Interest rate cut

Insidious Von

My head is my home
Sep 12, 2007
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Stephen Poloz is a coward.

Due to he's complete lack of courage he's doing the opposite of what Canada needs. He's cut the interest rate by another quarter and now stands at 0.5 %, this is unheard of and ridiculous. By doing this he's pricing the majority of Canadians out of the housing market. And he's whacking responsible Canadians who value liquidity and who understand the repercussions of personal debt. He's set us on the path of becoming Greek.
 
Stephen Poloz is a coward.

Due to he's complete lack of courage he's doing the opposite of what Canada needs. He's cut the interest rate by another quarter and now stands at 0.5 %, this is unheard of and ridiculous. By doing this he's pricing the majority of Canadians out of the housing market. And he's whacking responsible Canadians who value liquidity and who understand the repercussions of personal debt. He's set us on the path of becoming Greek.

Sorry, I don't understand. How does a 0.5% interest rate cut price one out of the housing market?
 
Sorry, I don't understand. How does a 0.5% interest rate cut price one out of the housing market?

Because it sends the price of real estate sky high since it becomes to cheap to borrow money.
 
Because it sends the price of real estate sky high since it becomes to cheap to borrow money.

Kind of a revolving door, don't you think? It's cheaper to borrow money, so buyers are more able to access cash to buy a house. But, having done so, they raise demand and inflate prices.
 
Kind of a revolving door, don't you think? It's cheaper to borrow money, so buyers are more able to access cash to buy a house. But, having done so, they raise demand and inflate prices.

Well, true but I don't think it will be significant. With single family homes, the demand is pretty soft from what I understand, and there seems to be a lot of condos on the market....part of the equation is employment stats, and population growth too. If there is an increase in housing prices, it will put some people out of the market, not the majority.

They are lowering the interest rate to increase the supply of money in the market, whether it puts that much pressure on inflation is really up in the air.

I don't disagree with the statement, but with all the checks and balances Canada has in place, we won't get to the Greek situation.
 
Prime rate is now reduced to 2.7%. I understand hikes or
cuts are done incrementally. But for simplicity, if the prime
rate to be reached in one year is set to either 5% and 0.5%
which target is politically easier? Even with the
economy resuming growth in one or two years a 5% rate
will easily wipe out the housing market. The desired direction
of rate change is the one that will protect the status quo.
Expect more cuts if outlook of economic growth continues
to be less than encouraging.
 
Well, true but I don't think it will be significant. With single family homes, the demand is pretty soft from what I understand, and there seems to be a lot of condos on the market....part of the equation is employment stats, and population growth too. If there is an increase in housing prices, it will put some people out of the market, not the majority.

They are lowering the interest rate to increase the supply of money in the market, whether it puts that much pressure on inflation is really up in the air.

You don't think it will be significant???? What city are you living in?

Toronto house prices are at record high. An AVERAGE, AVERAGE, AVERAGE price for a single detached home in Toronto is OVER $1 Million. If there is a "soft demand" for single family homes, as you suggest, it is because of the VERY EFFECT YOU INDICATE WILL NOT BE SIGNIFICANT!!! You then say "there seems to be a lot of condos on the market" which is another symptom of people being priced out of the housing market in Toronto - and also a significant sign of housing inflation caused by record-low interest rates.

There are enough stats out there to back what I am saying above, but my personal situation... Over 10 years, my house went up in value by over 150%, and most of that increase happened in the last five years, not the first five. And the amount I paid for my house 10 years ago is what a mid-level condo in Toronto starts at now, which is about 1/3 the size of my house.
 
Poloz is only doing what his masters at the BIS ( Bank of International Settlements ) tell him. Anybody that thinks these low interest rates are a good thing is an Economic idiot. Why do you raise interest rates ? To cool off an overheated economy that is approaching a bubble. So what does our current clown at the Bank of Canada do ? Lowers interest rates. Rates have continued to be lowered ever since the 2008 Financial Crisis. All that has happened is a housing bubble, stock market bubble, student loan bubble, bond bubble, car loan bubble etc.... The clowns are out of tools in the tool kit. The great Keynesian experiment is over. All they're doing is putting lipstick on a pig. Prepare accordingly. We're all Greeks now. Soon to be Palestinians.
 
Poloz is only doing what his masters at the BIS ( Bank of International Settlements ) tell him. Anybody that thinks these low interest rates are a good thing is an Economic idiot. Why do you raise interest rates ? To cool off an overheated economy that is approaching a bubble. So what does our current clown at the Bank of Canada do ? Lowers interest rates. Rates have continued to be lowered ever since the 2008 Financial Crisis. All that has happened is a housing bubble, stock market bubble, student loan bubble, bond bubble, car loan bubble etc.... The clowns are out of tools in the tool kit. The great Keynesian experiment is over. All they're doing is putting lipstick on a pig. Prepare accordingly. We're all Greeks now. Soon to be Palestinians.


Is it not a response to recession storm clouds?

If there's a correction to housing prices, it will only affect those who have additionally leveraged against their house.
 
Is it not a response to recession storm clouds?

If there's a correction to housing prices, it will only affect those who have additionally leveraged against their house.

Nobody has mentioned the POS Banks for not passing along the whole cut.
They kept 1/2 for themselves this year
.5% reduction with only .25% passed to the consumer.
Your Banks just stole another .25% right under your nose.
Doesn't seem like much? Try multiplying it by Billions
So what was the point of sewering our dollar and confidence in our economy for a lousy .1 of 1%.
 
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Nobody has mentioned the POS Banks for not passing along the whole cut.
They kept 1/2 for themselves this year
.5% reduction with only .25% passed to the consumer.
Your Banks just stole another .25% right under your nose.
Doesn't seem like much? Try multiplying it by Billions
So what was the point of sewering our dollar and confidence in our economy for a lousy .1 of 1%.


AJ, don't get me started on the POS banks!

I hear ya bud.
 
Is it not a response to recession storm clouds?

If there's a correction to housing prices, it will only affect those who have additionally leveraged against their house.

Geez - there are a lot of housing investors that could be hurt by a decline, not to mention seniors or retirees that have NOT leveraged their houses but plan on getting as much equity out of them as they can as a way of funding their retirement.
 
Further rate cuts is going to hurt a lot of seniors dependent on
interest from fixed income securities as their main source of income.
With the kind of low yield we have I wonder if a net worth less than
half million can sustain a decent life style for senior couples in
their early retirement.
 
You don't think it will be significant???? What city are you living in?

Toronto house prices are at record high. An AVERAGE, AVERAGE, AVERAGE price for a single detached home in Toronto is OVER $1 Million. If there is a "soft demand" for single family homes, as you suggest, it is because of the VERY EFFECT YOU INDICATE WILL NOT BE SIGNIFICANT!!! You then say "there seems to be a lot of condos on the market" which is another symptom of people being priced out of the housing market in Toronto - and also a significant sign of housing inflation caused by record-low interest rates.

There are enough stats out there to back what I am saying above, but my personal situation... Over 10 years, my house went up in value by over 150%, and most of that increase happened in the last five years, not the first five. And the amount I paid for my house 10 years ago is what a mid-level condo in Toronto starts at now, which is about 1/3 the size of my house.

No need to SHOUT.....having a discussion here.....
 
Nobody has mentioned the POS Banks for not passing along the whole cut.
They kept 1/2 for themselves this year
.5% reduction with only .25% passed to the consumer.
Your Banks just stole another .25% right under your nose.
Doesn't seem like much? Try multiplying it by Billions
So what was the point of sewering our dollar and confidence in our economy for a lousy .1 of 1%.

I know TD attempted that before caving and going with .30%. Is there some other bank that only went .25%?
 
No need to SHOUT.....having a discussion here.....
When you're right, you're right, and I apologize.

Sometimes I get too combative.

I do think interest rate cuts play a very large part in what is driving the housing market up, but as has been discussed, there are many inter-related factors when interest rates change. I do, however, think that part of the reason housing is so expensive is because of low interest rates, and that causes a host of problems - and benefits. On the other hand interest rates are a national monetary policy, and there are many other factors to consider than Toronto's housing market.

I wonder though what the impact of lower interest rates is in other real estate markets in Canada is, both large and small.
 
CAD down to 77 U.S. cents... Is this suppose to revive the manufactoring economy (based on all the Harper Petro-Loonie bashing posts)?