Interest Rates.

[liquid]

Mine has jumped half a precentage point in the past 6 weeks. I'm on a variable rate with my mortgage right now, as I don't see that rate jumping above 5% any time soon.

Anyone else have any thoughts where this may lead. In my opinion, I think it may rise another half a percentage point soon, but then stabilize. Blood would run on the streets if interest rates rise above 5 or 6 percent. So many people are so highly leveraged right now, that it would create chaos. With that said, personal savings are basically at an all time low.

[James]

Re: Interest Rates.

When you got your mortgage they surely told you now is the lowest they've been for a long time?

Mine did, I locked in for 5 years cheap! while I dont like the idea of being "locked in" i did it for 5 years because the guy was positive the rates would go up..the other reason I did 5 is because it will be time to renew for me right around the next time the states has an election which is historically borrowing rates drop

[Mr. Burns]

Re: Interest Rates.

Werd. My wife and I locked in for 5 years at 4.3% or something like that.

[liquid]

Re: Interest Rates.

It's no suprise that they are going up; I think everyone expected that. I just took the gamble that they would not increase a full percentage point. My variable rate was setup at 3.4%, and is now 3.9%, so it's still quite good. With that said, I'm curious as to where people think they will stabilize again. My guess would be around that 4.5% area.

[Tuna]

Re: Interest Rates.

I'm playing the variable game for a couple reasons. One, the lowest I could have locked in at (I looked everywhere) was around 5.3 percent or so. By the time my 6month convertible gets over 5 it would likely have been time to renew anyway, plus, even if it does go above 5 percent in the next couple years, the thousands i'd have saved up till that point will more than make up for it (in other words, it will have to rise substantially above 5 percent for me to be "losing" so to speak).

The other reason is simply, My wife and I werent sure what we were going to do when we first got married (if we were going to stay in Calgary or not) so this way, I can get out anytime since i'm only locked in for 6 month periods.

[Kor]

Re: Interest Rates.

This is not on topic.

Did you know the VW Vortex is the 10th largest forum on the entire internet??

[RONDAL]

Re: Interest Rates.

here's a tip if you are worried about interest rates:

Bank of Canada over the long run likes to keep interest rates around 3%.
the target band for inflation for the BOC is also between 1-3%.

right now the CPI inflator for September was 3.4% so bumping up the interest rate was inevitable to happen. whenever the inflation gets out of that area the BOC will step in an try to bring it back within. while it is within the area they largely stay out of things.

also check out the BOC website, it basically lays out what it will be doing for the next 18 months.


now you know

[Aleks]

Re: Interest Rates.

Is this at all tied to the fact that the US interest and primes went up today??

[liquid]

Re: Interest Rates.

As a rule of thumb, Canada watches our Southern neighbours quite closely; so yes, it does play a part. Rondal is bang on with what he said.

[NeonGTI]

Re: Interest Rates.

**** WARNING: LACK OF COMPASSION TO FOLLOW ****

I'm quite happy about interest rates going up. I just dumped one of my revenue properties partially in anticipation of the winter real estate season, an over-indulgent xmas, and rising interest rates!

I hope to cash in on some good deals as a result of some peoples over-buying. I would LOVE to see mortgage rates pop to 7%+ (all of my mortgages are VRM, by the way) and see the glut of sales due to over-buying.

[Aleks]

Re: Interest Rates.

mines VRM aswell.....and I didn't overbuy thank god, but still, think of the mass devestation it would cause alot of people if they couldn't afford homes.....it would not be a good scene....I think my house is actually too small, and the cost of houses here in Calgary is insane, and its not right a house my size is worth a hair over 200K....

[R_Ethug]

Re: Interest Rates.

my mortage is locked at like 4.3 i think..

hey alex you think thats nuts my place is worth over 200 now!! thats nuts

and yes house prices in calgary are ridiculous

[Tuna]

Re: Interest Rates.

mines VRM aswell.....and I didn't overbuy thank god, but still, think of the mass devestation it would cause alot of people if they couldn't afford homes.....it would not be a good scene....I think my house is actually too small, and the cost of houses here in Calgary is insane, and its not right a house my size is worth a hair over 200K....

what you said......I can afford for the rates to go up some, and I also whish I could get something a little bigger but that will involve a substantial pay increase.

[liquid]

Re: Interest Rates.

Your right Ryan, it is nuts. Although I wouldn't expect it to change anytime soon.

As for your comments Neon, I have to say I agree. My investments (real-estate wise) do not exist beyond my primary residence. At my age (23), I don't feel comfortable leveraging myself beyond what I think I can handle comfortably. If rates get to 7%+ it can be expected that the economy would head into a recession, and IMO, that is not something that any federal government wants at this point in time. BOC overnight rates have fluctuated between 2% and 3.5% in the past three years, and I believe we are on that upswing which will bring that to a 3.5% mark.

It seems the new trend is to leverage the equity on your primary residence as collateral for a second "revenue" property; without paying off the debt on their primary residence. Maybe I'm just old-school, but I hate carrying debt on my primary residence. After that, I'm comfortable levergaing myself.

[RONDAL]

Re: Interest Rates.

^ this is what people are doing, and having near record low interest rates didn't help matters much. after the dot.bomb and 9/11 instability in the markets people turned to realestate to a place to basically store their money.
alan greenspan, and a few other prominent economists and individuals in North America are predicting a reordering of pricing within the market as some places have become overinflated in price driven by a sense of false demand.
when a the price of your average single family home becomes unaffordable for your average single family things will start to change. and all these people that have bought into mediocre homes, which they overpaid (in relation to what the market was) will see a drastic drop in their property value. problem is these houses which they bought mostly on mortgage for say $500,000 are now worth $200,000 but they are still sitting there with a $500,000 mortgage.
those homes in the higher end will not see such a drastic swing as there is always a market for these types of homes, especially in calgary with a very vibrant booming economy.
this "theory" held by more than a few is not local to just calgary or alberta for that matter. it is a widespread issue across North America at the moment.

and just to put it into perspective, interest rates in the states are now after yesterday's raise up to 2001 levels prior to 9/11. for those that dont remember this was when US was saying they were on the verge of a recession.
Canadian rates aren't as high, and do not need to be.
I will see if i can find the graph of our rates plotted with US rates since 1998