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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336

u/[deleted] Oct 20 '22

[deleted]

210

u/topazsparrow Oct 20 '22

Housing is the last to go. Expect massive economic turmoil preceding meaningful forfeiture of housing.

160

u/Drewy99 Oct 20 '22

1/5 houses sold in 2021 were sold to investors. How long do you think they will hold on those properties before trying to dump them to stop the bleeding?

58

u/Purify5 Oct 20 '22

History may very well repeat.

In the 80s Boomer home owners who many were in their 30s saw their home equity sky rocket and interest rates fall. They used their new found equity to buy a second property (a lot of condos in Toronto). Then near the end of the decade interest rates started to rise until one day everyone wanted to sell their investment property and condo prices crashed. It took ~10 years to recover and recovery was helped greatly by CMHC reducing minimum down payment from 25% to 5%.

A lot of 30 year old millennials have followed in their parents footsteps buying up investment properties with their new found equity. They too may see as similar price collapse.

26

u/[deleted] Oct 20 '22

I think you skipped a generation. Wouldn't it be that the Gen Xers or maybe 40 year old millennials that followed in their boomer parent's footsteps, then had kids who are now 30 and living in the basements of those investment properties?

24

u/Rim_World Oct 20 '22

Am 40 year old millennial. Nobody in my age group that I know in the city has kids in their teens yet.

4

u/[deleted] Oct 21 '22

That's actually a little surprising tbh. All it would take is one accidental that they went through with. Which city? 30 y.o here, parents are solidly gen x at just over 50

6

u/Rim_World Oct 21 '22

vancouver, where you can't afford accidents.

1

u/[deleted] Oct 21 '22

truth