Welp. Interest rates are staying steady (at least) until the next announcement in October.
I don’t feel like inflation has decreased. Housing is still exorbitant. But there haven’t been mass layoffs, so we’ve got that going for us.
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I don’t know, I think the price hikes have stopped, but the sticker shock from the past price hikes remains. That by definition is the end of de jure inflation.
The real scary problem that smart economists are pointing at is that now the prevailing rent for available units is horrifying – not the rent most people are paying, but the rent they’d pay if they moved today. Most people who are in rent-controlled units or just have friendly landlords don’t know how bad it will be if they have to start looking again. That’s a ticking time-bomb, one that a landlord can detonate prematurely with a renoviction.
The pressure on rentals has potential to become MUCH worse too if the interest rates start pushing people out of their current owned homes.
I’m a home owner. I am looking at a mortgage renewal in about 18 months. At the current interest rates I’m facing a painful mortgage payment hike. Can I manage it without extending my amortization period? Yes… painful, but yes. I can absorb the increase because I intentionally bought in a (at the time) marginally lower COL area at less than 50% of what I qualified for. Most people I know who bought around the same time went right to the max and they are screwed at renewal if rates don’t drop by a substantial amount. In some cases they will be forced into extending their mortgages well beyond 30 years or forced to sell… if they sell, they have to live somewhere… they will transition to renting…
As of July, grocery inflation was still up over 8%. Sure, it’s slowing, but that’s a significant increase in costs for most Canadians.
The good news is that it’s just the delayed response to the 2021/2022 food production seasons, which saw the farm gate price go to the moon – or maybe more like Alpha Centauri. Major weather-related crop loss in 2020, followed by Europe shutting down fertilizer plants in 2021, and Russia invading Ukraine in 2022 was not kind to food buyers. You didn’t have to pay then, but the piper has to be paid eventually.
The farm gate price has moderated substantially this year. Food and fertilizer stocks are returning, and we have a better understanding of what is going on in Ukraine. As such, food off the farm is now only worth a fraction of what it was. As food is mostly secured on futures contracts, the grocery store buyers are still living in 2021/2022, but the price will come down for them too once the consumer catches up with newer contracts.
Same as usual.
An aside but one thing I do/don’t like with lemmy (yes on fence) is the editorializing when posting links.
That said, I’m happy rates stayed for now. We are now in wait and see mode. Will it go up more? Who knows. Rumour is another .25 hike this year and done. Time will tell.
Edit - oh and housing prices by and large won’t be impacted unless the litany of other underlying issues are addressed which no party is currently doing.
I really wish people would do more than post links. Summarize. Editorialize. Blather. I don’t care. Just make the community more interesting.
which no party is currently doing.
Stands to reason. Why would you go to a party to address housing issues? You join a party as a reprieve to get your mind off life’s issues.
Where are the activists, though?
Lol wut?
I go to a party because it’s a social agreement that as adults we defer decision making to the politicians and parties we agree on. Activism is good, but like charity it shouldn’t be needed if the system worked properly in the first place.
as adults we defer decision making to the politicians
Huh? No we don’t. We defer carrying the message from our home base the agreed upon central meeting place to save us the trip. It’s a long way from Vancouver to Ottawa. Best to send only one person – or, at most, a handful of people – instead of millions of people all making the trek.
You, the leader, are still responsible for crafting that message. That is why you’re down at the constituency office on the regular telling your employee what message needs to be sent. I mean, I assume you are. It is your democratic obligation. It is true that some people don’t believe in democracy and will steer clear.
You’re paying good money for that office to allow you a place to spend time talking to the employee you hired. Your workers are most definitely not mind readers. Best to put that office to good use!
and parties we agree on.
Are you referring to the labour unions our hired representatives are known to join? We have no say in that. In fact, our employee selection system, known as FPTP, is explicit that we have no say in what union a worker may choose to be a member of. We only choose the person – one individual. What labour groups that individual chooses to associate with is beyond our concern.
There are countries using other electoral systems that give the leaders of a country some say in what unions are able to represent the hired workers, which is perhaps the source of your confusion? But that is not the system we use in Canada.
I have no idea what you are saying or going on about and I’ve read it 3 times. Nothing you’ve said is a counter argument. At best you’re shifting the goalposts to what I said.
I have no idea what you are saying or going on about and I’ve read it 3 times.
Cool story, I guess.
Nothing you’ve said is a counter argument.
Stands to reason. This isn’t high school debate club. Why would I want to make a counter argument? That would make no sense at all.
At best you’re shifting the goalposts to what I said.
I’m not sure it has anything to do with what you said, beyond clarifying what I said as you identified in the previous comment that you were unable to understand it.
Is this “I don’t understand” just a recurring joke or are you truly that unfamiliar with the world?
Inflation has abated significantly. Inflation is not prices, it is the rate that prices are increasing. Prices staying high is not inflation.
The levels that rent has reached is the real killer. That will continue to roll out across the population for years to come and is going to be a massive standard of living killer.
The levels that rent has reached is the real killer.
In fairness, that is happening because people are afraid to buy houses right now. With rates going up it is not clear what is going to happen to housing. Many believe a crash is imminent, and as such don’t want to be the bag holders, hence why we have way more people trying to rent right now than is usual.
If rates stabilize, or even fall, and the housing market shows no signs of crashing, there will be a lot more interest in owning homes again and rents will come back to reality.
That said, if the housing market shows to be stable and rents crash as people return to buying, that could trigger a housing crash. 😂
In fairness, that is happening because people are afraid to buy houses right now.
A lot of people have been priced out of home ownership. Even if they could qualify for a loan, there isn’t housing available at reasonable prices in a number of major metros.
there isn’t housing available at reasonable prices in a number of major metros.
That doesn’t matter. If you truly believed in the housing market, you’d buy a house in another market that does fit your budgetary constraints. You don’t have to live there. If living there is not in the cards you would rent it out and use the income from that rent to pay your own rent.
The reality is that housing is scary right now. A lot of people have backed away, if only temporarily, because it is not clear what’s going to happen. If the market crashes, they don’t want to be bag holders.
If I were to buy a house somewhere and rent it out, the rent would cover the mortgage not my own rent to live somewhere else.
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Methinks you’ve not thought this through.
(Rental income - rental cost) - mortgage cost = (Rental income - mortgage cost) - rental cost
The July inflation report recorded a slowdown in grocery inflation, but Canadians continue to see sharp increases at the supermarket. … Prices were up 8.5 per cent in July from a year ago
From the G&M.
Isn’t M/M inflation down for everything except mortgage payments?
This is in response to the statement above:
Prices staying high is not inflation.
Prices for necessities are not just staying high. They are continuing to increase. Month over month increases may be trending down, but inflation for food is still over 8%.
This is the best summary I could come up with:
The Bank of Canada opted to hold its benchmark interest rate steady at five per cent as the economy is showing more and more signs of cooling.
The move was widely expected by economists and other financial observers, as the central bank’s unprecedentedly swift campaign of rate hikes since early 2022 have made major headway on bringing down runaway inflation.
That’s the first shrinkage since the onset of the pandemic and a sign the economy may be tipping into at least a mild recession.
In a statement accompanying its decision, it said it “remains concerned about the persistence of underlying inflationary pressures, and is prepared to increase the policy interest rate further if needed.”
Royce Mendes, an economist with Desjardins, says it is noteworthy that policymakers at the central bank “aren’t completely shutting the door to further rate increases.”
“The recent string of weak data reinforces our call that the Bank of Canada will not be raising rates any further this cycle,” Mendes said.
The original article contains 386 words, the summary contains 162 words. Saved 58%. I’m a bot and I’m open source!
