including our ultra low rate decade. There are a lot of limiting factors, like municipal process, but a primary issue is that for-profit interests always seek to maximize profits, and that means the largest (way oversized) most expensive home per lot. Canada never caught up from Mulroney privatizing the CMHC development arm and even in the last decade we are producing 60% of the new housing starts per capita than we were in the '70s. The solution is to go back to Crown Corp non-profit development. Flood the market with cost-recovered units and non-profit rentals. We absolutely cannot double our housing starts with current market trends (resources poured into huge detached homes) but we can if we stop leaving those decisions to for-profit drivers and focus on high density housing.
Taking more debt is NOT housing affordability. You need to pay more interest to the bank
It may help with affordability in the medium term. The issue is that Canada is lowering the rate ahead of the US which means that the Canada dollar will weaken against the USD if the US doesn't follow suit. If there is an expectation that Canada will continue to lower rates ahead of the US then there is an expectation that all CAD denominated holdings will decreased in relative value. For investors, this means worse returns making the Canadian housing market less attractive.
Exactly this. Why would investors hold CAD when they're guaranteed a higher interest rate in USD? I wonder if this rate drop will have an impact. Sucks for all the businesses who trade globally (in USD). Think things are unaffordable now eh? Good luck everyone... But don't worry mortgages are marginally more affordable everything is saved. How much building supplies/fittings are bought from overseas in USD again? What global currency is manufactured goods, many foods, and oil and gas traded in again?
> I wonder if this rate drop will have an impact The CAD has already dropped from ~0.731 to ~0.728 against the USD since the news broke
People who couldn’t finance a purchase at 5 aren’t going to be able to finance at 4.75
I don't know about that. I did the math yesterday to see what a 0.25 cut would do to my mortgage. It's about $60 per month, not nearly enough for people to jump into the market after just one rate cut. I would agree with you if it was a 2.5% cut.
The hopes of people cheering this on is that it signals a series of cuts back to the 2.5-3% range.
The only way housing affordability improves is a drastic reduction in demand mid-long term. This can be done through a reduction in immigration levels and strict real estate regulations. None of this is news to anyone, but the political willpower to make it happen is not there. Which is why we need to continually harass our political representatives about it.
It’s actually the opposite. For housing, demand is much more volatile short term than supply whereas the supply is induced long term. A drastic reduction in demand in the short term absolutely improves affordability, but in the long term the prices climb back up due to much less induced supply. The key to long term housing affordability is instead long term increase to supply. In relation to interest rates, high interest rates improve affordability short term by reducing demand and low interest rates improve affordability long term by increasing supply.
The bidding wars were happening at a time of 0.25% interest rates. It will put a little breath in the market but not much can still enter at 4.75
We had 0.25% interest rates? Dang. I bought at the wrong time! (Or the right one because I didn’t overpay)
0.25 BoC overnight rate, fixed mortgages bottomed out at like 1.75%.
HSBC had 0.99% 5yr fixed
I’m at the tail end of a 1.75% mortgage. Sucks what’s on the horizon. 😬 we are fortunate our house is not extravagant and is our mortgage is still fairly low but with rising costs in life it’s going to cause a squeeze.
You can bump your amortization back up if needed don't forget. I know it's no ideal but if you need the breathing room it's an option.
Yes for sure it is. And we will revisit that at that time. I’d rather not as I am in my mid 40’s and would love to actually have my home paid off before I hit retirement age 🤣.
Tell me about it! I’m early 40s on my 3rd house and had to refinance due to a breakup. Only 29 more years and I’ll own it (and my car they had to write in just to qualify)…
Heh I feel that. I'm 38 and I'm 3.5 years into ours. We've decided that as rates come down here we're leaving the payment alone (we raised it along with the rates) try to get ahead of it since we're managing just fine at the higher payment.
On the bright side, the best time to have a 1.75 rate locked in is the beginning of your mortgage period. idk how much you paid for the home in total, but rate wise you timed things almost perfectly
The price you buy at is way more important
0.25 won’t increase the amount someone can get on a mortgage significantly so it won’t have a huge effect for now
It could help my unsustainably expensive mortgage rate and others on variable who bought in the past 2 years too
0.25% is nothing. It won't change much. That's like a $50 to $100 difference per month for most.
but its a clear sign that we already passed the top of the rate hikes and are now seeing downwards trajectory. people who were worried about how long the rates could stay high or go even higher now have some confidence that the rates will only continue to fall, even if it's a slow fall.
EDIT: Check the graph in the article, not the article itself. [Check this out.](https://www.varinggroup.com/bank-of-canada-raises-interest-rates-to-1-5/) I cannot post the pics in this sub, but it's never that simple. And you definitely don't want to look at 70s trend. Hopefully it's steady, but I wouldn't bet on it.
My neighbour is specifically waiting for rates to drop to buy. And chatter online indicates she is far from the only one with that line of thinking.
They’ve just completely fucked everyone. We were finally making it to the point where houses weren’t selling and the market was starting to show cracks, that’s now gone completely out the fucking window.
All I think is that it will help me stay in my house that I need to live in
Housing is too expensive. 0.25 more or less on mortgage won't change the fact that few can *qualify* for the size of mortgage needed.
House prices will increase proportionately to the money saved with lower rates. People don’t understand that you buy mortgages, not houses so a lowering house price does not always mean more affordability.
Any measure that claims to "increases affordability" outside of building more housing than the growing population needs is only going to increase prices. All the attempts to subsidy, relax lending regulation, first home buyer grants, using RRSP for downpayments, etc. has only made housing more expensive because it lets the buyer borrow more, and thus pay more.
The bank has decided that you can't get ahead in this country by actually WORKING hard, the only way to attain wealth now is via assets. Because they are devaluing labour by devaluing the currency (remember money is a "store of value"). Groceries are not getting more expensive, the value of your dollar is losing its stored value. We do not have income inequality in this country, we have asset inequality. Cause earning $100K a year means nothing when assets explode in price.
Exactly this news is bad for young people who aren't heavily indebted.
> Because they are devaluing labour by devaluing the currency And importing cheap labour by the millions.
totally, many people do not understand income is less and less important nowadays, owning a house is the ultra rich class. Housing price can appreciate more than 100K a year
is that still the case? I don't think my home has appreciated at all, mind you we bought at the peak
You always needed assets to attain wealth. Go ask anyone even remotely wealthy, it wasn't their salary that did it. If you think you're going to be rich and comfy without some form of investments where your money is the thing "working hard", I have some bad news for you.
I think I saw this already in another thread.
Couldn’t have waited till my GIC’s rollover in 2weeks could ya?
This rate cut should’ve mostly been priced into fixed rates as it was expected. Still if they are not, call your bank, you should be able to add a 30day rate hold.
Thank you for settling my mind faster than my first cup of coffee today!
Can you explain? And for how long would have they been in factored in already?
Is there a reason you’re going for GICs and not index funds?
It's been priced I for a while. They've been sitting 3.75%-4.5%. I got a juicer at 5.25% coming due in Oct.
As someone who needs to re-sign their mortgage, I'll take it.
Me too! I’m up for renewal in January, and hoping it goes down more by then. Even 4.75% is still double my current interest rate.
If you're going fixed rate, you want to look at the Canada 5 year bond yield. That's what influences fixed rate mortgages. Take that number, add 2%, that's roughly the going 5 year fixed rate mortgage. Good credit? A little lower. Meh credit? A little higher. https://www.marketwatch.com/investing/bond/tmbmkca-05y?countrycode=bx The BoC rate does impact bond yields but indirectly.
I am January too and am currently at 2.17%
Same. Mine is coming up in August so this is good news for me personally.
all debt holders are jumping for joy for this rate cut while CAD continues to devalue agains USD. this is going to be a bumpy ride. interest rate is a tool. rate increase is to discourage borrowing, rate decrease is to encourage borrowing. if they have to encourage borrowing, its probably because the economy is not doing that great. i would hold off on the celebration.
You can apply the “I would hold off on the celebration” line at every single moment the rate has changed. Rates go up? Hold off on celebration, inflation is kicking in. Rates go down? Hold off on celebration, recession is kicking in. Maybe, just maybe, the interest rates moving is like you said: the tool being used to manage Canada’s economy.
Owning a home in Canada feels like crypto.
My mom lives alone in a 4 bedroom home at 1.8%. She's practically a feudal lord.
Oh. Is the housing crisis over already? Or have we just decided that we weren't actually serious about house prices going down?
This won’t fix the affordable housing crisis in Canada. Overhauling the market to exclude speculators, money launderers and private equity firms along with increasing the supply though all-income all-density public housing is the real long term solution.
This will start to help people who are renewing, not necessarily those who haven't purchased. I think there is a recognition that a lot of people are renewing soon and yea, you can renew them at a high price and they can tighten their belts but they won't be helping the rest of the economy by dining out in restaurants or shopping in retail. I'm due for a renewal in January...I have X amount left over with my budget, if I have decent excess income, I am more inclined to splurge on some meals out with wifey on date night or do home reno projects etc. If it's a high rate, I might put things off or do *all* of the cooking at home.
Lots of economists on reddit today!
By the comments, it sounds like a lot of people wanted the interest rates to be raised?
Lots of people here have this fantasy of raising interest rates to a point where people with mortgages are forced to sell, cratering prices, so they can buy houses for cheap. To make this sound less selfish, they hide this behind smoke-screens of helping the poor and punishing the greedy.
Go to the TorontoRealEstate sub Half of them think a detached home in the city should be 10M and the other half will tell you it isn’t worth more than 200k. I think it is more telling of the general economy eroding out the middle class and creating haves vs have nots
Bought my Calgary condo for $380, in late 2021. A modest 2 bed, 2 bath, 900 sqft, but has a killer reserve fund and is a decent part of downtown. The building next to me which is the same, doesnt have the reserve fund, and has more condo fee cost, has a unit with 100 more Sq Ft for $565. This was listed before this cut, I cannot wait to see what it fetches. Honestly, if my condo hits $600K, Im outta this country because there is no way its worth that much.
Go see what $565,000 @ 5% will buy you in Vancouver lol. Vancouver has given up and is now moving to Alberta. You ain’t seen nothing yet!
You can really tell how big of a deal real-estate is in Canada by the number of threads discussing mortgage rates. If you are reading this, try to imagine significantly reducing our dollar value and the implications on imported goods.
And that is exactly why we can't just inflate wages to match housing costs. Housing prices need to come down, we can't just give each other raises to cover the extra expense.
Saving the over bloated housing market > everything else
The BoC can’t do anything about housing prices. Lowering rates makes asset prices higher but that just offsets the difference in financing costs. It’s the government’s job to make home’s more affordable and well they’re doing a terrible job. But in fairness, lower rates helps get more supply built.
Private industry has no incentive to build us into affordability. If rates were 0 they would just raise prices to peoples maximum budgets.
They have no incentive to build us into affordability but I’ll still gladly take 100 houses being built rather than 50 houses being built. We’re already outpacing housing starts with population growth and Id prefer us to bridge the gap in how many people vs housing units there are rather than do nothing about housing starts until it can be fully fixed. BOC can’t do anything other than change interest rates. Take your anger that you have for the BOC decision here and write your MP with it instead, as the government is who needs to implement policies and/or legislation to bring us to affordability.
I agree with you but it doesn't matter how much they build if our population keeps going up 1 million plus a year. They literally can't build enough even if we had 0 for a rate. I'm not really angry, i just see terrible governance leading to a shit future for future generations.
Trudeau says housing needs to retain its value: https://www.theglobeandmail.com/business/article-trudeau-house-prices-affordability/
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Well, housing and the massive immigration numbers are keeping the GDP positive. That's why neither will change if/when the Conservatives take power. Nobody wants to eat the recession headlines.
If housing is the only thing keeping the GDP afloat, the entire nation has already failed. Rip off the bandaid
We are so fucked in this country - and it’s got nothing to do with interest rates and everything with shit financial literacy based on these comments… look at all these economists… and some of them might even be voting!
What will our dollar do vs US?
Down
People think this is a good thing, but when the central bank cuts rates it usually means the economy is about to tank.
“The price of buying a single family home has gotten too cheap” - Said no one. We need to chill on the immigration. Build more houses. Keep rates high
> Build more houses. Keep rates high Pick one. Builders need mega-loans and there is often no profit margin at high rates so why would they bother.
Is now the right time to resubscribe to DisneyPlus?
We might see ppl jumping back into real estate thinking this trend will continue which will pump up demand and homes will be sold at current prices or higher. But there really was no good option. Keep it high market crash in a real estate one tool economy. Drop it affordability crisis and slow and continuous standard of living decline. Take your pick. Both sucked. We are just reaping what we sowed for decades.
Thank god, I knew this would happen which is why I went variable on my mortgage but there was always the doubt of where, or when.
Hallelujah! The people on variable rate mortgages can now afford the brand name ramen!
And they have decided to pull up the ladder on young people again fuck me it will be a grind to even own a 500 sq ft condo one day. Let the over leveraged homeowners fall if they bought something they can’t afford
I mean .25 isn't going to move the needle too much either way. It's not like interest rates are headed anywhere near as low as the 2020-21 zeitgeist regardless. The rate hikes were always meant to curb inflation not housing prices. If you were relying on overleveraged homeowners creating power of sale opportunities that's already happening, housing prices aren't going to fall much with this level of demand.
This is signalling a decoupling to USD. Our interest rate just went below the US feds. Our dollar is gonna crash hard. This is indicating our economy isn't strong enough to weather high interest rates. Our future outlook is grim. Crash is likely at this point.
Where are all the people saying BOC won't lower rates till the feds do?
This really means nothing to the average Canadian your mortgage is going down like $50 a week For housing to become affordable again the Canadian government needs to : 1. Limit and target immigration 2. Heavily incentivize building homes and social housing 3. Adding a cap on the amount of residential properties a person can own 4. Out right banning corporations from owning residental properties
I'm very interested to see if this affects the Liberals polling numbers. I know one thing doesn't have much to do with the other but they are getting burned by the old "it's the economy stupid" aspect of politics right now.
US rate cut next!
The mad men did it. Somehow everything will go up 5% by next week.
Look everyone everything is fixed! Soon we can go back to dishing out money like a drunken sailor again! Then hyperinflation again 🍾🍾🍾🍾
People here cheering for a bigger rate cut. Talking about housing specifically, It would not benefit a single person that isn't already a home owner. It could go back to 0.99, if anything it would make the problem worse (think back to 2021-2022). Rates should stay high until the market stabilizes (more units built). This is coming from someone who owns a home (with the bank). Now if you are a homeowner and you are happy with this, think twice, regardless of when you bought your home it has always been overpriced! Remember that your home is built of sticks and cardboard. The only durable thing you have is your driveway! Long term it is much better to live on a place where homes aren't the hottest commodity.
Rate decisions are not about the housing market, they are decisions based on the economy as a whole.
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Every major builder has stopped future projects due to the high rates. They are only finishing up the ones they already committed to. Lower interest rates will hopefully incentivize growth. Major companies tend to borrow more in order to expand when money is cheap, which should stimulate the economy. Obviously, there's a lot more to it, but that's a very high-level tidbit in regards to more units and interest rates.
.25 ain't gonna do shit for anyone. Buyers "waiting for a rate cut" at 5.25 bank rate are still going to wait. People who can't afford their upcoming renewal at 5.45, still can't afford 5.25. Everyone on both sides are going nuts arguing about something that won't make any difference at all.
people who were waiting for the interest rate top have now seen downwards movement. it's about confidence in the direction of the rates more than the actual effect of a quarter point.
Canada is long term doomed, even if King Arthur became PM, you can not undo the damage that has been done. It will be generational.
The conservatives aren't even talking about lowering immigration targets either I'm all for immigration but lower it to like 0.75% of population per year We are growing like some africian countries but we only have a fertility rate of 1.3
Immigration as just a “we need immigration so keep em coming” is just as dumb as “we need to eat so keep putting stuff in your mouth, some of it will probably be food” The way the future looks, I would go very bold and predict that countries with smaller populations will be better off in the future. Massive populations need employing, retirement, healthcare, services, and if one pillar collapses like say…AI replaces 30% of the jobs, just as a quick example…then you get favelas…do we need favelas?
Igloo favelas seem pretty cool tho
Sooner or later, we will have to develop economic sensibilities around how to maintain a high quality lifestyle while enduring a decreasing population. We don't get to grow indefinitely forever. I am pro-immigration, but I also think that Canada is a resource-intensive place to live, and that we should take people on for the short run, but as the global population begins to decline we should encourage our citizens to emigrate to warmer, more hospitable climates.
The solution has always been technological innovation leading to productivity growth. Advancements in technology are deflationary - leading to more production of goods acting as a deflationary impulse. It is, however, constantly battling against poor fiscal policy which is why we're in the mess that we're in right now. Canada will never get out of the situation it's in without a sharp correction in housing prices. Housing is cannibalising a serious share of capital which would be going towards other things. The ponzi scheme only lasts so long.