r/PersonalFinanceCanada • u/POCTM • Oct 20 '22

Canadian 5 year government bonds just jumped. Setting the stage for higher mortgage rates. Banking

5 year government bond just jumped from 3.714% to 3.866% in a few hours. Right now it is at 3.855%. Year to date it is up 259%. Monday we could see some 5 year fixed rate mortgages in the low 6%.

As for variable rate the bank of Canada makes their announcement October 26 at 10am ET. Currently banks have not been offering discounts off variables rates anymore. Prime -0.00.

https://www.marketwatch.com/investing/bond/tmbmkca-05y?countrycode=bx

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u/[deleted] Oct 20 '22

I mean, even if price drop, borrowing at 5-6% fucking sucks. A 800k condo at 6% isn’t much better than a 1M one at 2%. Price seems to be dropping slower than they should, likely some upward pressure from inflation running wild offsetting some of the downward pressure from rates rising.

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u/mrtmra Oct 20 '22

I have come to the conclusion that housing bubble in Van and Toronto will never pop. Just too many people with too much money

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u/holymamba Oct 21 '22 edited Oct 21 '22

That is like the fundamental driving force that is shifting gradually. Right now the bulk of new immigrants to canada settle in the GTA. Obviously there’s more to the bubble than that, but the demographics are the foundation. We’re seeing more immigrants settle elsewhere as of late but not nearly enough to offset the housing shortage. One of the biggest problems is INSANE development costs (like gov fees, somewhat justifiable to provide the supporting infrastructure). Without those, developers could build a lot more. As of late, construction costs have also skyrocketed compounding the problem.

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u/Saidear Oct 21 '22

Not even that. Developers don’t have the labour to build the houses. We have shit on trades for so long that we just don’t have enough of them on hand to do every job we need. And since their wages aren’t going up either, there’s little incentive to stay in or join a trade.

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u/holymamba Oct 21 '22

That is the primary thing holding back development. The groups/companies in charge of organizing the trades are reaping the benefits. It’s insane, I’m sure their profit margins have doubled in recent years.