Burning Down the House….Interest Rates and the Vancouver Market

by admin on June 16, 2011

The writer is a Vancouver mortgage broker.

Carney commented on the extreme valuations in a few Canadian markets…tough words for a Bank of Canada Governor.

Vancouver is over 11 times income for average house prices in Vancouver. The historical average has been 3 times income. Clearly the Vancouver market has become unaffordable to all, with the exception of the buyers of houses in this super hot market.

The impact of Mark Carney’s sharp comments concerning the Vancouver mortgage will be minimal.

The flood of money from China will continue unabated. The Chinese investors are looking for a safe haven as China begins to tightened its monetary policy.

Carney is restricted by the flaccid job growth in Canada and the US. An increase in interest rates will push the dollar higher. A higher dollar will have a dampening effect on Canada’s already weakened export sector further weakening the soft jobs recovery.

There is a clear recognition that some markets in Canada have become overvalued. Interest rate intervention is not the way the government will attack this problem.

The Finance Minister has submitted an amendment to Reinforce the stability of Canada’s housing finance system.

  • Strengthening the Government’s oversight of the mortgage insurance industry.

The impact of tightening the mortgage lending rules will have a dampening effect on the mortgage lending market. What the potential rule changes to be implemented are is still in question. The only certainty is some Canadian’s applications will no longer be considered.

In summary, rates will remain at historically low levels until the job recovery is certain; however the rules governing mortgage insurance will undoubtedly get tougher.

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BC Interest Rates…Who Knows

by admin on June 11, 2011

The author is a Vancouver mortgage broker who has extensive experience in bad credit mortgage applications.

Currently, BC interest rates seem to be second to the Canucks and their playoff drive. However the traffic to my site indicates that BC home owners are concerned where interest rates are going.

The main stream media is speculating that the Bank of Canada must raise mortgage rates in the coming months. I would like to offer another opinion.

The worlds economies are split between those that are overheated…India, China, Malaysia and the countries severely impacted by the economic slow down…US, European Union and Canada (to a lesser degree). The issue in my mind is that the stronger economies om the east primarily served the consumption of the western economies. While India and China have a developing middle class, they have larger problems such as powering their industry. A case in point was the move of a popsicle manufacturer from China to Thunder Bay Ontario due to the lack of reliable power. Maintaining their economic growth will be problematic when you consider the impact of lowered consumption in the western economies .

Until the economies of the west begin to improve where there is significant job growth, the central banks will keep rates down. The raising of rates in these economies will have a disastrous effect. The US job numbers, our major trading partner, reveal that the worst is not over for the United States. The Canadian finance minister’s statements of concern over the impact on the Canadian economy is an indication any significant interest rate rise, which would put the brakes on any recovery, is off the table for the next 6 months.

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Refinancing a Vancouver Mortgage – A Look into the Future

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