July 13, 2022, another Bank of Canada meeting and a huge 1.0% (cool kids say 100 basis points) Interest Rate hike.
Four rate hikes, 2.25% in total so far, and it is still 2022 on my calendar!
Must be good for your Savings Account and bad for your Mortgage…
So, Mortgage Rates, huh?
Last year I was trying to decide myself whether to go variable or fixed.
Back then I had 2ยฝ choices for what my Mortgage Interest Rate would be for another 5 years:
- Variable rate of 1.45% (or 1.35%)
- Fixed rate of 1.99%
Basically, I was struggling between greed and common sense. And luckily common sense won that time, so just several days before renewal I switched my Mortgage to the Fixed Rate.
My theory back then was that Interest Rates can’t go lower, but if they go up at least 1% in the next 2 years, my Fixed Rate Mortgage will be a big winner.
The lowest Variable Rate on ratehub.ca at the moment is 3.5% and the Bank of Canada warned of more hikes in the future.
Fixed Rate is at least 5%, which is more than double compared to what I’ve got a year ago.
If I went with variable back in 2021, my rate would be at least 3.6% now!
Hard to predict what will happen in the future and how high BoC will be able to raise the rates until something breaks.
The good thing is I’m stuck with 1.99% till 2026.
Now back to Canadian Real Estate, or should I call it Unreal Estate?
I’m checking RE around Montreal, just curious, you know, and prices are still crazy.
It is very subjective and must be just totally random, but half of the listings, I’ve checked, are for sale by “investors”.
Some have very telling photos, like this one, the townhouse on the right was for sale (now for rent), in the middle, not yet:
I’ve also gathered my own subjective statistics on Canadian Real Estate availability.
Yep, I like to reinvent my own wheel. ๐
Somewhere at the beginning of 2021 once a week I started to go to the realtor.ca website and just take a total number of listings and save it to an Excel spreadsheet.
Now I have this nice chart:
So, the top of ~160k listings was somewhere in June 2021.
The lowest number of listings, ~90k, was in January 2022.
There are ~182k listings as of July 15, 2022, more than double from the bottom just 6 months ago, and this number keeps growing.
Oh my, another 0.75% rate hike from Bank of Canada.
My 1.99% fixed rate mortage looks more and more attractive.
And it’s not over yet:
What Does an Inverted Yield Curve Mean For You?
Another day when it feels good to have a 1.99% fixed mortgage rate.
If I made a different choice I could end up having at least a 5.35% variable mortgage rate right now.
+0.25%
Well, some say it’s the last hike.
I would say there should be more this year. ๐
We shall see.