– The original estimate was 0.75%
– Biggest interest rate hike since 1998
– Impact on the housing market
– Inflation expected to peak at 8%
Resources
Bank of Canada hikes rate to 2.5% — here’s what it means for you | CBC News
https://www.cbc.ca/news/business/bank-of-canada-rate-hike-1.6518161
Bank of Canada increases policy interest rate by 100 basis points, continues quantitative tightening – Bank of Canada
https://www.bankofcanada.ca/2022/07/fad-press-release-2022-07-13/
Bank of Canada raises interest rate: Read the official statement | Financial Post
https://financialpost.com/news/economy/bank-of-canada-raises-interest-rate-official-statement-0713
VIEW Bank of Canada surprises with 100bp interest rate hike | Reuters
https://www.reuters.com/markets/rates-bonds/view-bank-canada-surprises-with-100bp-interest-rate-hike-2022-07-13/
Bank of Canada raises its key interest rate by 1 per cent | CTV News
https://www.ctvnews.ca/business/bank-of-canada-s-larger-than-expected-interest-rate-hike-is-biggest-jump-since-1998-1.5985427
(99+) LinkedIn
https://www.linkedin.com/news/story/cmhc-sees-possible-recession-4831849/
Google Trends
https://trends.google.com/trends/trendingsearches/daily?geo=CA#Bank%20of%20Canada%20interest%20rate
Mississauga Housing Market Report | July 2022 Real Estate Trends & Stats | Zolo.ca
https://www.zolo.ca/mississauga-real-estate/trends
Bank of Canada hikes rate to 2.5% — here’s what it means for you | CBC News
https://www.cbc.ca/news/business/bank-of-canada-rate-hike-1.6518161
canadahousing
https://www.reddit.com/r/canadahousing/
Bank of Canada increases policy interest rate by 100 basis points, continues quantitative tightening : canadahousing
https://www.reddit.com/r/canadahousing/comments/vy3z71/bank_of_canada_increases_policy_interest_rate_by/
Bank of Canada Hikes Interest Rate Full Point to 2.5% in Bid to Crush Inflation – Bloomberg
https://www.bloomberg.com/news/articles/2022-07-13/bank-of-canada-hikes-100-basis-points-in-bid-to-crush-inflation#xj4y7vzkg
Housing is set for a monstrous fall-off and the Bank of Canada is underestimating the economic risks – The Globe and Mail
https://www.theglobeandmail.com/investing/markets/inside-the-market/article-david-rosenberg-housing-is-set-for-a-monstrous-fall-off-and-the-bank/
Bank of Canada Hikes Rate to 2.5% in Bid to Crush Inflation : canadahousing
https://www.reddit.com/r/canadahousing/comments/vy4612/bank_of_canada_hikes_rate_to_25_in_bid_to_crush/
bank of canada – Twitter Search / Twitter
https://twitter.com/search?q=bank%20of%20canada&src=typeahead_click&f=live
#canada #interestrates #mortgages #housingmarket #variablerates #fixedrates #100bps #interestrate #interestratehike #housingprices #portcredit #mississauga #inflation #policyrate #consumerpriceindex #bankofcanada
YouTube Video
Automated Transcription
Hello hello, Tyler Bryden here, hope everything’s going well today. I get to talk about everyone’s favorite topic here, which are interest rate hikes in Canada. There was an expected 0.75% increase and what happened? The news that we’ve just got was it was actually a whole 100 basis points that actually was deployed. So this is the first time since I think 1998. The biggest the biggest interest rate this the last time that 1998 was the last time that that was done. And obviously the goal here is to curb inflation. So I’ve got a couple articles. A couple links. As always, I’m sort of examining this, watching in interest and horror and disgust as all this. And then you know what that means for obviously myself. Personally, what that means for Canadian? What that means for the housing market, all of the good stuff that this sort of touches upon and. And this was again a bit of a surprise. A bit of a shock for people. 0.75 was already.
A big hike and going to be the largest one in a long time and then this is another 0.25 print on that. Now talking about and there’s a quote directly from Trudeau here about, you know. Sort of the global forces at play. Ukraine’s supply chain issues, Russia, you know. All these things are sort of touching it, and I think the sort of sentiment around this is is with all these global forces. Is this interest rate?
You know shift which, which is punishing. You know, a lot of Canadians. Is this actually going to have an impact on inflation? And really the goal here is that that piece is to decrease inflation, which I believe is sort of sitting, which they sort of expect to peak at 8% here over the next few months and then start to drop and then get back to sort of the target of 2% by 2024. Now do we think that’s going to happen? Do we know that’s going to happen? No?
There’s been lots of goals in the past that have been stated that doesn’t necessarily that these goals have been true, but that is the sort of work that is being put together here. So the next interest rate hike is at sort of or I guess, policy rate. Maybe it’s not a hike, but almost certainly will be, even if it’s a smaller one is September 7th, so there’s a little bit of I guess breathing room or processing of this. How does the economy take this? How do people take this?
Sort of evolving world sort of events. How does this all come together before September 7th? And so I think there will be definitely a lot of sort of scrutiny and adjustments before then to figure out what’s the next best step now. Lots of sort of stories that didn’t revolve around this. Again, I’ll put all these as links in the video, but you know, CMHC so Canadian housing and mortgage says that a recession could be on the cards. Many people think that we are already in one, but they’re just saying.
And and and then that definition is like two straight quarters of negative GDP. We’re already sort of a resetting what our expectations are for GDPR. For GDP is not GDPR. Still in compliance and security mode here. And then really what they’re seeing here is home prices to fall. So 5% from 2022 peak by the middle of next year, and then so the prices, and then the sales and estimated 34%. So lots of comments coming in this. A lot of people who have bought.
You know houses in the past? What year, two years? Six months are going to be in an interesting place and I’m one of those I bought a house, Mississauga, here at one point. This was a completely you know, trajectory continued up and we bought sort of October November here. So a lot of you know ways for.
There was a lot of spike up after that, which was generally sort of artificially inflated, and then that’s now coming down. The question is, how far does it come down for us? 3 bedroom 945 makes you know pretty in line with what we saw, but only a few months ago. That was one point. 1,000,000. So within the time that we had bought the house, there was already sort of significant appreciation on it and the extra sort of so so that you can see. Like again, this is just looking at. Yeah, range is like over year over year.
They’ll you know increases about monthly and then quarterly significant drops in that and then other complexity for us, which I think was probably one of the dumbest things that I have ever done. And you know, I don’t. You can’t really blame anyone because you’re the one who goes through the decision. But are we? We took a variable rate mortgage and then with that variable rate mortgage there was.
There’s sort of two kinds, ones where your payment continues to go up and then other ones where your payment actually stays the same, but you’re paying more in interest than you’re paying on principal, and within the last whatever you know a few months of these adjustments and aggressive adjustments, the amount that we’re paying on interest versus principal is, you know, pretty astronomical, and so that is only going to continue with significant impact from this hundred basis points. That was just added today, and I think there are a lot of people in this situation. We had sort of this option to choose a fixed rate and variable I. Advocated for you know a fixed rate based on some of these statements that were sort of coming out and my just sort of pessimism of where we were economically and what the Canadian government would do and sort of how we just sort of followed the US. You know to you know I was very skeptical that very rate mortgage or real estate agent advocated for us to check that because we had such a low rate and sort of showed us historical things we listened. I wish we hadn’t listened just now. Maybe we’re still, you know.
In the end, this plays out, but I’m actually very unsure and also the math once you do that seems relative. I mean, I know that there’s a way to do it, but there’s some complexity on that math there that is frustrating. And you know a lot of work to do to make sure at the end I’m not even sure I want to see the number that that comes out there. So definitely checking out my Twitter. Oh, it actually is loading for once. You can see, you know.
Sentiment overall, I’m you know I’m interested in tracking this. Do a lot of sort of data scraping and analysis of what’s happening on Twitter, and this makes me. Want to do a little bit more of that, just maybe I don’t know if it’s cathartic. I don’t even know what it is. And and we’ll, we’ll we’ll see the impact on this. So here’s some of the top tweets specifically. You know I was looking at the hashtag interest rate, but Bank of Canada.
Is a little bit more localized to Canada, Canada so. Bank of Canada raises interest rates. All of my friends are sharing her at macro economic analysis on their insta stories. So if you’re following real estate agents on Insta then then then then good for you. I hope you’re learning something. I hope that I’m learning something and then lots of sort of commentary. Some of these commentary maybe should be taken with a grain of salt. Maybe some are valuable insights from people who are part of the space or have good knowledge of it. And as always I’m a huge fan of Reddit. Sorry I’ve got a nice little train going by here.
And Canada housing relatively pessimistic subreddit but does have some really interesting insights in in it. Lots of threads being published here. So again, we’ll link these in the comments in the video main top comment. Top comic user having some indicator that it’s worthwhile that this will affect the housing market. They say a big time so I don’t even know if I have too much else to say just overall, this is the first time that I have.
Been part of this and then the first time going through this as I was saying to this person wants to keep dropping. Some people just want the housing market to crash at one point. That was me not having a house now. Obviously having a House I understand a little bit more. The consequences of that and hope that it it doesn’t happen frankly. And so I’m learning a lot along the way. Realizing that you know I’m in a situation where personally is still going to be OK even if we’re just paying more in interest than than we like and not paying down.
Principle or than using sort of chunk payments of principle, you know, sort of a 20% allotment each year to make sure that we’re making a dent in it, but. Overall, it’s been a very interesting sort of journey, and you know, there’s this idea that you should just get into the housing market, and I think that is fair when we do some analysis on this versus rent and then the outcome of it and all those things, it still makes sense and we’re happy here. We’ve got a great location. There’s a lot of value in the area that we’re in. The house is nice, lots of room for improvement, backyard all those things, but.
It’s still a scary time, and there’s still so much volatility in the world and there’s so many sort of macro trends, macro events going on in the world. The impact all of this that I’m not sure how much we have. Control over and you know there’s this one layer here, which is sort of housing and then as myself as someone who is a business owner doing software who has looked at fundraising. You know what is the impact on that, and so we’re already seeing you know, massive. Pieces on companies, valuations, bridge rounds for when they’re trying to raise money. The terms that they have to take on because as these interest rates go up, it impacts the economy. It impacts everyone’s money and then investment is, you know, less less available. It only goes to specific amount of companies. All these other factors that don’t just hit myself from a A the housing market perspective as a house owner, but then also as a business owner and.
You know, depending on different outcomes that I want for the business, what is the best path to take so those are a couple of things that I’m working through here today along with this wonderful 100 basis points interest rate hike. If you are following this, if this is impacting you, even if it’s not, would love to hear what you think. I’m excited to continue to see sort of YouTube channel grow continue to shine these videos on LinkedIn. Very excited to see over 50 subscribers now and getting you know. Feedbacks, feedback and comments. And those things I’m I’m feeling great.
Bra this is probably not my most interesting or positive or optimistic video, but I think it is worthwhile covering and I definitely wanted to do a little bit of research before this video, just to make sure that you know a couple of my thought processes are accurate or along the line, so if they’re not feel encouraged to send me a note and thank you again for checking this out, I appreciate it very much. Standbridge bye.
