Francois Lalonde, Directeur Développement Hypothécaire

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From BNN Bloomberg:

Rosenberg sees 'terrifying' mortgage math bringing Canada rates down quickly

Canada’s central bank will have to cut interest rates faster and further than markets expect to get ahead of a wave of mortgage maturities that threaten a fifth of the country’s discretionary income, according to economist David Rosenberg.

The Bank of Canada will be forced to cut 2 percentage points from its policy rate over the next 12 to 18 months, taking it down to 3 per cent, with the process kicking off in the first quarter of next year, Rosenberg, founder and president of Rosenberg Research, said in a telephone interview.

“It’s going to happen quicker than most people think,” said Rosenberg, who’s known for predicting the 2008 US housing crash when he was at Merrill Lynch. “The economy is going to be in a bad recession. It’s going to be late and they’ll be scrambling.”

Economists surveyed by Bloomberg last month see rate cuts unfolding a bit more slowly. The consensus view is that they’ll begin in the second quarter of next year, with the overnight rate at 3 per cent in the second quarter of 2025. Swaps markets are pricing in three rate cuts by next October.

Though the central bank is still warning its benchmark rate, currently at 5 per cent, is more likely to rise than fall as inflation persists above its target, other indicators cause Rosenberg to suspect the economy is already in a recession. This will force policymakers to move quickly to get ahead of a wave of mortgage renewals coming over the next few years, he wrote in a research report Tuesday.

“The macroeconomic math relating to Canada’s looming wall of mortgage renewals should be terrifying for the Bank of Canada,” Rosenberg wrote.

Around two-thirds of Canada’s mortgages by value will be coming up for renewal over the next three years, Rosenberg wrote, shifting borrowers from the ultra-low rates available during the pandemic to much higher ones. That will push the average monthly mortgage payment up by 15 per cent in 2024, 30 per cent by 2025, and 45 per cent by the end of 2026, Rosenberg’s report said — if rates stay at current levels.

In aggregate, all those extra interest payments would amount to a 20 per cent reduction in the national disposable income by the end of 2026, he wrote.

“If households are forced to funnel more of their monthly income into mortgage payments, that means less for discretionary spending on things like white goods, restaurants, and holidays,” Rosenberg wrote. “That’s an enormous hit to demand.”

And even if consumers take steps to avoid these extra payments, that would only throw up economic headwinds elsewhere, according to the report. Households that opt to restructure their debt would have to draw down their savings. Others who decide to sell their homes will put pressure on an already softening housing market, while those left with no choice but to default will put Canadian banks at risk of losses, the report said.

“If we can do this math, the economists at the Bank of Canada can too,” he added. “That means that the bank will need to switch posture relatively soon.”

"https://www.bnnbloomberg.ca/rosenberg-sees-terrifying-mortgage-math-bringing-canada-rates-down-quickly-1.1998590"

Rosenberg sees 'terrifying' mortgage math bringing Canada rates down quickly - BNN Bloomberg Canada’s central bank will have to cut interest rates faster and further than markets expect to get ahead of a wave of mortgage maturities that threaten a fifth of the country’s discretionary income, according to economist David Rosenberg.

Goldman’s chief economist just weighed in on the productivity debate—and says it’s been dropping for years before remote work came along An NYU economics professor shocked the profession by arguing that “total factor productivity” is linear, not exponential. Jan Hatzius says he's got a point.

Canadian Housing Investment Is Correcting At The Fastest Rate Since The 80s Bubble Pop - Better Dwelling Canadian residential investment further pulled back as a share of GDP in Q2 2023—it's now the fastest correction since the 80s bubble popped.

https://geopoliticaleconomy.com/2023/06/26/corporate-profits-inflation-europe-imf/?fbclid=PAAaZp52-z6nogzcwCA60LuWAXUiSNSalEeX0zWU3fykKqhwmAflPafmNK6yk

Corporate profits were biggest driver of inflation in Europe, IMF admits Rising corporate profits have caused 45% of inflation in Europe, compared to 40% for rising import prices and just 15% for workers' wages, according to research by IMF economists.

More disconnect from the Bank of Canada. Every time they've increased the rates in the way they have over the last year it's lasted about 3 years and then rates crashed. The economy will not be able to sustain what they've done and the rates will crash back down.

Bank of Canada Warns The Era of Low Rates Is Over - Better Dwelling Canadians can barely remember the last time rates were this high, but get used to it. Bank of Canada (BoC) deputy governor Paul Beaudry, speaking a day after the rate hike, warned the era of low interest rates is over. They justified the forecast with a slate of reasons that didn’t quite make sens...

Prime rate reaches 22-year high of 6.95% and could rise further as rate-hike expectations grow - Mortgage Rates & Mortgage Broker News in Canada Variable-rate borrowers will see their interest cost on their next mortgage payment rise as banks and other financial institutions have lifted their prime rates to a 22-year high of 6.95%.

When policy makers are out of touch

‘No grasp on reality’: Bank of Canada hikes interest rate to 4.75% | Watch News Videos Online Watch ‘No grasp on reality’: Bank of Canada hikes interest rate to 4.75% Video Online, on GlobalNews.ca

The Fed's man-made housing market recession hit so hard that 4 real estate titans just lost their Fortune 500 status Rocket Mortgage and Zillow just fell out of the Fortune 500. Here's why.

Odds of Bank of Canada rate hike just went up as economy beats expectations The Canadian economy grew at a stronger pace than analysts were expecting, which could push the Bank of Canada to hike rates again. Read on.

Posthaste: Looks like Canada's housing market has finally turned the corner The speed of Canada's housing market correction surprised forecasters. Now its recovery is too. what does this mean to the Bank of Canada?

Canadian Real Estate Prices Set To Rip Higher After BOC Signal: BMO - Better Dwelling Canada’s real estate correction may already be over, as prices return to sharp growth. BMO Capital Markets wrote to investors this week to explain they see higher home prices in the near-term. The bank observed that shortly after the Bank of Canada (BoC) warned of no further rate hikes, buyers ret...

House for sale in Saint-Lazare - $789,000 Contemporary 2-storey residence located in the heart of Saint-Lazare. Featuring 3 bedrooms on one l...

In a context where the existing mortgage restrictions are already no longer representative of market conditions these proposed changes would be both I'll advised and disconnected from the reality of the middle class

Critics say OSFI's proposed mortgage changes could do more harm than good - Mortgage Rates & Mortgage Broker News in Canada While OSFI's proposed underwriting changes announced in January were presented as an effort to control market risk, critics say the regulator risks overtightening a market that is already in decline.

Interest rates expected to fall to 3.00% by end of 2024 - Mortgage Rates & Mortgage Broker News in Canada The Bank of Canada's benchmark interest rate is expected to fall back to around 3.00% by the end of 2024, according to a median of responses from market participants.

BoC rate hikes among the leading contributors of inflation now due to mortgage costs - Mortgage Rates & Mortgage Broker News in Canada The country's inflation rate may be coming down, but there are still some parts of the economy exerting upward pressure, including, ironically, high inflation rates.

The latest in mortgage news: Feds amend foreign buyer ban - Mortgage Rates & Mortgage Broker News in Canada The Government of Canada has unveiled four amendments to its foreign buyer ban less than three months after the legislation took effect.

Canadian Real Estate Prices Will “Rip” Higher Due To The Fed: Scotiabank - Better Dwelling Canadian real estate might be slow right now, but a large bank thinks it’s going to “rip” soon. A new analysis from Scotiabank warns investors that the Federal government is at odds with the Bank of Canada (BoC) goals. The country’s central bank is trying to slow demand and the resulting inf...

Code hypothécaire | Une « bonne nouvelle » pour les emprunteurs, disent des experts Des observateurs de l’immobilier affirment que le nouveau code de conduite hypothécaire promis dans le budget fédéral sera utile aux Canadiens confrontés à des difficultés financières, mais ils estiment malgré tout que le plan économique manque de mesures nécessaires pour l’abordabilit...

Interest rates are unexpectedly dropping on five-year mortgages — and the global banking crisis is partly the cause Experts says it might be time to lock in a pre-approval rate as a fall in the Canadian five-year bond yield is bringing down certain fixed mortgage rates.

Is your mortgage with Scotiabank due for renewal in the next 6 months ? You may not be getting the best offer from them due to the new direction the bank is taking.
Contact me to look at options

https://www.canadianmortgagetrends.com/2023/03/scotiabank-intentionally-slowing-its-mortgage-portfolio/

Francois Lalonde, Directeur Développement Hypothécaire Accompagnement A à Z dans votre processus Hypothécaire! Pré Autorisation, Achat, Refinancement (r

An economist who correctly predicted the Great Financial Crisis says the world’s central banks have chosen ‘class war over financial stability’ The Fed and other central banks want to bring down inflation at all costs. Is it worth it?

Depuis environ une semaine les taux fixes hypothécaire était en ascension. Ce matin nous venons de voir une chute soudaine des taux.

Contacté moi pour voir comment protéger votre financement contre le risque du taux d'intérêt a long terme .

Credit Suisse and First Republic are the latest banks in peril. What’s happening? - National | Globalnews.ca Credit Suisse and First Republic Bank are now in the spotlight after the collapse of Silicon Valley Bank. Why is risk spreading to bank after bank?

‘The worst is yet to come’: After interest rate hikes, SVB won’t be the only casualty The fallout continued to spread Wednesday, as news of a potential funding crunch at Credit Suisse clobbered bank stocks around the world

If you’re renewing a mortgage or buying a house, the collapse of Silicon Valley Bank is the best news in ages The collapse has caused a rush of money into bonds issued by governments, sending prices soaring on Monday and sending interest rates on the bonds down. If you’re a borrower, this is the best news in ages

Bad news for rates

Canadian 5 Year Bond Yields Surge To 2023 High—Bad News For Home Prices - Better Dwelling Canada’s rising bond yields are set to drive mortgage rates higher, as fears of a recession are put aside. The Government of Canada (GoC) 5-year bond yield hit a new multi-month high on Friday. Yields have suddenly reversed course, as economic data has been coming in much hotter than expected. Can...