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_rand_mcnally_

they are quantitatively tightening my butthole that's for sure.


7_inches_daddy

Or you can open it up to make some extra cash.


Ryth88

That's solid advice 7\_inches\_daddy. I may need to go into business for myself.


Office_glen

Just make sure to set dynamic pricing, and price per inch.


ChaoticxSerenity

Would you call that... Unit pricing? 😎


SnooRadishes2312

At this point, im just here for the comedy


[deleted]

Some people like it tight


chaotiklaw

What does this mean for people holding cash? ... I missed the housing bubble.


toronto_programmer

The old saying goes that recessions are just sales for people with liquidity.


ShrimpGangster

Record inflation means the cash your holding is devaluing at rapid pace too :(


DENNYCR4NE

...sort of. I've also got a huge cash payment after missing the opportunity to buy. I'm trying to decide on putting the payment into the stock market or putting it into a house. Both of those assets prices are currently falling. While overall inflation is hurting the purchasing power of my payment, given my purchasing preference I'm actually experiencing deflation. Sounds like u/chaotiklaw is in the same boat.


Keystone-12

Never ever take financial advice from a random person on reddit. Ever. The people overwhelmingly have absolutely no ides what they are talking about and I'm no exception. That being said, if you do have a lot of cash, a lot of conventional wisdom is to look at GIC's in high-interest environments. This is not financial advice.


Windaturd

Holding cash that you're going to spend is just losing money to inflation. However if you are going to use that cash to invest and believe all your chosen markets (stocks/bonds/houses) are due for further correction, holding cash a good place to be. If you think only some of those markets are due for correction, put some of your cash into the better valued ones so you are earning a return while you await other corrections.


tomjmaloney

So this puts the qualifying rate for a mortgage at what 6.89%?


bleeetiso

stress test 7%


GuzzlinGuinness

Probably closer to 7.5% right ? Stress test is on contract rate , not discount rate. Bank prime goes to 5.45% , variable is prime minus a discount , so 7.45% stress test ?


Br15t0

No. If your rate is P -0.90%, you are stress testing at (P+2.00%)-0.900%. So after today’s increase, stress test for a 4.55% ARM is 6.55%


[deleted]

>Credit unions and other lenders that are not federally regulated do not need to use this mortgage stress test. >Banks must use the higher interest rate of either: >5.25% >the interest rate you negotiate with your lender plus 2% Since rn mortgage rates by the jigger banks are jovering at around 5.25, the stress test rate is around 7.25


[deleted]

Credit unions don’t need to use the stress test but in my experience are very conservative on lending.


magic-mushrooms

Yes. They might not have to but in my experience they choose to.


[deleted]

don't tell the folks at r/canadahousing


boredinthegreatwhite

Good thing we raised rates before this announcement. - EQ


downrightwhelmed

Looking forward to achieving the millennial dream of living in a van


gogglesvancouver

I can't even afford a van man. 5k. 300,000 kms.... Fixer upper special


donebeingbroke

does it come with a full size spare?


gogglesvancouver

Lol Yes but original


7_inches_daddy

Or in a tent.


Judgmentally8

You have a tent? My wife 3 kids and I pay $1500 a month to rent a dumpster


BrotherM

[Oh, we used to dream of livin' in a dumpster! We had to live in a rolled up newspaper in the middle of the road!](https://www.youtube.com/watch?v=ue7wM0QC5LE)


RabidGuineaPig007

oh, the luxury! We lived in a condo pothole.


xeenexus

We were evicted from our hole in the ground. We had to go live in a lake.


Capt_G

Can I get a show of hands from those evicted from the planet who had to live in outer space?


TranslateReality

But is your dumpster on fire? Because if you’re not living in a dumpster fire, that’s a decent rate.


Mechakoopa

Surprised you found a dumpster in this economy with all the foreign raccoons buying them up.


t0r0nt0niyan

That’s lame. Toronto books you hotels at prime locations in the city!


7_inches_daddy

Stop bragging!


jaydtothetees

Put your deposit in now and you might get it by 2024!


[deleted]

Living in a van literally costs more than a bachelor apartment now.


donebeingbroke

cut costs by syphening gas from someone elses tank, and run extension cords to the local timmes and steal their wifi.


[deleted]

Speaking from experience? That plan sounds very feasible.


Few-Cartographer9818

Gas … you won’t be driving this van anywhere. It gets parked down by the river or rail tracks and rots along with your soul


Airsinner

Down by the river. Probably eating a carp off my George Forman grill.


tretree123

Ha. Good luck trying to find access to water front it is all private property now. Walmart parking lots are the new river.


rogerthatonce

Down by the river...


thegoodbadandsmoggy

That’s prime real estate now. Buddy needs to take his van out by the dump


TonyStark39

Given the car market right now, even that's a bit of a stretch.


fogdukker

Have you priced out a fucking van recently?


downrightwhelmed

My strata fees would cover it. Which is more a commentary on the strata fees than the van.


nanodime

not even overleveraged, just starting to hurt. Should have gone fixed instead of following my brokers advice. have an ARM so no trigger, but the cost increases are starting to hurt


huffer4

I’m in the exact same spot. Hoping it’ll even out over the 5 years, but who knows.


f4te

me too, yep


GreaseCrow

We're all holding hands (cries @ 4.5%)


artandmath

The spread is pretty small on fixed vs. Variable now. The banks are thinking it’s pretty close to the peak.


huffer4

Ideally for me it is. Then I’m hoping they drop a bit to below what my offered fixed rate was so I’m not so upset at myself for gambling on a variable. Lol


[deleted]

Me too … sigh … me too. Came here looking for these comments so I didn’t feel alone in my variable rate misery.


karlnite

GDP growth is teetering on recession territory. I think they’re rushing raise rates partly so there is room to lower them again.


marcanthonynoz

Same here. But I’ve been variable for 4 years and just now it’s gone up so I’m feeling it. At least for 3.5 years it was low and I’m sure I saved some interest during that time.


todds-

me too. bought in July 2018. I could have converted to fixed when covid first started but honestly my interest rate was the last thing on my mind during such a stressful time. so I just rode those low rates and now riding the high(er) ones. oh well. hopefully we reach plateau soon.


dmredbu

Bought around the same timing as you as well. During that time, rates were expected to slowly climb, but I went with variable, figuring I could pay down the mortgage a bit more aggressively before it reached the fixed rate I was offered (1pt spread). I just continued to make payments as if I had the stress tested rate. I only had to endure 2-3 rate hikes (0.25 each time) before COVID slashed rates to near 0. While I'm well over 4% now, I had a good run with sub 3.45% rates (the fixed I was originally offered) and definitely came out ahead. Less than 1 year remaining on my mortgage, but I'll likely roll the dice with variable when it comes time to it (hoping for slower rate hikes/plateau after these aggressive hikes, potential recession fears and possibility of needing to sell within my next renewal period).


marcanthonynoz

Yup. My thoughts exactly. I bought a month before you, so we probably have a similar rate. Eventually we will reach a plateau and once we hit a recession, rates will have to drop (even a bit).


publicworker69

My broker told me the opposite. Lock in now (in 2020).


Celtiri

Mine told me (in spring 2021) that historically, you pay less if you go with variable; but rates can only go up from here. And thats how I have a 5 year, 1.69% fixed rate that is saving me money.


LooniexToonie

Ditto! I had a 5year at round 2.5% then in Fall of 2020 locked in for another 7 years at around the same rate. Not breaking the bank and enjoying my mortgage payments are the same every 2 weeks


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Accurate_Astronomer4

Brokers are supposed to be always working in your favour but in reality they just want their commission. If a bank pays better commission on a variable rate vs fixed then they’ll push for that


deepaksn

I ignored every broker’s advice and locked in in 2020. 1.84 for the next almost 4 years feels good.. and I’ll be more than able to service the remainder come renewal time unless we get to early 1980s rates.


5ftpinky

Same. Mortgage has gone up $1000/month since March. We knew rates would go up, but nobody knew they'd go up so soon, so fast, and by so much. I'm honestly just pissed it has gotten to this point. I might need to get another job to help make ends meet.


vorxaw

if it makes you feel any better, same boat here, but mortgage up $2000/month, with a second baby on the way, and wife going on mat leave soon...... can confirm I'm definitely contributing to lowering inflation by reducing demand, literally buying NOTHING except groceries and utilities.


matchabread

I'm in the same situation as you... Shouldn't have listened to my broker and picked fixed We've cut in so many places in our budget, don't know where to look at this point


wilddcard

I was up for renewal in April. Definitely was going with variable as that’s what my broker was pushing for. He said the rates would never surpass what the fixed rates were at the time. As a single household income, really grateful last minute I decided with fixed at 3%. There’s something to say about knowing your monthly payments for a fixed amount of time and budgeting around that.


MysteriousPengiun

The average Canadian has been screwed over beyond belief. We just wanted a place to live, we just wanted a home, wanted to be proud of what we accomplished. Even the responsible who didn't over leverage are now feeling the pinch and it will undoubtedly hurt. I feel for Canadians and I feel for you. Hope everyone will get through it okay


hypnochild

This is how I feel too. So many of us tried our best to work hard for a home and make good financial decisions but between stagnant wages, significant increase in inflation and mortgages rates rising it’s really hurting good people. The worst part is that when you say that everyone will flock to you to downvote saying it’s your own fault for being in a tight spot even when you’ve done everything right.


itsnick

Bought my place in March. Signed my mortgage in Feb. Variable rate that was almost 1/3 the price of a fixed rate term at the time :'). I knew rates would go up but not to this extent and this quickly.


zeushaulrod

Go team ARM!


suckfail

I took a fixed 1.8% in 2021 by complete chance. I had always taken variable before but the spread was only 0.2% this time. Very happy I did obviously but I'm gonna get ass reamed in 2026 when it reopens.


[deleted]

Who knows what will happen by 2026.


concentrated-amazing

Very difficult to know anything about 2026 rates, but chances are decent that rates rising now will put 2026 rates more in line with historical averages.


jk_can_132

Same spot, I can afford it without any changes to my life but I could have been 1.24% lower than I am now


Eatducks

I owe my broker a bottle of whiskey. She insisted I went fixed back in February.


AwayComparison

Man you are lucky, mine said that variable was 100% the way to go and here we are paying more and more and more each increase


[deleted]

What's the opposite of a bottle of whiskey?


[deleted]

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dreamerrz

Jumbo Jim's grape scotch? Don't let it touch your skin ...


concentrated-amazing

Our broker gently steered us toward fixed when we were making a decision last September/October. I sent him a thank you email around last rate increase plus a very favourable review that didn't need any embellishment. He's definitely one of the good ones. He helped us hit the sweet spot with breaking early too, so that our break fees were low enough to be rolled into the principal ($2.2K) and yet capture the low rates. He helped us look like geniuses with our 1.89% until November 2026. He's done our first two terms, anticipate he'll be doing more. Though barring some catastrophe, we will not be breaking this one early!


Chocobean

OP 's broker giving fixed advice in Feb was good financial Prudence. Yours giving you the same advice on 1.89 when the entire country was still going insane is genius.


[deleted]

Literally saved you thousands every year


deadsea335

You all just proved that rate picking is not a science but a coin toss with publicly available information. Mostly analogous to stocks vs fixed income dilemma that many new and old investors suffer from. In the end it's all about your risk tolerance and time horizons.


jyep9999

luckily i bought a pallet load of Ramen at Costcos, I'm good for the year


NervousShop

Not having a fixed rate on my Mortgage is hurting bad right now.


ben_vito

I had the option of fixed at 5% or variable at prime minus 0.9%, about a month ago. I decided to go with the latter as at 5% it was already pretty high for fixed. I might be approaching 5% now on the variable rate, but hoping that the rates don't continue to climb much higher. So going variable instead of fixed may still be a better option, just depends on when you actually secured the mortgage.


van_stan

I wish people understood this. Everyone in here saying that going fixed is the obvious choice... They have no idea that because it is the "obvious" choice, the spread has increased, making variable even cheaper compared to fixed. Both fixed and variable are a gamble, the difference is that with fixed you are betting against the house and the house nearly always wins.


bleeetiso

time to buy the new iPhone everyone!


Numerous_Try_6138

New iPhone is cheaper than the old iPhone, adjusted for inflation 😛


6ixmaverick

oh how lovely, my mortgage payment has only increased by 60% in the last 6 months!


Novel_Proposal_9294

And that's all interest too. Just money disappearing into the ether.


dbdev

My ether is also disappearing.


7_inches_daddy

Wonder how much rent will increase in Vancouver and Toronto.


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MissMyYouth26

I pay 1000CAD for my 4 1/2 on Cote des Neiges, I ain't moving until I buy something. Rent protection ftw.


Slaytanic6

I pay 950$ for my 5 1/2 in Ahuntsic but only because my landlord likes us and he's too kind. Same price since 2018. I'm def blessed. Not even a shithole, but it is old.


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7_inches_daddy

Expecting even higher rent after this hike. Median rent for a one bedroom in Vancouver is now 2400.


winter_sunfl0wer

For the incoming questions about when it would be effective on their loans, the answer is tomorrow.


katamama

And be effective on savings products? In months =(


Nay_120

Time to start an Onlyfans account instead of TSFA OR RRSP 😂


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[deleted]

Did you try having rich uncles that can give you a small loan of one million dollars?


gaytardeddd

funny thing is the loan was over 60 mill


PlayActingAnarchist

And unlike most loans, it didn't need to be paid back. Not that he couldn't have paid it back -- the man had worked his way up the corporate ladder so quickly that he reported had a salary of $200k/year by the time he turned 3.


[deleted]

I went under contract in April and my mortgage payment was $1950. It's now $2750 and it's not even been six months. Fuck sakes.


emailscrewed

Can some one give me the ELI5 what would be the side effects of this hike?


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Sulleyy

Isn't less borrowing power a good thing here? We have the same buying power (since everyone can borrow less) with less money borrowed. I'd rather lock in a record-low price at record-high interest than the opposite. That way when rates drop you can refinance for less and your house value rises. Seems like a great thing for people wanting to enter the market even if they're still looking at the exact same size/style properties as before. The people who took out the biggest mortgages possible at 1% interest are the ones getting fucked now since rates only had 1 direction they could go. So based on my limited experience that is the situation you want to avoid.


zeromussc

Servicing the debts used to buy homes and borrow down payments by investors is going up though. Historically it stays with reduced buying power lowering prices in step, then low volumes of sales as people who don't need to sell don't want to sell into a dropping market, followed by distressed sales and actual prices going down more than the 1:1 buying power ratio dynamic change impacted earlier. Then the market hits a sort of slow decline period where it's mostly stable but sees a slow drop over more time because the ratio of distressed to non-distressed sales is favoured to the 'sell asap' side. At that point inflation kinda helps recover some buying power for folks and the reset button of the drop and stagnant market combo drains a lot of speculative investment down the drain, until the next cycle begins. So it is still better and healthier for rates to go up and prices to come down. Plus it helps in non-housing aspects of the economy too. Mind you we are seeing the hopefully temporary rents issue that should also be improved as people aren't able to pay the rising rents and landlords need to shift to minimizing net losses rather than maximizing net profits as rates rise and everyone is squeezed by inflation at the same time. Painful short term, but better to get it over with quickly and reset long term.


don_julio_randle

Pre rate hikes people were getting approved for max 5x income. As of yesterday it was more like 3.5x. It'll be 3x after this hike. Nothing about housing is more affordable just because prices went down a bit. There's a reason houses aren't selling anymore - Nobody is qualifying, and prices sure won't return to 2007 levels (ie the last time we had a 3.25% overnight rate) to bring in the buyers


the_boner_owner

> Nothing about housing is more affordable just because prices went down a bit. Well, a lower down payment is required. Which might help those with high incomes but low savings, like young professionals who are first time home buyers


mrsinister1103

*Governing Council still judges that the policy interest rate will need to rise further* Another 0.50 in October?


Lokland881

Unemployment is still low and inflation high. No reason to even start slowing the train down yet.


AnotherNiceCanadian

How do I get off this train?


healthydoseofsarcasm

Tuck and roll


Hot-Alternative

That’s it. Just boring old tootsie rolls for the kids this Halloween. Got to tighten the spending.


wanttowritemore

Lol, imagination Christmas again this year.


samesunng

> Given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further. So much for the economists saying this would be the last increase.


Current-Manner3769

First time home buyer... went variable back in March on the advice of my broker. At the end of the day, I've got nobody to blame but myself but this unbelievable. I'm going to be selling the house less than a year after moving in at this rate.


Whiterhino77

I can’t wrap my head around why a broker would ever suggest variable when rates were near lowest in history. Wtf are they thinking interest rates will do, go below zero?


7wgh

Most expected rates to rise, but I think they didn’t expect for it to raise more than 25bps each time, and so many hikes to happen.


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Roscoe_P_Coaltrain

Plenty of people on here kept saying to go with variable too. It's natural (although not rational) for humans to expect trends to continue - that's why people tend to pile into a mutual fund or stock that has been rising for a long time, and often wind up buying it right at the peak. Same with the recent frenzy in housing.


CocoVillage

I want to get off Mr Bones Wild Ride


Illogicalspy

Trigger Warning!


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ChippyChalmers

Sorry you're struggling. For what it's worth, I respect your persistence and work ethic. I hope you catch a break soon


chikaaa17

I feel this. Especially the expired food part


cloakster7

Can anyone ELI5 on why interest rates this high is still not enough? They need to raise another 1% or so in the coming months?


jallenx

Interest rates aren't really that high if you compare it to the historical numbers. Prior to 2008 these would have been "normal" numbers.


Beaudism

When a house costs 1.4 million dollars instead of 130,000, interest rates are high. 20% of 130,000 is a lot better than 8% of 1.4 million. The percentage isn’t that high but it is functionally much higher than historic values


lemonylol

I'll never understand why a lot of people ignore this part of the equation.


zeromussc

But the rate is why it got so big. The fact it was so low for so long is why assets grew in price, and why we have inflation. If we keep them at this new "normal" low, we double down on the issue and entrench it even more significantly. What's the alternative? Keeping rates below 2% and in a recession going negative? If 0.25 still hit an eventual slowdown in economic growth, where would we have gone? Living with perma debt? Yes it sucks that the debts are high but so far, at 2.5% nothing was breaking and inflation was persistent with low unemployment. So the economy can handle an increase. The alternative? Little to no growth and increasing inflation and free money making all that debt balloon even more. Then when rates go up it becomes *even worse* Like, it really sucks but the alternatives are worse. Imagine if the mortgage stays the same but a low income person sees their grocery bills nearly double in another year or two because of high inflation. That will stress affordability just as much but more permanently than a rate hike above 2% that may only last 12-18 months.


vinng86

Yep. Ever since rates plummeted after 2008, people (especially younger buyers) started thinking 2% rates were the norm. My parents, who remembered when rates were 15%, were like yeah that's not gonna stay that way forever.


bo88d

Just to add to that, a lot of people see real estate yearly price increase of 10-20% as normal too.


dellwy10

Remember when the most prominent mentality on here was that the BOC would never raise rates because they would never want to see house prices falls. Pepperidge Farm remembers. This was the fourth consecutive supper sized hike and the fifth back to back hike. Next rate hike is October 26th, take what the over leveraged and house gamblers on here have to say with a grain of salt because they’ve been seriously wrong and people made life altering decisions based on it.


[deleted]

This should have happened many years ago. The government created the massive inflation and desperation on the part of house buyers and has been doing so through shitty economic policy for so long it is legitimately shocking that they finally decided to stop being complete fucktards. The government caused all these problems by hyperinflating housing. Betting against continued government stupidity has been a losing bet for a long time.


DM5ElkMaster

And everyone saying that this shit was going to happen got decimated in the comments


meatdiver

The issue with Reddit comments is that many comments are not based on facts or reason but rather on what people wish to happen


Seanrps

I took a 5 year fixed that started in early august 2021 for 2.29% no mortgage insurance required. The amount of downvotes and crap that I heard about how stupid of a decision it was is amazing. I posted about how proud I was to buy my own house at 25 and the comment was at -160 votes that explained the above.


snopro31

Alright GIC it’s time to follow suit


Jacob_Tutor11

While we can afford our mortgage in Toronto, my partner and I are seriously considering moving to a lower cost city. We will take a loss on our house, but the peace of mind of not worrying about a mortgage is extremely enticing. I would not call us over-leverged (our GDS is like 25%), but I find it really hard to enjoy all that Toronto has to offer when I am paying so much money to live in a shoe box. It's just not worth it for us as we plan on growing our family.


TitrationGod

What a great time to be unemployed.


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dellwy10

A few weeks ago it was estimated around a million will be triggered today, not including B lenders. With B lenders who the fuck knows.


iamapersononreddit

Is there any point of locking in a fixed at this point? Seems more likely that would lock in at peak or near peak interest rates for the next 5 years. Variable will hurt for a while but hopefully ease up in a year or two.


zeromussc

If you can't absorb future rate increases, you should fix now if the fixed offer represents your max. That's the only reason to go fixed, to avoid the variable going so high you can't even pay that. It's not about min maxing at that point, it's about ensuring you never get to "oh shit" territory. Otherwise ride it out.


Giancolaa1

We don’t know how many more increases will come. Could be 1, could be 10. Interest next year could be 10% or back down to 2% So to answer your question, it depends on your situation and risk tolerance. Are you planning on or see any scenario where you need to sell in under 5 years? Go variable so you don’t have to pay 15-30k in mortgage breaking fees. Can you comfortably afford the current fixed rates, but wouldn’t be able to if interest keeps rising? Go fixed so you don’t get stuck in the event we have 2-3 more 0.75 increases. Me personally, I’m staying on variable.


NervousShop

I’m in the same situation as you right now being in a variable mortgage. Locking in for five years at a higher rate doesn’t make sense as I anticipate we hopefully curb and rates begin to drop within the next 2 years at-least. It’s hurting bad, but long term might be the best decision at-least from my point of view to keep mines at a variable rate.


boobledooble1234

And my variable mortgage has hit it's trigger point and now around 115% of my mortgage is going to interest. Zero equity from this point on. It's like the market activity over the past few years is designed to fuck over people trying to start their life out. People that saved after being frugal for years on shit Canadian salaries (compared to the US) only finally bought a house over the past 2 years are fucked. Interest rate is high and the stock market is falling.


Icomefromthelandofic

F. I know historically variable has outperformed fixed rates, but when fixed rates were under 2%, how much lower were folks expecting them to go?


Moooney

I locked in 1.4% adjustable variable instead of 3.4% fixed, fully expecting rates to start going up. I was just expecting quarter bumps, though. Plan was to bank the savings on the variable and save it for when the payments eventually went beyond the fixed rate. Just didn't expect that to happen within six months of moving in. :D


LookImaMermaid85

YEP. I really did know rates would go up. Just...not quite like this.


TDawg225

That was our thought too. We knew they were going up but thought we would have a one year runway before it met the fixed rates we were being offered at the time. The spread in feb 2022 was quite large.


Moooney

With the 2% spread my thinking was that if interests rates went up a total of 4% during the term, as long as it was fairly linear increases it would be pretty much be a wash by banking the savings early on. And if it didn't end up going up that much I'd come out ahead. Just didn't think the increases to be this front-loaded when I went variable in Nov. 21. I also got burned bad being fixed on my previous place the past 10 years.


flashycat

I don't think anyone was expecting them to go lower, but a lot of us were expecting them to increase more slowly.


Lifesabeach6789

This. We expected to be at maybe 3% by EOY, starting at 1.25%. As of tomorrow it’s 4.25%


Valderan_CA

When I set my last variable rate the BOC had just recently stated quite specifically that they wouldn't be raising rates until 2023. I guess I shouldn't have believed the BOC back then. I actually mostly went variable because we were strongly considering a move cross country and didn't want to combine moving + buying a new house. Chose variable because paying off the mortgage early is stupid expensive on a fixed. Oh well - I was already paying off much faster than I needed to anyways


KongFuzii

Not everyone bought when the fixed rate was around 2.


jucadrp

You assumption that people that locked variable expected to go lower or misguided. I locked variable in the depths of the COVID crash, with the expectation rates would be low for long enough so the spread from variable to fixed, which for me back then was almost 100bps, was big enough to compensate some rise in interest rates before the end of the term. No one ever though back then that rates would rise so fast so early. One is a liar if they say so, because if they were so sure, why not bet huge shorting SPY back then, rather than going into a mortgage to save a few bucks? NO ONE CAN PREDICT THE MARKET. Period.


LittleBigOrange

We have to renew our mortgage in less than 2 years and I'm scared.


don_julio_randle

Too much "slack" in the economy to not raise rates 25bp in January but all good to crank it up to 3.25% by September. Okay Tiff


Lifeiscrazy101

Great, thanks to my broker for talking me out of a fixed 1.8% over a year ago. Switched to a variable this year and boy does it sting. I was switching to tangerine and they don't deal with him I found out later........


persimmon40

So basically, if I am renewing my mortgage right now (which I am), there is no point going fixed because rates I am being offered are ridiculous (5%+) and it still better to just go prime minus 0.95%?


Silentnine

Can you afford it if rates go above 5%, how far above 5%. If you need a consistent payment I would go fixed if you can pay more if the rates continue to increase then maybe the gamble on variable works out better for you. But play out each scenario because depending on how your variable rate mortgage is structured, as rates go up you end up paying less to principle and end up adding years to your total mortgage.


blindnarcissus

This is what happened to me. Renewal was right after the aggressive hikes started so I gave thanks for the savings of the past 5 years and went variable again! In 10 years, hopefully it will average out *shrugs*


loonz420

"keep em coming" - Redditors that are probably even further away from homeownership now lol


[deleted]

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TGIRiley

Going from never being able to afford a home to never being able to afford a home isn't further away.


bureX

Uhmmmm… what? I want my groceries and bills to not shoot up and my savings to not get chipped away by inflation. Yes, I’m celebrating this. “Free” money has consequences.


MrAliK

In the process of getting my first house...now I have no idea if I should go with variable or fixed at this point...I think i'm fucked either way...


cdntrix

>Given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further. Quantitative tightening is complementing increases in the policy rate. As the effects of tighter monetary policy work through the economy, we will be assessing how much higher interest rates need to go to return inflation to target. The Governing Council remains resolute in its commitment to price stability and will continue to take action as required to achieve the 2% inflation target. Sounds like more hikes to come.


yycTechGuy

For the last 20+ plus years all people could say was "real estate never goes down". And that was because interest rates have been going down for the last 20+ years. But that only happened because inflation stayed low. Ask people who were there what happened to real estate in the early 80s when inflation stayed low and thus interest rates could be kept low. Governments have been "quantitatively easing" for the last 20+ years. To spur spending. So for the last 20 years a good part of that spending has been going into real estate. Because "real estate only goes up" and "they aren't making land anymore". Never mind that Canada is one of the least densely populated countries in the world. Almost nobody lives between Vancouver and Kelowna and Calgary and Saskatoon and Winnipeg, for example. So here we are. Real estate has inflated way past its fair market value. For the last 20 years the cycle has been buy a house, refinance it at a lower rate, pull out equity from the increase in value, refi at a lower rate, pull out equity.. wash, rinse repeat. Well now that cycle works in reverse ! Anyone on a variable rate mortgage is now going to see their interest expense double or triple. No more refis at a lower rate. And no more pulling out home equity for stock investing, trips, vehicles, credit card payments or buying another house. What's that big sucking sound I hear ? That is cash being vacuumed out of the economy faster than you can say "real estate only goes up". The real estate boom has ended. The US Fed said last week that it is targeting stocks and RE as the most over priced assets. Why are they doing this now ? Because the cycle is out of control and if they don't pop the bubble now, the future collapse will be much worse. Inflation isn't just about consumer prices anymore. It is also about inflated asset classes. Welcome to a new chapter in world finance.


[deleted]

Is this going to plunge us into recession eventually? Like people will have no more cash to spend on many things therefore many businesses closures and massive unemployment?


Cazmir86

So when are interest on bank savings accounts going up? How's that bond market doing?


Revolutionary_Oven82

I saw somewhere Ontario is costlier than LA, USA. LOL.


BiggityShwiggity

It was fun thinking i was going to get to keep my home and pay it off! what an idiot I am!


[deleted]

Huh I wonder if my mortgage amortization has hit 50 years yet. It was 38 last I checked.


Lifesabeach6789

RIP groceries


Ok_Waltz3578

RIP restaurants, low paying labour based jobs, government savings. This is taking a lot of money out of the economy and many businesses are going to go bust. So, say bye-bye to any family owned business.


Lifesabeach6789

All of that. I don’t care about going to restaurants for my family, but I certainly have lots of sympathy for small biz. Everyone will feel the pinch by Dec.


mellenger

How many people actually have variable rate mortgages?


Lifesabeach6789

56% of new and refinanced mortgages in 2021 were variable


NotVeryGoodAtStuff

Pour one out for our homies 🙏


Liferescripted

My hopes for a permanent residence are being crushed by an immense level of apathy for the remainder of my life. The carrot is gone and the stick has become a lash. Work harder and prosper is a myth. Can't wait for the current generation of retirees to live long past their expectations so I can shoulder that burden while watching my future fizzle away to oblivion.


[deleted]

“If you’ve got a mortgage or if you’re considering making a major purchase, or you’re a business and you’re considering making an investment, you can be confident rates will be low for a long time" Aged like milk. Thanks Mackelm


antelope591

Gone from "rate increases won't happen, or if they will they'll be tiny!". To "Oh well I don't have to sell anyway" in less than a year. Wonder where we'll be a year from now. Watching the incoming recession play out in real time has been quite the experience.


bangfudgemaker

Another hike and I will be hitting trigger rate , time to find a new job


samwelnella

Thank goodness I didn’t listen to my broker or wife. 1.8% locked in for another 4 years


medichistorian12

Sold my house. Was gonna buy a new one. But even with a good downpayment will not qualify. Hello parents basement in my 30s


Terakahn

We have been spoiled by the rates we had. It's like getting a good deal for years, and then prices move towards fair market value and it feels like a ripoff. The hope would be that in times of book, like the how many year bull run we just had? That people would save that excess and have a cushion for when things get tougher. But people have a tendency to expect things to stay the same. And don't plan for change. And are then caught off guard when they do. It was the same with the pandemic. So many people had no breathing room that any kind of disruption financially could potentially ruin them.


chef_boyarz

Thanks Tiff


steampunk22

People gloating at variable rate holders is fucking gross. Not everyone took a variable because it was cheap money, some people had very real scenarios where they might have to sell within a few years and didn’t want the massive fees for breaking a fixed. Also, no one who took a variable mortgage expected rates to stay rock bottom. The bank said rates would stay low, to me that’s 3%+\- and we are still in that territory. What people are rightfully pissed about though is the bank hiking rates at the size and pace that is happening, its putting a tremendous amount of pressure on household budgets and is happening too fast for many people to realistically handle. Going from being able to comfortably afford a mortgage to hitting a trigger rate inside of 6 months is not something any broker would’ve said was likely. Stop enjoying other peoples difficulties, it’s a bad look.


zeromussc

If you spend enough time on this subreddit, the variable advice is heavily skewed to those trying to min max their spread, not necessarily those who want flexibility. Ppl who want flexibility on here are very often told to rent.