Mortgage Rate Cut

BMO and Scotiabank cut some of their rates today The rates quoted are the posted rates; it will be interesting to see what mortgage brokers come up with.

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30 Comments

Filed under Mortgage Rates

30 responses to “Mortgage Rate Cut

  1. $fromA$ia (everybody's a RE tycoon)

    Woohoo, a whole .05%? Am I right?

  2. fun&mental

    those lenders had higher than market rates as it was.

  3. WoW

    AmPa – could these 24,000 folks be looking for Vcr RE after they get their pink slips? Our RE attracts a global crowd, they may just end up here – is this BULLISH for our local market, good for another 20%+ year for 2008? Whadda ya think?

    Citigroup is the first in line among banks to report its fourth-quarter earnings, due on Tuesday. Markets will be watching for indications of how much the credit crisis is damaging the banks’ bottom lines and increasing the risk of a recession.

    Citigroup could write down as much as $24 billion (12.3 billion pounds) and cut up to 24,000 jobs, CNBC reported on Monday.

  4. hateMyLandlord

    Vancouver only caters to the ‘elite’ global crowd; thus the 24,000 peons getting fired will not be fleeing north. Though I imagine after all the layoffs upper management will be due for some performance bonuses, so there could be a few more people looking around. 😛

  5. WoW

    haha – ya, good point.

  6. WoW

    Rob, does there appear to be a stronger surge to listings, in your view, than this time last year?

    Guess only time will tell how it plays out. What do you make of the Edmonton/Calgary slowdown, and the same in Ontario/QC?

    thanks.

  7. AmPa

    But of course, most those 24,000 are going to buy Vancouver presales in the glorious downtown east side, the ultra chic coquitlam, or the beautiful heritage neighborhood of New Westminster.

    They will do it because they can have it for a dirt cheap price of $900 per square foot, and they know for sure that it is going to be $1500 /sqft two years from now. They’ll buy 3 each and never have to work again.

  8. Whybuywhenucanrent

    Hey, 0.05% is nothing to sneeze at. That’s $500 per year on your average $1M fixer-upper. That will let you have the bathroom fan replaced, hire a rodent control specialist, or pay 1 month of property taxes. For folks eating boxed macaroni to pay the mortgage, $500 will go a long way!

    Again,
    Whybuywhenucanrent?

  9. Joe 6-pack

    AmPa. Do you still have to work?

  10. ceejay

    Goldman Sachs said it now forecasts U.S. property prices will fall 20 per cent to 25 per cent this year amid a possible recession, leading to “unnerving prospects” for HSBC and its U.S. mortgage unit, Household International. Goldman Sachs expects more than 70 per cent of Household International’s subprime loans to fall into negative equity this year. (various sources)

    Yikes!

  11. Cool Guy

    0.05 is really nothing!

    Last week PCF and ING raised their fixed 5-yr mortgage from 6.00 to 6.16

    No big fuss 😀

  12. -A-

    I am so surprised this is even discussed. When the banks want a little free press, they release such inconsequential drivel; they do this every year around this time. They may raise or lower the “Posted Rate” which is very different from what you can actually get.

    Robs, gang: I am shocked that highly and refined RE minds such as yourselves did not learn this in your post-graduate studies from Faculty of Mortgagemarketology?

  13. robchipman

    Interesting. Rates go up half a point and people talk unaffordability. They drop and people talk spin. Hmmm 🙂

    As I say, I’m interested to see what my mortgage brokers’s rate sheets say later this week.

  14. WoW

    Rob – with bank stocks getting hammered, could you see fear driving listings into the market at an accelerated rate?

    Could Alberta weakness spill over here? Or are we immune to global weakness? Is shanghai stock market decline uncorrelated to vcr RE?

  15. -A-

    “Rob – with bank stocks getting hammered, could you see fear driving listings into the market at an accelerated rate?

    Could Alberta weakness spill over here? Or are we immune to global weakness? Is shanghai stock market decline uncorrelated to vcr RE?”

    Wow, Rob may have a slightly different reply, but here is the standard canned response:

    No, with bank stock getting hammered, investors may see real estate as a safe investment which they will flock to.

    No , no fear, supply is still very tight

    No, Alberta is a different market, ours is driven by international buyers

    No, global weakness will not affect us, we have India and China that will fuel our economy,

    No, the stock market declines in Shangai is actually a stimulus because our market will be seen as a safe haven and all the rich foreigners will transfer their wealth to Canada and the Canadian dollar will move to new heights which will send interest rates even lower.

    This is what the spinners would say, of course Rob is not a spinner.

  16. Dmello

    c’mon Rob… 0.5% up and 0.05% down. Quit your BS spin routine… Even a used car salesman like yourself can do that math. (oops, i mean realtor)

  17. Annon

    Risk aversion seems like a good idea … Hope more people realize it and can do something about their investments.

  18. patenttranslations

    >>Interesting. Rates go up half a point and people talk unaffordability. They drop and people talk spin. Hmmm :-)<<

    With respect, 0.05 is nothing. If rates went down 0.5, that would be something. Perhaps you overlooked a zero in there? -A- is right. This is a non-change that does nothing at all but excuse a press release. If you did not overlook the zero I would say that, yes, you appear to be spinning.

  19. WoW

    Rob – if you were bearish on RE, would you admit it? Or would your role as a realtor forbid it?

  20. WoW

    http://www.canada.com/calgaryherald/news/newhomes/story.html?id=5742ffd6-98ac-4d13-87de-4eb997d92ba5&p=1

    A tale of two halves (year)…WoW, how things can change in a year.

    Rob – I ask you AGAIN – do you sense a cooling trend in vcr RE? Are you seeing the market the same as AmPa (always sunny), or are there cracks in the teflon?

  21. jesse

    “Rates go up half a point and people talk unaffordability. They drop and people talk spin.”

    Affordability just improved with this rate cut. I don’t see how this can be spun. Spin could be explaining why rising rates resulted in higher prices in the face of falling affordability, like what happened in 2007.

  22. Annon

    Haven’t seen coco posting lately …

  23. blueskies

    Ampa:
    some good news to temper your sunny disposition….. from Canada no less

    Murray Leith, director of research at Odlum Brown in Vancouver, said investors are coming to grips with the realization that economic growth is slowing, not just in the United States but around the globe.

    “The idea in 2007 was that the rest of the world was decoupling with the U.S. and slowly, painfully slowly, people are realizing that the rest of the world is also going to be impacted by this credit crunch,” he said.

    http://tinyurl.com/yrj3sl

  24. robchipman

    jesse wrote:

    “Affordability just improved with this rate cut. I don’t see how this can be spun. ”

    I tend to agree. If I’m spinning with this post then so’s yahoo.ca. Like I said, it will be interesting to see if it shows up in the mortgage broker’s rate sheets.

    Also, if I’m spinning I’d expect someone to point out that I’ve argued that lower rates effect real estate pricing. Lower rates do make it easier to pay for real estate, all other things being equal, but I’ve said many times that lower rates don’t necessarily result in higher prices.

    I have been consistent in stating that the increases we’ve seen over the past two years are, in my opinion, inconsequential. Most other commenters have tried to argue that the minor increases we’ve seen are the next death knell for the market.

    WoW:

    I don’t see the connection between bank stocks and real estate. Care to expand? I am liking the look of CIBC, mind you. Apparently the investors group paid about $67/share. Think it will go lower than it is now? Pretty good P/E. Can a Canadian bank fail? Or will it merge?

    Can Alberta weakness spill over here? I think that’s the wrong way to ask the question, assuming I understand you correctly. I don’t think Alberta real estate weakness has any real bearing on Vancouver values. I think the strength of the Alberta economy has huge bearing on the national economy, however, and I think it depends (as does BC, to a somewhat different extent) on oil and other commodities. What hurts the AB economy will also hurt us, I think. The question of the hour is whether the new kids, China and India, can replace the consumption from the US that we’ve traditionally relied on. I’ve seen arguments going both ways, so can only plead ignorance.

    I guess I’d have a similar answer with Shanghai. I don’t think the level of the Shanghai index relates directly to Vancouver real estate. I do think that what hurts the Shanghai index could hurt Vancouver real estate. While the global economy is now bigger than its ever been, I’m not convinced that its stronger or more immune to shocks. In fact, we may find that the footings aren’t solid at all. Isn’t that what makes the credit crunch fun to watch? If minds greater than mine don’t sort it out we might all end up digging ditches again (wait, something tells me -A-‘s never dug a ditch in his life!)

    Would I admit to being bearish on real estate? Yet again, I’ve got a bit of a problem with the question. At best I’m a long term bull on real estate. I’ve said repeatedly that based strictly on the numbers real estate is not a good buy in Vancouver currently. I’ve said that a purchase can currently be justified on the basis of a trade (and I’ll advise on that practice), a value added exercise (rehab or build) or a speculation play (and I don’t advise on or engage in speculation). Is that bearish or bullish?

    What does earn me the bull tag? Admitting that I don’t see much weakness in the market right now, and I don’t see an imminent collapse. Point of fact? We just finished an outstanding year with increased prices across the board. The market is in no way weak. We’re pushing 6 month’s of credit crunch and multiple years of huge gains, and see no cracks. Does saying that make me a bull or a realist? Would you like me better if I had a solid track record of horribly wrong predictions? 🙂

    Markets go up and down. I’ve been through lots of them. My role as a Realtor requires that I give solid advice to people engaged in trading real estate. If the market is collapsing and I can’t get you the price you think you deserve, I’ll lay it out for you, trust me.

    -A-:

    You nailed it. Took the words right out of my mouth. You should get your own blog!

  25. WoW

    Great points Rob, other than not seeing the connection between declining bank stocks and RE – perhaps you don’t understand the basic premise of a bank’s business. But that’s a debate for a different blog.

    Glad to hear that the market is solid and not showing any cracks, hope you have a record year.

  26. robchipman

    WoW:

    I’m sure you’re right. I probably don’t understand the basic premise of a bank’s business, which is why I don’t see the direct relation between a bank being “hammered” and the local market.

    Before you agree that I don’t understand, however, you might refer to your original statement. Its not exactly precise. What bank or banks? (local, like Vancity, or Canadian in an international market like CIBC, or foreign?) What’s “hammered” (writing down valuations or experiencing a drop in stock value or what?) I assumed you meant bank stock valuation, but I could be wrong. Could you maybe explain the basic premise of a bank’s business and how it relates to local real estate? I’d be very interested to see where you’re going.

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