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#7912156 - 10/14/14 07:41 AM Prime rate heading as high as 7% in 2 yrs?!
furball Offline
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http://www.thestar.com/business/personal...in_the_gta.html

 Quote:
Moody Analytics chief economist Mark Zandi told a Toronto audience last week that he sees the prime rate, now at 3 per cent, going as high as 7 per cent within two years.

The U.S. Federal Reserve is expected to start raising rates next June and Zandi expects us to follow suit, even though Bank of Canada governor Stephen Poloz says that’s not necessarily the case. The increases might begin sooner. Friday’s economic surprise was surging September job creation with a corresponding drop in unemployment.

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#7912167 - 10/14/14 07:49 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: furball]
JEFFOS Offline
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They won't or else everyone who is just squeaking by on overpriced houses will have to default (which is a lot of people)
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#7912169 - 10/14/14 07:51 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: JEFFOS]
Choco 'Nuck Offline
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 Quote:
in 1989 the Bank of Canada created a recession by raising interest rates to throttle inflation. That did the trick, but flattened the housing boom and the wider economy as well. In 1990, the house was worth 10 per cent less than we’d paid for it and remained underwater for five years.


The economy is still to shaky, no way in hell rates will hit 7%

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#7912172 - 10/14/14 07:54 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: JEFFOS]
LNXGUY Moderator Offline
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 Originally Posted By: JEFFOS
They won't or else everyone who is just squeaking by on overpriced houses will have to default (which is a lot of people)


Pretty much, a lot of people would be big big trouble.
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#7912174 - 10/14/14 07:56 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Choco 'Nuck]
Screamin Type ARGH! Offline
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 Originally Posted By: Chocolate Canuck
 Quote:
in 1989 the Bank of Canada created a recession by raising interest rates to throttle inflation. That did the trick, but flattened the housing boom and the wider economy as well. In 1990, the house was worth 10 per cent less than we’d paid for it and remained underwater for five years.


The economy is still to shaky, no way in hell rates will hit 7%
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#7912177 - 10/14/14 07:57 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: LNXGUY]
Risky Business Offline
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7% prime would be epic. That will put a lot of people in a world of hurt.
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#7912199 - 10/14/14 08:11 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Risky Business]
spd-dmn Offline
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wow.. a quick calc shows a 60% increase in the monthly payment

572k mortgage
25 year amort

2.5% = $2562

7.0% = $4006


dang

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#7912213 - 10/14/14 08:19 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: spd-dmn]
Hatorade Offline
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LOL, yeah not happening.
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#7912228 - 10/14/14 08:31 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Hatorade]
Euphoricuck Offline
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USA easing(ceasing) up on bond purchasing = gnsp
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#7912241 - 10/14/14 08:43 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Euphoricuck]
4age Offline
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For all those who say this increase is unrealistic, what are the driving factors which cause you to think so? Is it head in the sand, or is it for reals?
Prime rates have been higher than that in the late 80s and 90s

http://www.mtgoptions.ca/mortgageratehistory_000.php
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#7912247 - 10/14/14 08:46 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: 4age]
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4% over two years is very aggressive. It will go up just not that fast.
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#7912257 - 10/14/14 08:50 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Risky Business]
JEFFOS Offline
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They won't purposely cause a housing crash. Slowly sure.

As someone still looking for a house now the pricing and market is stupid right now. The average person can't afford a home in a decent desirable area. Most of the people buying now are maxing themselves out for sure.
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#7912258 - 10/14/14 08:51 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Risky Business]
4age Offline
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makes sense.
Also though, it went up 2% between 05 and 06 FWIW.

BRB buying micro house and will live in a park
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#7912266 - 10/14/14 08:53 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: 4age]
JEFFOS Offline
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It's nuts there is a small raised bungalow near where I am right now (nice area I admit) going for $920k lol and it still needs some renos. Crazy.
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#7912267 - 10/14/14 08:53 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Risky Business]
spd-dmn Offline
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^^ this (referring to riskys post)

current BoC language has been far from signalling any kind of increase, let alone something so drastic


next announcement is next week.. we'll see i guess

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#7912603 - 10/14/14 11:42 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: spd-dmn]
c2k Moderator Offline
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Bring it. It'd likely weed out the faux ballers.

Brb applying for 4th and 5th part time job
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#7912619 - 10/14/14 11:55 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: c2k]
JEFFOS Offline
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 Originally Posted By: c2k
Bring it. It'd likely weed out the faux ballers.

Brb applying for 4th and 5th part time job


It would crash the market and housing prices would drop substantially.

People struggling to get by now can't pay mortgage on 700k home. Need to sell house. House now worth 575k. Upside down. Screwed.

Also even if you're fine your house value drops as well. The only one that benefits are people not yet in the housing market after the price corrections.
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#7912622 - 10/14/14 11:56 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: c2k]
Balhar Offline
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What do you consider "Maxing out"?

granted we pay much more for real estate vs income when compared to some parts of the USA.

but i've always wondered what people consider "maxed out"

% of your monthly income on mortgage?
what if you have no other debts?

im pretty comfortable, but i'm also looking to move and am wary because it will be stretching me further than i want to go (but still manageable, i'm just extra cautious compared to others)

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#7912636 - 10/14/14 12:04 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: JEFFOS]
87ZCSi Offline
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 Originally Posted By: JEFFOS
 Originally Posted By: c2k
Bring it. It'd likely weed out the faux ballers.

Brb applying for 4th and 5th part time job


It would crash the market and housing prices would drop substantially.

People struggling to get by now can't pay mortgage on 700k home. Need to sell house. House now worth 575k. Upside down. Screwed.

Also even if you're fine your house value drops as well. The only one that benefits are people not yet in the housing market after the price corrections.
But if you're borrowing less at a higher rate you still may not be better off, at least in the short term. If you've got cash, then you're all set.

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#7912699 - 10/14/14 12:30 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Balhar]
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 Originally Posted By: Balhar
What do you consider "Maxing out"?

granted we pay much more for real estate vs income when compared to some parts of the USA.

but i've always wondered what people consider "maxed out"

% of your monthly income on mortgage?
what if you have no other debts?

im pretty comfortable, but i'm also looking to move and am wary because it will be stretching me further than i want to go (but still manageable, i'm just extra cautious compared to others)


Maxing out is all relative and a term everyone has a different definition for.

To quantify it, if your mortgage payment/utilities/property tax are 30%+ of net income, that to me is up there. On the flip side if you are young and starting out with higher earning potential, it may be normal. Lots of factors to think about it and it will vary from person to person.

When I first bought my house as a single earner I was over 30% of net, closer to 40% and I was sh!tting my pants, not going to lie about that. Took a bit of a gamble, but also considered higher earning years ahead, wife's income once married, additional source of income starting up, etc.

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#7912708 - 10/14/14 12:33 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: 87ZCSi]
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 Originally Posted By: 87ZCSi
 Originally Posted By: JEFFOS
 Originally Posted By: c2k
Bring it. It'd likely weed out the faux ballers.

Brb applying for 4th and 5th part time job


It would crash the market and housing prices would drop substantially.

People struggling to get by now can't pay mortgage on 700k home. Need to sell house. House now worth 575k. Upside down. Screwed.

Also even if you're fine your house value drops as well. The only one that benefits are people not yet in the housing market after the price corrections.
But if you're borrowing less at a higher rate you still may not be better off, at least in the short term. If you've got cash, then you're all set.


Yep was just going to say the only people benefiting of a *crash* are those who are buying homes with cash. If you need a mortgage post crash, you will be just screwed as everyone. Lower principle payment, higher interest payment, net effect on the size of your mortgage payment will be similar to that pre crash except it will be even tougher to get a mortgage since qualifying will be harder due to unemployment risk.

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#7912943 - 10/14/14 02:10 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Risky Business]
phoenixrage Offline
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bring it! #notinthemarketyet
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#7915090 - 10/15/14 03:32 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: phoenixrage]
Simon_the_Pieman Offline
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hmmm, sell soon, rent when crashed?
grow money, profit later?
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#7915165 - 10/15/14 04:00 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Simon_the_Pieman]
phoenixrage Offline
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if you stand to make a decent profit.. probably?
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#7915166 - 10/15/14 04:00 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Simon_the_Pieman]
TheRealCSnapper Moderator Offline
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is this going to happen before or after this long awaited market correction/bubble burst/crash/collapse?
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#7915379 - 10/15/14 06:06 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: TheRealCSnapper]
Senor Eduardo_82 Offline
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#7971063 - 11/19/14 07:02 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: TheRealCSnapper]
Lafora Offline
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 Originally Posted By: c_snapper
is this going to happen before or after this long awaited market correction/bubble burst/crash/collapse?


i forgot the guy's alias, (JACN or some shit like that?) but the bubble's been waiting to burst since 09.

still waiting.

http://business.financialpost.com/2014/1.../#__federated=1

think we got it bad, think of those poor fucks in calgary.

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#7971185 - 11/19/14 08:32 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Lafora]
Euphoricuck Offline
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That article is dumb.
What does the amt of condos have to do with an asset bubble ?
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#7971380 - 11/19/14 10:51 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Euphoricuck]
Screamin Type ARGH! Offline
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of note - the homes nearby (leslie and major mack) which started at $1.3 mil.....yeah all sold out within the week. dem mainlanders doe.

WTF
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#7971399 - 11/19/14 11:24 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Screamin Type ARGH!]
Lafora Offline
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i actually wondered about this the other day. if selling price was kept "secret" instead of being made available to agents, do you think it'd keep pricing of pre-owned in check? Granted, it's probably impossible to keep it secret, but let's say for the sake of argument it could be.
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#7971721 - 11/20/14 08:41 AM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: Lafora]
SW20_MR2 Offline
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Doubt it. Agents would just find a way to share the knowledge.

IMO, it's the blind auction piece that really drives prices up. It only take one idiot to bid $40k above everyone else, and that then becomes the new standard price. The next one goes higher.
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#7972858 - 11/20/14 04:59 PM Re: Prime rate heading as high as 7% in 2 yrs?! [Re: SW20_MR2]
Lafora Offline
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the blind auction certainly doesn't help.

the guy who helped me sold my place and helped me with my purchase process had another client who sold a place with 10 bidders at 100k over asking. Was all said and done in one round of offers.

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