The (almost) sure thing

Mr. Bond Market shoved rates higher again Wednesday. So bond prices were down. Rate-reset preferreds went up. The stock market was less vexed. And variable mortgage rates kept falling.

Huh?

You may have noticed that as fixed-term, five-year loans jumped in recent weeks, the big banks turned around and inexplicably reduced the cost of VRMs. In fact, there’s a mini war raging now and so far HSBC is winning. The variable rate there is more than a full 1% below the prime rate, and the bank is also aggressively going after new HELOC business, offering those lines at the prime rate (3.45%) without the usual half-point (or greater) premium the other guys charge.

Of course, HELOCs are variable-rate as well. So what does this mean and why is it happening?

Mortgages come in essentially two flavours – open and closed – and rates come as fixed or variable. Open mortgages can be paid off at any time without penalty, so they’re rare. Lenders would rather have you firmly by the shorts for many years. Most people (70% or so) opt for fixed-rate mortgages with five-year terms because the payments are never-changing and the loans have predictability. Variable rate ones change along with bank prime, which reflects moves made by the Bank of Canada. These days rates are increasing, a trend with legs.

But variables are cheaper than fixed. The average locked-in fiver is around 3.3% but the variable version is a full 1% less (the best deal in seven years). That appeals to people who have over-leveraged (they might also want a longer amortization to reduce payments) and want the lowest monthly bill possible. The catch (as mentioned) is that rates are rising and VRM borrowers could be caught in that trap.

Typically a bank will allow you to keep steady monthly payments for the term of the loan (normally five years, but you can choose less) even as the interest rate accelerates with prime. But as rates augment, less of your payment goes to principal and more to interest. If rates were to increase significantly over five years, it’s conceivable you’d make payments for 60 months and still owe what you did on day one. Unlikely, but it’s happened before. Most VRMs come with an escape hatch, however, allowing conversion to a fixed-rate loan part of the way through the term if you chicken out.

Why are the banks aggressively chopping variables? Should you get one? Trevor wants to know:

We are a family with 2 kids age 3 and 7 and have an annual income with $220,000 between the wife and myself. For our house that’s valued at $600,000, and still has a mortgage of $300,000 to be paid off, I have 2 questions where we could use your guidance

1) We are renewing our mortgage, and these are 2 options to choose from, which one would you suggest/vouch for?
5 year fixed 3.24%
5 year variable 2.16%

2) Should we pay off the mortgage in the next 5 years by paying about $5,000 monthly installments but cheap out on max TFSA/RRSP savings? or should we take our time to pay the mortgage (may be take 10 years instead of 5 years) but max out on TFSA/RRSP first?

First, if your finances are shaky, your spouse is about to run off with his Zumba instructor or you have triplets coming, get a fixed-rate mortgage. You don’t need more surprises. Otherwise, the fact the spread between fixed and VRM is 1% or greater poses a compelling argument for taking your chances on rising rates. The Bank of Canada would have to up its trendsetting rate at least four times for you to stop benefiting over a fixed rate. While there’s a large chance that will happen, it could take a couple of years to materialize – during which time you’re saving money. If the economy tanks in the meantime, higher rates might be stalled out completely.

Down the road if you did decide to switch to fixed, the penalty for doing so would typically be small (compared to breaking a traditional mortgage). So, Trev, why not sign up for that cheapo 2% deal?

However, bloating monthly payments to $5,000 to trash the mortgage at the expense of investing in TFSAs or RRSPs is just emotional. So please get the unruly, hormonal right side of your brain under control. Why pay off a 2% home loan when money invested in a tax-free investment vehicle can return three or four times that? Especially if real estate has peaked and may be flaccid or even descending over the next half decade? No logic there. Build up the investment assets, then use the gains to apply to the mortgage principal when it renews. Much better path.

By the way, why do the banks want you to go variable? (a) You’ll borrow more and (b) they got ya.

171 comments ↓

#1 Victoria Guy on 05.16.18 at 4:56 pm

Here in boring town everyone whines about not being able to buy a house…but the ones who do own them whine about how expensive they are to keep up with.

#2 Victoria Real Estate Update on 05.16.18 at 5:04 pm

TRUE OR FALSE (searching for a grain of truth in the unsubstantiated claims of Vancouver Island realtors)

* House prices in Victoria will keep rising forever because we’re running out of land.”

False. Hundreds of years of world housing bubble history proves that all price-bloated and debt-overstretched cities go through major market corrections that take prices back to the long-term mean. This holds true for those cities that some might say are “running out of land”.

The American market correction, as one of history’s many examples, demonstrated that cities that have geographical features that may limit expansion are not spared from the inevitable price reversion to the mean that follows the extreme price run-up in housing bubbles.

The American examples below illustrate this (with date from the Case Shiller Index and the All-Transactions House Price Index). (link)

CITIES WITH MAJOR GEOGRAPHICAL FEATURES THAT MAY LIMIT EXPANSION

* San Francisco, California (is bound by the ocean on three sides and has mountains in the area)
Price correction: – 45% (in 3 short years)

* San Diego, California (is bound by the ocean, the Mexican border and mountains)
Price correction: – 42%

* Los Angeles, California (is bound by the ocean and mountains)
Price correction: – 41%

CITIES WITH NO MAJOR GEOGRAPHICAL FEATURES LIMITING EXPANSION

* Shreveport, Louisiana
Price correction: – 1%

* Pittsburgh, Pennsylvania
Price correction: – 2%

* Fargo, North Dakota
Price Correction: – 2%

* Davenport, Iowa
Price correction: – 2%

* Texarkana, Arkansas
Price Correction: – 2%

* Amarillo, Texas: (- 2%), * Cedar Rapids, Iowa: (- 2%), * Oklahoma City, Oklahoma: (- 3%),
* San Antonio, Texas: (- 4%), * Lexington, Kentucky: (- 4%), * Little Rock, Arkansas: (- 4%),
* Wichita, Kansas: (- 4%), Sioux Falls, South Dakota: (- 4%), * Austin, Texas: (- 4%),
* Omaha, Nebraska: (- 5%), * Tulsa, Oklahoma: (- 5%), * Louisville, Kentucky: (- 6%),
* Indianapolis, Indiana: (- 7%), * Des Moines, Iowa: (- 7%), * Jackson, Mississippi: (- 7%),
* Madison, Wisconsin: (- 8%), * Nashville, Tennessee: (- 9%), * Columbus, Ohio: (- 10%),
* Dallas, Texas: (- 11%), * Cincinnati, Ohio: (- 11%), * Springfield, Missouri: (- 11%),
* Kansas City, Missouri: (- 12%), * St. Louis, Missouri: (- 12%)

#3 B20 is the real deal on 05.16.18 at 5:05 pm

You gave an example a couple days ago that a family with income of $120,000 would only qualify for 600′ mortgage vs 800′ before the stress test.
When you go to td online and use their fancy calculator, the truth is actually much worse.

$120,000 family income with $200,000 down payment allows that family to shop for a property around 720′ or a max mortgage of 520′. No other debt payments and minimal utilities or maintenance.

What calculator did you use in your example?

#4 B20 Bust on 05.16.18 at 5:08 pm

So variable rates and reduced HELOCs just in time for that 40% of Canadians that have to renew in the summer. Gee, is that a coincidence?

Just when the bears get giddy about B20 and declining sales, the headwinds of rising rates that should impact HELOCS and mortgages, becomes moot.

As many have said here, its game of for RE with cheap, easy money. Specu-renters and cashed out owners on the sidelines get to continue to watch the nine lives of real estate. Lol.

Don’t worry, this race to the bottom with bank rates will be used in 6 months time to justify why the crash has not materalized.

#5 Ustabe on 05.16.18 at 5:13 pm

A number of years ago I attended a fund raiser golf tournament.

I was assigned into a foursome, one of which was a RBC regional VP. Over the course of play he told us that if he (meaning bank) could get someone into a mortgage, auto loan or line of credit plus a credit card their internal stats showed they had that person for life.

All they want is you for a client because once you are a client you become a consumer of their goods.

Interest rates on long term loans matter less than the terms and conditions placed on those loans. Banks sell you on the sizzle then whack you with the price of the raw steak.

You get more fulsome disclosure when financing an automobile than you do when getting a mortgage or HELOC. I asked my banker why, once. She said its because they can get away with it where the auto dealers have regulation with teeth to contend with.

I’ve never signed a mortgage without my accountant reading over the full terms and conditions and making whatever deletions or changes needed. I’m retired now but at one point we had mortgages on a house my sister lived in, 7 rental houses, two commercial units, 2 what are called executive rentals and each and every one of those mortgages contained a term stating that we could take the cash back out of a mortgage up to its original amount at no cost or fee. Built in HELOC w/o all the cost.

In short, our real estate rental business became self financing under terms and conditions we knew and understood. The lender (ATB) never once turned us down or even balked.

#6 MF on 05.16.18 at 5:17 pm

#159 Fake News Again on 05.16.18 at 12:27 pm

Man. Some of your posts are disagree with, but here you wrote the TRUTH.

These never Trumpers might been waiting a while (about 7 years more).

MF

#7 Mike on 05.16.18 at 5:17 pm

Who is funding BC Pipeline Protesters?

http://fairquestions.typepad.com/rethink_campaigns/2017/05/the-cra-audit-of-tides-canada-why-this-matters.html

On the Canadian economy and particularly in the political arena, the influence of Tides and Tides Canada is far-reaching. With more than 200 employees and annual expenditures of roughly $30 million, Tides Canada is a hub of activism and has funded major campaigns against all of Canada’s main resource-based industries: forestry, mining, oil and gas, and salmon farming…..Tides is a particularly important conduit of funds for anti-pipeline activism that has stalled construction of major pipelines, costing Canada billions of dollars in lost revenue and royalties.

#8 dakkie on 05.16.18 at 5:21 pm

DELETED

#9 Stephanie on 05.16.18 at 5:23 pm

House prices will never collapse in Toronto. We are a tolerant, vibrant, interesting and post-feminist city which upholds human rights for women and transpeople. Toronto women are more likely to be educated, smarter, genetically superior and stand up for women than other humans.
To say that house prices will collapse in Toronto is misogyny. Do you see all of those cranes in the background? Do you see all of our recent condos in the downtown core? When you respect a woman’s right to her body and her right to dress for the weather, a country’s economy grows into prosperity. Please don’t shame a woman if she chooses to bare her chest or wear no underwear. It’s hot outside.

#10 FOUR FINGERS WATSON on 05.16.18 at 5:31 pm

Low interest rates for a long time folks. Rock on !

#11 Reximus on 05.16.18 at 5:40 pm

So variable rates and reduced HELOCs just in time for that 40% of Canadians that have to renew in the summer. Gee, is that a coincidence?

====

That “47% are renewing this year” thing is bunk

#12 PastThePeak on 05.16.18 at 5:44 pm

When I had a mortgage, I always went variable. This was in the 2001-2012 period, so it worked out quite well as interest rates for the most part declined (but of course I wasn’t that great at predicting the future, so it wasn’t a slam dunk decision at the time).

Even now, I would recommend variable. The BoC will raise rates a bit, but they are dragging their feet as much as possible. The differential as Garth notes is high. I don’t see any risk of an interest rate spike – just some gradual increases.

I would not take significant funds to pay off the mortage faster, but with $300K remaining, increasing your monthly payment a bit (e.g. set payments as though you were on a 5-year fixed @3.3%), and doing even a few $1-2K one-time payments a year in the early years, will lower the mortgage duration substantially.

#13 Nilly Willy on 05.16.18 at 5:45 pm

Is the variable rate 100% hard coupled to the BoC rate?

Or can the lender adjust the variable rate nilly willy, regardless what the Bank of Canada does?

Thanks.

#14 B20 is the real deal on 05.16.18 at 5:46 pm

@B20 Bust

What does it matter how low the “offered” rates are when buyers need to qualify at “offered” +2% or the “posted” rate?

Existing owners are ok on their primary property. If they want to buy a secondary property, they need to qualify as well.

Unless of course you’re suggesting all deals are done at less than 20% equity so the insurance premium can be flogged on?

#15 WelcometoSlurrey on 05.16.18 at 5:48 pm

Not sure where those rates came from in this post,
Prime – 1.29 ? As a broker I don’t know any lender who is offering that. Anyone else in the industry care to chime in ?

#16 tccontrarian on 05.16.18 at 5:56 pm

I agree with Garth – go for the variable. Too much of a difference in rates to ignore, and the freedom to close at any time with minimal penalties/fees.

Apart from the 1st year with my first home (when I did a 1-year closed, as I was really a newbie and didn’t know much about these things), I always opted for the open variable options my bank offered.
Interestingly, it was initially with HSBC as they offered competitive rates (I shopped around at every renewal). Then, after 10 years with them they only offered us the 3rd tier rates (since we didn’t have > $100k in investments with them), so I shopped around and found a deal I liked (with the Green one).

TCC

#17 Party On on 05.16.18 at 6:08 pm

Banks lowering variable rate mortgages to 2.3%?

2 years until it changes? What a joke.

The banks are scrapping it out because mortgage lending has crashed in Canada and approaching soon to be worse levels than the great financial crisis bottom.

Up next: Negative interest rates and 100 year amortization.

The banks want you buying houses and consuming. It is the only industry supported by your overlords in Canada.

It you do not obey you will be punished for trying to save money.

#18 Steven Rowlandson on 05.16.18 at 6:08 pm

It seems Bill Gross is of the opinion that the bond bear market is over and that is because the economy is not strong enough to handle higher interest rates.

https://www.silverdoctors.com/headlines/world-news/the-bond-bear-market-is-done-the-economy-cant-handle-higher-interest-rates/

#19 Tater on 05.16.18 at 6:11 pm

181 tccontrarian on 05.16.18 at 4:44 pm
#125 Tater on 05.16.18 at 7:35 am

#92 crdt on 05.15.18 at 9:50 pm
Gentlemen, I think it is time to take out the proverbial white glove and move it briskly across the other’s cheek.

#63 tccontrarian on 05.15.18 at 7:35 pm
#108 Tater on 05.15.18 at 7:48 am

————————————————————–
I just find it funny that someone who thinks of themselves as a contrarian is happy to parrot other’s thoughts.

He’s also demonstrated a lack of knowledge about markets and investing that is pretty amazing.
—————————————————–
Yes, I tend to try and learn from the best – and if you want to compare portfolio performance, I have a feeling we’ll never hear from you again!
By the end of 2019, you will have lost 30-50% of your net worth – precicely because you haven’t the ability to be a … yes, a ‘contrarian’.
Rick Rule says it best: “you’re either a contrarian, or a victim”!
Around then, the ‘white glove’ will be a rubber one, as a nurse attempts to remove your head from your…arse! LOL

TCC

————————————————————-

I’d ask for your money weighted CAGR, Sharpe and Sortino, but we both know you couldn’t figure that out.

#20 Canada no good on 05.16.18 at 6:12 pm

You know it is bad when we are splitting hairs over a 1% interest rate change.

Rainy days do come and it looks like nobody cares to save for one anymore.

#21 april on 05.16.18 at 6:12 pm

check out, Point2HomeSupport…many reduced listings, some in the LowerMainland of BC, most further out in BC.

#22 april on 05.16.18 at 6:13 pm

#6- correction: Point2HomesSupport.

#23 oncebittwiceshy on 05.16.18 at 6:15 pm

B20 Bust: “So variable rates and reduced HELOCs just in time for that 40% of Canadians that have to renew in the summer. Gee, is that a coincidence?”

<<<<<<<<<<<<<<<<<<<<<<<<<<<

I guess the lack of sales provides you with a real window of time to try and flog a dying horse.

Let's see how those "renewers" are doing. Lol

https://www.castanet.net/news/The-Mortgage-Gal/226161/2nd-mortgage-helps-sleep

"Since the introduction of the Stress Test, I see more and more clients who are finding that their only option for accessing equity in their home is an alternative lender.

These lenders generally come with a fee and higher interest rates."

#24 The real salary on 05.16.18 at 6:17 pm

Enough of these 6 figure salaries being discussed.

Gen Xers and Millenials in the 416, 604 and 250 make 50k a year and carry 800k mortgages or rent for more than 50% of their gross income.

In Vancouver, BC – 127% mortgage debt to net income.

That 27% hole is securitized through home appreciation. Or was.

#25 oncebittwiceshy on 05.16.18 at 6:21 pm

WelcometoSlurrey on 05.16.18 at 5:48 pm

Not sure where those rates came from in this post,
Prime – 1.29 ? As a broker I don’t know any lender who is offering that. Anyone else in the industry care to chime in ?

<<<<<<<<<<<<<<<<<<<<<<<<

All of those posts and I thought you were just a hopeful home owner. Any more industry pumpers want to out themselves?

#26 Penny Henny on 05.16.18 at 6:35 pm

Smokie you think there is aliens among us and I would say your reasoning is part way there but if you want to blow your mind start investigating Hypothesis Theory.
Here is a little clip. Start watching at 26 minutes. Talks about double slit theory. This will blow your mind. NoName, you will enjoy this too!

https://topdocumentaryfilms.com/simulation-hypothesis/

#27 Flat Earth Society on 05.16.18 at 6:38 pm

I’m pretty sure the left side of the brain controls the right side of the body and does the logical stuff. It’s also the only side that can speak although both sides can understand language. The brain is cross wired. In fact, not much of the brain looks like it was purpose designed. Why do the nerves from the eyes go to the back of the brain? Well, that’s the part that was handling visual information before the cerebral cortex evolved. The brain is a mess. It’s a surprise it works, and there is plenty of argument to be made that it doesn’t. Just ask any flat-earther. Or electric car proponent.

#28 The Real Mark (not the imposter) on 05.16.18 at 6:43 pm

The thing about variable vs. fixed is that variable facilitates a very high degree of ‘supervision’ and ‘response’ by the bank to the quality (ie: price) of the underlying collateral. While with a fixed rate mortgage, while its still possible for a bank to call the loan if the collateral falls in value (read the fine print), its a far more cumbersome process prone to significant public and even political backlash if done systemically.

The banks, with a stroke of a pen, changed the spread of “Prime” (or “mortgage Prime” as at least one bank termed it) against the BoC policy target. The extra spread kicking in almost immediately and accruing to the bank’s bottom line since their funding costs were not rising at the time.

I’ve written this probably a number of times in the past, but if you’re good and highly creditworthy, with a relatively small loan relative to your property value — you may even see lower rates going forward. Its the people who have under 60% equity who are really going to face the brunt of the banks’ profit-raising efforts over the next few years. The wealth bifurcation this will create in Canada will be enormous going forward as Canada. The US experience during their crash circa 2006-2009 was that even newborns were rendered, in many cases, wealthier than a good chunk of the under-40-year-old population. Merely by virtue of having $0 net worth.

#29 Smoking Man on 05.16.18 at 6:45 pm

James LMAO @ Bird cage liner.

Im pretty open about my life. I Don’t mind sharing the highs and the lows on this chaotic road toward certain death.. Not one of you will out run it. Might aswell have fun on that ride.

Every once in a while I share some damn good market insites too.

Can you play a bit nicer? Were does all this anger and vendictavness come from? What is it I say that triggers you? Just tell me and I’ll stop doing it.

BTW over 2000 book sales with very little promotion. Tones of 5 star reviews….a extremely complimentary emails..

I call that success……. In spite of being a high functioning alcoholic and all.

Over to you.

#30 jess on 05.16.18 at 6:48 pm

seattle vs amazon

http://www.truth-out.org/news/item/44491-seattle-just-showed-how-to-rein-in-amazon-and-the-company-is-going-to-war

https://itep.org/whopays/washington/

#31 mike from mtl on 05.16.18 at 7:04 pm

Because they’re anything but stupid.

1) Yes to ensnare the needy up for renewal, then BAM.
2) They live for actual revenue, unlike unicorn cash burners. A paying customer is better than no customer.
3) They know this ‘tightening’ is BS and for show – can take the slight risk / loss in the meantime.

#32 Ardy on 05.16.18 at 7:08 pm

Garth,

Albeit rates are low, if buddy is disciplined enough that after trashing his mortgage in under five years, he invests the same overpayment amount plus regular mortgage amount, he should come out at par.

This is my strategy, and running the scenarios, mathematically, gave me similar results. What it also gives me is peaceful night’s sleep, that makes up for the slight drag the numbers foretold.

I naively comment, to gauge the spanking I anticipate receiving when I come solicit your services upon becoming mortgage free next April. GTA digs 30yr mortgage trashed in six (projected).

If there is a flaw in this plan, it’s too late to save me, but the kids in the steering section will survive.

-RD

#33 Capt. Serious on 05.16.18 at 7:10 pm

The last mortgage decision I had to make was 2.3% variable vs 2.59% fixed for 5 years. Pretty easy choice.
I agree that at 1% differential between variable and fixed, variable is the clear way to go. Rates have to rise really steeply over a short period of time for fixed to win in that scenario. Do the math kids, as they say.

#34 The Real Mark (not the imposter) on 05.16.18 at 7:10 pm

“Or can the lender adjust the variable rate nilly willy, regardless what the Bank of Canada does?”

They can adjust willy nilly, at their discretion. No recourse by the borrower whatsoever. What, did you actually think that a Canadian bank would ever put themselves in a situation where they could lose money on a residential RE loan? Good one, lol.

#35 -=jwk=- on 05.16.18 at 7:12 pm


Is the variable rate 100% hard coupled to the BoC rate?

Or can the lender adjust the variable rate nilly willy, regardless what the Bank of Canada does?

They can raise it will nilly. Each bank has their own Prime which sounds official but is not actually tied to anything real. RBC’s is called “royal prime rate” which sounds legit, but they just make it up.

I was in RBC variable at 2.05. Then 2.30. Then 2.55. Then 2.85. So we did the free extension, went to 5 years at 3.29. Two more raises over the next few years will put us ahead of the game. We bumped the payments to keep the term the same, and are doubling up ~ 4- times a year while we work on getting heloc to zero.

I disagree with Garths advice to not pay down the mortgage. You should not compare the 30yr rate (your mortgage) with the spot market rate. For every dollar we pay down on the mortgate this year, we save 3.29% for five years. And if rates move to 5% at renewal, we save 5% for 5 years, etc. You have to use the weighted average of the interest paid to determine your true interest savings over the life of the loan. In a rising market, that is likely more than todays current rate. Now is a good time to pay down debt. I do not want to get caught owing 300k at 8%…

#36 Capt. Serious on 05.16.18 at 7:15 pm

#31 Ardy on 05.16.18 at 7:08 pm

GTA digs 30yr mortgage trashed in six (projected).

Why would you do this? You enjoy paying interest? If you planned to trash it in under 10 years a 10 year amortization would make a ton more sense. In each of your regular payments on a 30 year amort, you’re paying a lot of interest in the early years. If you can make those overpayments, you could easily have used a shorter amortization. Math.

#37 Capt. Serious on 05.16.18 at 7:18 pm

The brain is a mess. It’s a surprise it works, and there is plenty of argument to be made that it doesn’t.

No argument. If it didn’t work you wouldn’t be here, because evolution.

#38 tccontrarian on 05.16.18 at 7:21 pm

#19 Tater on 05.16.18 at 6:11 pm

I’d ask for your money weighted CAGR, Sharpe and Sortino, but we both know you couldn’t figure that out.
———————————————————-

You’re right – I don’t get bogged down by fancy mathematical models and formulas/ratios. Those are for PhD candidates (as they should be).
As 90% of market action is emotional (ie. not based on fundamentals), I’ve found it much more relevant (and profitable), to gauge crowd psychology and insider activity, along with other indicators which actually have predictive value.

All I really care about is … performance (with measured risk). Seems that you haven’t figured this out yet: investing is part’ science’ part ‘art’. And you’re mired in the numbers/ratios so deep that you’ve never enjoyed the thrill of a multi-bagger!
{Past 12 months I’ve had several of them and cumulatively well into 3-digit % returns overall!}

So pompous one, take your CAGRs, sharp (or dull) sortinos, pour yourself a martini, and humbly accept that there are ‘lesser’ investors out there with smoking hot returns – the kind you’ll never see.

TCC

#39 Spectacle on 05.16.18 at 7:25 pm

“If rates were to increase significantly over five years, it’s conceivable you’d make payments for 60 months and still owe what you did on day one.”

………..and those who walk up and down outside the wall, …and some may stagger and fall..after all, it’s not easy banging your head on some mad buggers wall! Paraphrase Pink Floyd.

Such poetic math Sir Turner. But do we listen

Ps: Mike, #7 tonight,
Simply amazing contribution! Corruption at its finest exposed. Thnx & appreciated…

Now , back to my Libre Cuba and cooking Paella with my wife.

#40 bigrider on 05.16.18 at 7:30 pm

Really surprised Garth at your call to start vulching on RE in select hoods. Way to early.

Why you ask ? Assets have overwhelming tendency to both go up much higher than anyone thinks and fall much further than anyone believes. Equities or real estate included.

I would think that a potential buyer of RE would be best willing and advised to miss the first 5 or 10% on the back up to confirm a trend and that a bottom is in. Same advice often with equities is easily had anywhere.

Catch a falling knife ?? Not me anyway.

#41 Welcome to Slurrey on 05.16.18 at 7:31 pm

#25 _ yes I am a hopeful homeowner , but a new mortgage broker , career change, I dont sell homes just help with financing.

#42 Glen Breaks on 05.16.18 at 7:32 pm

Garth, the variable is bad news in this time of rising interest .
When helping my kids by a place six years ago, the rates were 3.49 five year fixed and just 1.9 on the variable.
I was inclined to advise them to go to the variable but discussed it with their ( and my) bank manager first.
Her feeling was their situation (80% borrowed) was too tight to chance the variable, should rates rise.
I questioned that by repeating the common wisdom of the day, ” but if that happens, they can just lock into the fixed”
” Sure they can, but the lockin doesn’t occur at the window poster special rate, it occurs at the POSTED RATE OF 5.5 PERCENT!. Can they afford 5.5?”
She already knew the answer.
So forget the idea of locking in at a nice comfortable 3.5
You’ll likely decide it’s time to lock in after things have clicked up 3 or 4 notches too, so the posted rated might be 6.5, not 5.3 or so as it is now.
Who can afford to go from 2.3 to 6.5 in one shot?

So lock in to the high Posted rate, not the nice low Special rate.

#43 David on 05.16.18 at 7:45 pm

The expanded stress tests (insured in 2016, b20 in 2018) are part of the puzzle. Only variables and short term fixed loans were stress tested before. That meant highly leveraged borrower could only get max mortgage if they went 5yr fixed. That discrepancy is now gone, so the advantage of going 5yr is bye bye. Now it’s just about rate – like a market should be.

#44 Spectacle on 05.16.18 at 7:45 pm

#30 jess on 05.16.18 at 6:48 pm
seattle vs amazon

Hi Jess,

Not sure of who you are, but appreciate your varied contributions on the Turner Blog.

I think the powers of those massive dollar companies will change over time. Example is, my wife waited a few weeks for a toy for baby to arrive.

She sent a note to the aspiring?? Underdog of E-bay regarding the bought, paid for Toy. Hey deuce, where’s my toy, and why is said asshole BANNED from E-Bay?

Ten minutes later we get 100% refund and apology! Yes, someone cares out there in E-Bay land. Industry changes ahoy.

Thnx too Jess & Garth.

#45 crowdedelevatorfartz on 05.16.18 at 7:51 pm

@#154 Smoking Man
“All you joggers and health food eaters take note.

https://www.mirror.co.uk/news/world-news/oldest-living-person-ever-128-12543657
+++++

Smokey. You’re missing the point.
All those elderly centegenarians are women…..
So if you’re planning on hounding us til 2078 best line up a sex change operation and become Smoking Woman…
Then you and #9 Stephanie can hang out topless in a Toronto park and talk ’bout how them damn misogynists cant make a good miso soup.

#46 Spectacle on 05.16.18 at 7:55 pm

#29 Smoking Man on 05.16.18 at 6:45 pm

Ok , last post tonight.

Smoking Man, I actually greatly appreciate your Retroactive , Long Market calls. And of course contribution to the blog. ( Although I live vicariously through the postings of Crowded Elevator)

Night all

#47 Professor SX on 05.16.18 at 7:59 pm

#29 Smoking Man on 05.16.18 at 6:45 pm

James LMAO @ Bird cage liner.

Im pretty open about my life. I Don’t mind sharing the highs and the lows on this chaotic road toward certain death.. Not one of you will out run it. Might aswell have fun on that ride.

Every once in a while I share some damn good market insites too.

Can you play a bit nicer? Were does all this anger and vendictavness come from? What is it I say that triggers you? Just tell me and I’ll stop doing it.

BTW over 2000 book sales with very little promotion. Tones of 5 star reviews….a extremely complimentary emails..

I call that success……. In spite of being a high functioning alcoholic and all.

Over to you.

..

2000….LMAO… the usual lies from jimmy stooge.. you lie constantly about everything

post the sales chart link……

Still in charge of engineering at de havilland?

#48 Long-Time Lurker on 05.16.18 at 8:10 pm

Speculations:

#1
Anyway, the U.S. T-Bill 10 year and 30 year are close to having the same yield. So are U.S. 30 year T-Bill interest rates going to jump?

I think Powell’s hands are tied. He’ll let the U.S. stock market take a hit because the U.S. Gov. can’t afford to let interest rates get out of control.

#2
I think Mueller is going to end his investigation soon. The last thing I read was that he inquired into possible foreign funding of Trump’s inauguration ceremony: grasping at straws.

Smoking Man and TCContrarian versus their detractors:

Insights versus insults.

#49 Ardy on 05.16.18 at 8:15 pm

36 Capt. Serious on 05.16.18 at 7:15 pm

Why would you do this? You enjoy paying interest? If you planned to trash it in under 10 years a 10 year amortization would make a ton more sense.

‘Planned’ is the operative word. Unfortunately lacking a crystal ball, I could only plan not knowing if life would get in the way. Fortunately it did not. It kept my payment manageable in the event of unexpected surprises. A plan is smart, a contingency is smarter.

From a math perspective the initial interest comes out in the wash. But you can’t put a price on peace of mind… for everything else there’s Mastercard.

-RD

#50 FOUR FINGERS WATSON on 05.16.18 at 8:16 pm

The mortgage rate on my first house was 14%. I can’t remember if it was fixed or variable.

#51 Long Branch Apprentice on 05.16.18 at 8:23 pm

Real estate sure does bring out the best in people.

#52 Leo Trollstoy on 05.16.18 at 8:23 pm

after 40 years of public service hillary clinton now spends her time giving speeches to everybody and anybody about how she was robbed of the US presidency

sad

lol

#53 Rexx Rock on 05.16.18 at 8:31 pm

Give me a break.10 years since emergency interest rates and you still can get a 5 year variable interest rate mortgage at 2.6%.Its over,we are Japan.Why can’t everyone stop drinking the kool aid and accept that its all a charade and we will be exactly like Japan. So will the USA.Its the debt,there will never,ever be normalized interest rates in your lifetime.I can’t believe people still believe the lies and propaganda.

#54 For those about to flop... on 05.16.18 at 8:35 pm

Recent Sale Report/ Realtor Assistance Needed.

This house in Vancouver sold 27 days ago.

Dirty Shyster has gone quite on me ,but maybe this big fish draws them back out.

These guys paid 4.05 in January 2016

The last asking price was 3.98

Did it turn out all Whyte…

M43BC

2006 Whyte Ave,Vancouver. Paid 4.05 January 2016 ass4.31 2017

On 3.98

https://www.zolo.ca/vancouver-real-estate/2006-whyte-avenue

https://www.bcassessment.ca/Property/Info/QTAwMDAwMDU1Qw==

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#55 Smoking Man on 05.16.18 at 8:46 pm

Whoa!!! Herdomiter is indicating the Ontario Librals won’t win a single seat.. Beilive I called that two years ago.

Go Vegas!!!!! Im thinking lord Stanley will come to my favourite town….why because I will it…

#56 Flat Earth Society on 05.16.18 at 8:47 pm

#37 Capt. Serious

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” – Darwin

We aren’t here because we are better at doing financial analysis and electing governments than a bee is at flying.

And remember, by mass, ants are the most prolific animals on earth. When the aliens come, or maybe they did already, they will see an ant colony that has an ape infection.

It’s always been fascinating to me that animals such as ants and bees can do what they do with such tiny brains, but we with our big brains are still playing the lottery and cheering for professional sports teams as if it matters who wins and as if it wasn’t rigged.

Our brains represent over complication in evolutionary terms and we likely won’t survive in the long term. Facebook and “The Housewives of Beverly Hills” are huge resource wastes just waiting for evolution to deselect them. But these are the same brains that are trying to decided how much to pay for a house. You just can’t do it. You aren’t smart enough.

This is why the free market was such a good invention, or evolution if you will. The failures of those who overpaid or otherwise failed kept the system in check such that those who happened to action wisely (I am using action because I don’t think decisions actually happen, only actions) survived and prospered.

All things evolve and I can prove it. There is no designer not even humans. Take your computer for example, it is a wonderful thing in it’s current state. But why didn’t they just introduce it all at once in 1985? Why was the first computer such a piece of shit that took a whole warehouse full of vacuum tubes and enough power to run a city but yet a hand held phone is more powerful now and runs for 2 or 3 days on a battery? Why didn’t they go straight to smart phones?

What we have for brains is a modified fish brain, that became a reptile brain, that became a mammal brain, that became well over-engineered for the task.

To think that your brain is some sort of engineering marvel is just hubris. Go talk to any flat-earther and you will find what I say is true. You (and me too) are a hunter-gatherer with a motorcycle.

#57 Myra Andrews on 05.16.18 at 8:52 pm

Greater Vancouver Stats from realtor Paul Boenisch

May 16 New 235 Sold 147 TI 11,133
May 15 New 315 Sold 178 TI 11,127
May 14 New 302 Sold 124 TI 11,052

May 11 New 183 Sold 132 TI 10,935
May 10 New 229 Sold 126 TI 10,957
May 9 New 309 Sold 172 TI 10,914
May 8 New 318 Sold 117 TI 10,835
May 7 New 389 Sold 131 TI 10,697

May 4 New 191 Sold 110 TI 10,540
May 3 New 213 Sold 103 TI 10,503
May 2 New 268 Sold 146 TI 10,481
May 1 New 363 Sold 134 TI 10,420
Apr 30 New 375 Sold 163 TI 10,459

April 16-27 New 2453 Sold 1224 TI 10,347
April 3-13 New 2111 Sold 916 TI 9,727

Mar 19-29 New 1834 Sold 1072 TI 9,032
Mar 5-16 New 2248 Sold 1224 TI 8,743

The inventory at the end of February was 8,211

#58 the Jaguar on 05.16.18 at 8:52 pm

#9 Stephanie is going to get mail.

On the variable rate issue. Remember that interest compounding is monthly versus semi annually on fixed, so the effective rate is a little higher than the advertised rate. In an environment of increasing rates you (meaning you, not the bank) as it can really erode principal payment as Garth points out….
Read your annual mortgage statement carefully.

#59 the Jaguar on 05.16.18 at 8:53 pm

that was meant to read ‘you need to keep a watch out’

#60 Reality is stark on 05.16.18 at 9:02 pm

For those folks who bought a SFH in the GTA 1-2 years ago it’s all over but the shouting.
It’s a hard rain that’s gonna fall.
You will have 10-15 years of pain and it will really hurt.
Good luck to you.
By the way you will also pay higher fees and taxes as our government needs tax revenue.
Certain financial mistakes ruin your life.
It’s a slow death and your wife will likely leave you as well.

#61 Reynolds531 on 05.16.18 at 9:13 pm

If you’re variable you can lock in for free, or usually break the mortgage altogether for three months interest. So you might not get a stellar fixed rate, but you can always walk and try somewhere else.

That said I have always gone fixed.

#62 Shawn Allen on 05.16.18 at 9:17 pm

Almost half of mortages up for renewal this year?

11 Reximus on 05.16.18 at 5:40 pm said:

That “47% are renewing this year” thing is bunk

****************************************
You might be right. That’s the kind of claim you can look at and say, yeah that sounds unlikely.

But consider in any year we should expect:

About 20% of the 5 years to be up.

About 33% of the 3 years…

All of the one year terms

And I suppose you could count ALL of the variables as sort of up for renewal.

If they are adding in the variables, maybe the figure is plausible.

The group who claimed it is 47% up for renewal this year should also have given what it was each of the past few years for context. Did they?

#63 Shawn Allen on 05.16.18 at 9:20 pm

Locking in the Variable

Do you get a pre-agreed discount to the posted rate when you lock in? If the option is to move from a discounted variable to a full rack rate fixed posted rate, well that would not be a great deal.

#64 Disgruntled on 05.16.18 at 9:20 pm

“The Bank of Canada would have to up its trendsetting rate at least four times for you to stop benefiting over a fixed rate. While there’s a large chance that will happen, it could take a couple of years to materialize…”

Yeah, uh, no. Poloz at BOC = BOy who Cried wolf. 15 years of empty “warnings” and you still believe money will not continue to be free here? 4 rate hikes by BOC? HA. Try ONE in the next 2 years, only if US moves at least 2-3 times and forces Poloz’s weak hyper-inflationary hand. To get Poloz to move twice would require minimum 4-5 US rate hikes. That’s max conceivable and probably not going to happen. 4 rate hikes? Put down the bong Garth, its not legal yet.

#65 Ardy on 05.16.18 at 9:23 pm

#36 Capt. Serious on 05.16.18 at 7:15 pm

Why would you do this? You enjoy paying interest? If you planned to trash it in under 10 years a 10 year amortization would make a ton more sense….you could easily have used a shorter amortization. Math.

Something inside strongly compelled me to fact check Capt. not so obvious Serious. Doing it my way costs me around $31K in interest, give or take a couple of dimes. Doing your me number one math gold star way would cost over $54K in interest.

Like I said earlier…smarter. Well maybe not, but I’m a heck of a lot less troll-y

-RD

#66 Barb on 05.16.18 at 9:24 pm

Excellent post, as always.
HSBC are the biggest crooks on the planet.

#67 nobody on 05.16.18 at 9:39 pm

Why would you take out a fixed rate mortgage?
The banks expert economists work out what they think future interest rates will be (and they play golf with the guy who sets them) – they then add a bit of insurance, and a profit, then a safety margin – then offer you that rate.

So you are betting that your estimate of rate rises is better than the bank’s by the profit+insurance+safety

#68 ANON on 05.16.18 at 9:42 pm

Brain. Mmmmm, tasty!

#69 Kilt on 05.16.18 at 10:47 pm

Hey Garth.
What if Trev is retiring in 5 to 10 years and wants to trash the mortgage prior to retiring? Lets assume his retirement accounts are in good shape.
I guess in the end you are better off saving money, going for the longer mortgage and putting down a lump sum if you want to trash it in 5 years.
One valid argument for trashing the mortgage is it forces you to “save”. Obviously this is only valid if the price of your home doesn’t decrease.

Kilt.

#70 Duke on 05.16.18 at 11:04 pm

Wow. I see a bunch of dudes hoping for low interest rates and propped RE prices. These are so-called ‘house horny losers.’ Once the rate goes up and RE boom is busted, which are quite promising to happen, your lives are in danger. Fun time is coming.

#71 OttawaMike on 05.16.18 at 11:13 pm

James:

The word is lose as in Lose an online war with Smoking Man.

loose is used as in to turn the bolt Loose.

Come on man, even a dyslexic Serbian drunk knows the difference between those words.

#72 Rarely Ever Post on 05.16.18 at 11:15 pm

For #62 Shawn Allen,

The 47% came from a misleading chart in a Bank of Canada report (see Chart 4 on Page 8 of the November 2017 Financial System Review).

https://www.bankofcanada.ca/wp-content/uploads/2017/11/fsr-november2017.pdf

Note that the 47% includes all variable rate mortgages (which have an effective rate reset date of one day), and all fixed-rate mortgage that will be renewed this year.

https://www.ratespy.com/47-of-mortgages-will-not-renew-this-year-05116120

#73 Variable rates headed down ? on 05.16.18 at 11:17 pm

But …but…they were to go up as well ?..oops

#74 Waiverless on 05.17.18 at 12:45 am

#50 FOUR FINGERS WATSON on 05.16.18 at 8:16 pm
The mortgage rate on my first house was 14%. I can’t remember if it was fixed or variable.

How much did you buy the house for, what year was it and what was your monthly payment. There’s more to a payment than an interest rate.

#75 Pete on 05.17.18 at 1:07 am

56 Flat Earth Society

Great post. I like the part of the masses cheering and caring about sport teams. Can you imagine the masses having nothing to do or talk about? Can you imagine millions of people waking up to the reality they are being screwed? Even as a kid I found it odd how people cared so much about sports. I always thought who gives a [email protected]$k? Next time you are forced to watch sports look at the crowd. It interesting watching everyone cheer with delight just because the punk, ball or whatever went into the net. They all look demented. It occurred to me when I was older, what would these people do without sports? The possibilities are frightening. The elites were smart to brainwash the masses. I feel bad for all those who watch sports. Does anyone know how they brainwashed girls to watch sports now? Millennials are the stupid generation. Smokingman is right about schooling and that generation has to much of it and it shows.

#76 Dolce Vita on 05.17.18 at 1:12 am

We are at the end of a credit cycle (i.e., it has peaked and is on its way down).

This means a diminishing appetite for large asset purchases largely financed by debt (e.g., RE).

Not only private but also the corporate credit cycle dropping (again, post peak).

B20 naysayers commenting today forget the obvious with contrary & minutiae “Bill Mahr Bubble” arguments.

The credit cycle information is widely published as of late.

Why the Banks pulling out all the stops, where they can, to lure a diminishing number of creditors…they can read credit cycle charts as good as anyone (well, save some of the Commenters posting today).

#77 What can I say about that? on 05.17.18 at 1:18 am

“If the economy tanks in the meantime, higher rates might be stalled out completely.” – Garth

———————————————–

Darn right. In fact, they’ll probably be coming down.

#78 Bob Dog on 05.17.18 at 1:22 am

The real estate bird of Torana and Honcoovr should be sent to the showers.

#79 Smoking Man on 05.17.18 at 1:23 am

Dr Jimmy

https://youtu.be/ZE097BPAPeE

#80 Steve French on 05.17.18 at 2:45 am

Smoking Man got thrashed into a bloody pulp yesterday in the comments section!

#81 Bad news for Smoking Man on 05.17.18 at 3:38 am

Hi “Flat Earth Society”,

Interesting concept your name is. Likely Nasa lies and man has never been to the moon, so hey who really knows if we are in a snow globe with a firmament above?

Sorry Smoking Man – i know u r always looking for aliens

#82 Ian on 05.17.18 at 7:03 am

Completely agree with you G on the variable. That 1% differential is a massive spread in such a low rate environment.

The bond market is showing we are very, very close to inversion and the end of the central bank rises. I don’t see four rises happening period, but even if so as you noted this isn’t some environment where the Fed can’t raise quickly enough. They’ve already done a bunch and I think a big pause happens now.

Then we roll over into a catastrophic QE4 attempt.

#83 Tater on 05.17.18 at 7:26 am

#38 tccontrarian on 05.16.18 at 7:21 pm
#19 Tater on 05.16.18 at 6:11 pm

I’d ask for your money weighted CAGR, Sharpe and Sortino, but we both know you couldn’t figure that out.
———————————————————-

You’re right – I don’t get bogged down by fancy mathematical models and formulas/ratios. Those are for PhD candidates (as they should be).
As 90% of market action is emotional (ie. not based on fundamentals), I’ve found it much more relevant (and profitable), to gauge crowd psychology and insider activity, along with other indicators which actually have predictive value.

All I really care about is … performance (with measured risk). Seems that you haven’t figured this out yet: investing is part’ science’ part ‘art’. And you’re mired in the numbers/ratios so deep that you’ve never enjoyed the thrill of a multi-bagger!
{Past 12 months I’ve had several of them and cumulatively well into 3-digit % returns overall!}

So pompous one, take your CAGRs, sharp (or dull) sortinos, pour yourself a martini, and humbly accept that there are ‘lesser’ investors out there with smoking hot returns – the kind you’ll never see.

TCC
—————————————————————
You’re playing a game and don’t even know how to keep score.

Without knowing some of your risk adjusted metrics, you have no idea whether you are adequately compensated for the risk you’re taking.

So, no, you don’t know whether your returns are “smoking” at all. You may have been able to achieve the same returns with less risk.

It’s ok. Eventually you’ll figure this all out, though it will likely be accompanied by a major pnl hit.

Good luck.

#84 Tater on 05.17.18 at 7:42 am

#62 Shawn Allen on 05.16.18 at 9:17 pm
Almost half of mortages up for renewal this year?

11 Reximus on 05.16.18 at 5:40 pm said:

That “47% are renewing this year” thing is bunk

****************************************
You might be right. That’s the kind of claim you can look at and say, yeah that sounds unlikely.

But consider in any year we should expect:

About 20% of the 5 years to be up.

About 33% of the 3 years…

All of the one year terms

And I suppose you could count ALL of the variables as sort of up for renewal.

If they are adding in the variables, maybe the figure is plausible.

The group who claimed it is 47% up for renewal this year should also have given what it was each of the past few years for context. Did they?

—————————————————————-
If you wanted to know, you could look at the 2017 annual reports for the Big 6 plus EQB and HCG. As far as I remember each publishes a mortgage continuity table in the notes that shows the roll off schedule.

For HCG its somewhere north of 50%, CIBC is in the 15% area, iirc. Can’t be bothered to check them all, but that’s how you’d do it.

#85 akashic record on 05.17.18 at 7:43 am

“If the economy tanks in the meantime, higher rates might be stalled out completely.” – Garth

Add to this the death of petro dollar.

#86 jess on 05.17.18 at 7:52 am

the right to know or be forgotten scanners /databases

Pennsylvania’s state government will upgrade all machines with a verifiable paper record, but not until 2019.

Other states facing expensive upgrades with insufficient federal assistance include Georgia, South Carolina and Louisiana, which is slated to receive $6 million but needs $60 million.

In the 2016 elections, Russians targeted voter registration databases in 21 states, according to the Department of Homeland Security.
Cybersecurity experts are pushing states to shift to paper ballots, which can be audited after the election to verify that the results reported on Election Night reflect the actual vote.

https://www.commoncause.org/democracy-wire/primary-season-is-here-and-our-elections-remain-vulnerable/
=======================

UK
the Investigatory Powers Act (Snooper’s Act),
Police’s Automated Facial Recognition System

The South Wales Police’s facial recognition system wrongly identified 91% of the matches.
https://www.theinquirer.net/inquirer/news/3032242/met-police-facial-recognition-is-worse-than-using-a-magnifying-glass-yourself
==============
BIG BLUE IBM is reportedly sending more than 100 execs to urge US Senators and Representatives not to implement an American version of the EU’s General Data Protection Regulation (GDPR), which comes into force next week.

According to Bloomberg, around 100 members of the company’s executive team will travel to Washington to lobby lawmakers against bringing-in a US-style GDPR. Instead, they will urge a “third way” that it describes as a “collaborative public-private approach”.

================================
subprime auto loans
information that others are monetizing?
Repo agents are responsible for the majority of the billions of license plate scans produced nationwide. But they don’t control the information. Most of that data is owned by Digital Recognition Network (DRN), a Fort Worth company that is the largest provider of license-plate-recognition systems. And DRN sells the information to insurance companies, private investigators — even other repo agents.(washington post
https://tinyurl.com/ycep4228

#87 Conn Smythe on 05.17.18 at 7:59 am

#175 James on 05.16.18 at 4:07 pm

“…400 to 1 says your a total alcoholic has-been.”

The wit of some bloggers on this pathetic site (the bearded mystic’s words not mine:) ) is first rate! I think there is enough talent here to write a sit com. Seriously! I get daily belly busting howls from the posts of some of the bloggers.

#88 akashic record on 05.17.18 at 7:59 am

#74 Waiverless on 05.17.18 at 12:45 am

#50 FOUR FINGERS WATSON on 05.16.18 at 8:16 pm
The mortgage rate on my first house was 14%. I can’t remember if it was fixed or variable.

How much did you buy the house for, what year was it and what was your monthly payment. There’s more to a payment than an interest rate.

I recently found out that a house on the street is owned by someone, who bought it for about $30K. No typo, $30K, way back then. It’s a rental, as long as the oldest neighbors can remember. Rumor says, this person has accumulated about 30 houses in the city over the years.
Still far behind the couple I know, who got a 12-storey building with couple of hundred rental apartments as a wedding present.

#89 Conn Smythe on 05.17.18 at 8:03 am

As a lover of all things Canadiana I recently stumbled on to what I consider one of the funniest comedy series of all time, Puppets Who Kill. It ran on the Comedy Network in the early 2000s. To boot, it is pure Canadian and in my humble opinion is as good as anything ever produced States side. I have ordered Season 1 and 2 on DVD. Check out this Canadian gem.

https://www.youtube.com/watch?v=-bu6LMapnRA

#90 maxx on 05.17.18 at 8:05 am

#7 Mike on 05.16.18 at 5:17 pm

“Who is funding BC Pipeline Protesters?”

How about a nice side of mercury or salmonella with that farmed fish? Or perhaps a nice toluene, benzene or hexane reduction with your carrots?

All sorts of people and organizations fund this protest, just as all sorts of people and organizations fund charity.

This is a very serious issue and BC is doing a stellar job of standing up for its legal rights as well as the health and well-being of its citizens, flora and fauna.

I haven’t yet made up my mind as to whether I’m amused or disgusted with the so-called “indemnification” (via the taxpayer) of Kinder Morgan as a nifty device to turn the rest of Canada against BC.

#91 Conn Smythe on 05.17.18 at 8:09 am

176 IHCTD9 on 05.16.18 at 4:07 pm

Yes, you have to make the trek to the world’s largest fresh water island, Manitoulin. En route to Tobermory you might want to stay a bit at Cobble Beach resort on lovely Georgian Bay, just 11kms away from Owen Sound. Cobble Beach was modeled after Pebble Beach in California and has a world class golf course with stunning views of Georgian Bay. They are building a community there with beautiful homes overlooking the water and at a fraction of GTA costs. To boot, in the fall they have a classic car show that is also modeled after Pebble Beach’s famous classic car show. I even propose a blog dog meet up at the car show! Check it out.

http://www.cobblebeach.com/?gclid=EAIaIQobChMIv9u7l9uM2wIV17XACh32rAlXEAAYASAAEgLI9PD_BwE

#92 Tony on 05.17.18 at 8:20 am

Re: #82 Ian on 05.17.18 at 7:03 am

The real inflation rate in America is in the 7 to 8 percent range. They’re way behind the curve in raising interest rates. The last CPI report was pure fiction.

#93 Tony on 05.17.18 at 8:28 am

Re: #64 Disgruntled on 05.16.18 at 9:20 pm

One G20 summit meeting could change all that in a hurry. Remember what happened after one of the G20 meetings? Almost the very next day after the meeting Poloz raised rates. America still has influence on what Poloz does.

#94 crowdedelevatorfartz on 05.17.18 at 8:28 am

@#90 maxx
“haven’t yet made up my mind as to whether I’m amused or disgusted with the so-called “indemnification” (via the taxpayer) of Kinder Morgan as a nifty device to turn the rest of Canada against BC.”
+++++

Its called “ISDS” ( Investor-State Dispute Settlement)and it’s an International trade Law that has become the new cash cow for polluters all over the world (including Canada’s notorious mining companies).

http://commonsensecanadian.ca/canada-backs-foreign-investor-rights-protect-mining-sector-book/

A company is banned from working/polluting by a country. The company sues. Wins. Collects millions.
2019 Kinder Morgan gets booted. Sues Canada in Court. Wins. Collects billions.
Canada finishes pipeline. Kinder Morgan pumps its goo to the coast in Canada’s pipeline. Win win for the Lobbyists!
Hoorayyyy!

#95 Gravy Train on 05.17.18 at 8:30 am

#29 Smoking Man on 05.16.18 at 6:45 pm
“Can you play a bit nicer? W[h]ere does all this anger and v[i]ndict[i]v[e]ness come from? What is it I say that triggers you? Just tell me and I’ll stop doing it.”

FWIW, here are my suggestions: 1) stop misspelling words, and 2) stop being a fascist! :)

#96 The Late Great Jim Lahey, Sunnyvale Trailer Park Supervisor on 05.17.18 at 8:54 am

#80 Steve French on 05.17.18 at 2:45 am

“Smoking Man got thrashed into a bloody pulp yesterday in the comments section!”

Nice to see a fellow cast member from the Trailer Park as a blog dog on this site. Give my regards to Bubbles and let the Sunnyvale gang know I am now the head trailer park supervisor next to the Pearly Gates…

#97 dharma bum on 05.17.18 at 8:54 am

So what does this mean and why is it happening? – Garth
——————————————————————–

https://www.youtube.com/watch?v=vzw_EfAk9Is

#98 Ian on 05.17.18 at 9:10 am

#18 Steven Rowlandson

Bill Gross is right that the US economy cannot survive higher yields.

What he’s wrong about is that yields will keep rising regardless, because of USD being at a 3.5 year low and foreign institutions continuing to get crushed by both f/x and the bond selling itself, and the bondholders realising the US is a fiscal trainwreck.

The Fed and Treasury will then be in a nightmare position, with yields going through the roof, the economy slowing making it impossible to raise rates, AND inflation surging.

I’m convinced the market is just not getting this yet. It’s starting to though. This week I think is where it has finally started.

All those yield channels are about to be broken on the upside, especially on the 30 year.

#99 Fish on 05.17.18 at 9:18 am

The pic, dog must be confused, he is looking straight ahead, but somebody put a big sign up to the side,

and the dog probley Thinking I can’t read could you please use a different sign message so I understand

You know I am old but truly a great companion oh the stories remember that time when we buried that bone

#100 Ian on 05.17.18 at 9:22 am

#55 Smoking Man

You know I love you but that’s complete nonsense.

Ontario Liberals looking at around 10 seats. Not a chance it’s zero.

#101 Mike on 05.17.18 at 9:22 am

#90 maxx

I don’t have issue with people protesting, however, I have a huge issue with wealthy foreign interests funding people to protest. If you’re so passionate about your position, why do you need to be paid?

The pipeline being built (which already went through regulatory approvals after public consultation), would allow KM to “de-rate” their existing pipeline while improving safety with a brand new pipeline that has additional safety protections, yet BC’ers would rather keep the old one in service?

The circular logic of that position is fascinating to watch!

#102 Ian on 05.17.18 at 9:32 am

#72 Rarely

That’s good clarification about the % renewing, thanks for providing that. I was wondering about that figure too.

We don’t need an unusually high renewals % to still have a huge problem. 47% exposed to higher rates within a year will still be super bad.

#103 Scott Cordier on 05.17.18 at 9:42 am

Canada 5 year is around 2.32%, 10 year and 30 year are the same 2.51%. The 20 year is 2.53%, actually higher.

This flat to slightly inverted yield curve if continues most likely means a coming slowdown or downturn in the next 12 months maybe 16 months if you want to be more conservative.

I’m not surprised by the outcome created by central bankers and governments, corporations to save billions of dollars a day in higher interest payments.

#104 Calgary Rip Off on 05.17.18 at 9:47 am

Got the mortgage for $420K as a first time buyer in 2011. Put the required down, renewed on a fixed rate I think about a year ago, around 2% for the five year.

This mortgage is about the same as rent in Calgary. Some people in Calgary and everywhere have some type of self identity with what they own. Newsflash: Possessions and housing are tools, not end in themselves. Prove me wrong by taking your money and assets with you when you die. You cant and wont be able to.

So if those tools enable you to learn more and change your state to one of better character, go for it. If the toys however become ends in themselves, you have become a slave, looking for appreciation and validation by others when you instead waste time and money on an image to uphold.

Some think that Calgary is a really nice place to live. It does have good drinking water, sunshine, and fresh air. The traffic is somewhat bad, and the cost of living too high. One coworker thinks it is the bottom of the barrel, and he has lived in Detroit.

According to LAPP I have 164 months(thereabouts) or 14 years until I am ready for my taxed pension. My coworker said not to look at that as an end position because that isn’t some magical payment or number. Ive learned to be content with what I have and learn how to use what I have, better. If wifey wants to eject from Calgary sooner than 2032, which is likely I may in fact bail and my healthcare job is overrated with much bureaucracy and people that get in the way of patient care. The money of greater than 6 figures is the best Ive ever made, but that money is absorbed by housing and living costs quite readily. Somewhere else, like Texas, Id have an acreage and servants for what Im paying here.

Best not to get too attached to the present moment. 100 years is not a very long time.

#105 PastThePeak on 05.17.18 at 9:57 am

#101 Mike on 05.17.18 at 9:22 am
#90 maxx

I don’t have issue with people protesting, however, I have a huge issue with wealthy foreign interests funding people to protest. If you’re so passionate about your position, why do you need to be paid?

The pipeline being built (which already went through regulatory approvals after public consultation), would allow KM to “de-rate” their existing pipeline while improving safety with a brand new pipeline that has additional safety protections, yet BC’ers would rather keep the old one in service?

The circular logic of that position is fascinating to watch!
+++++++++++++++++++++++++++++++++++

TransMountain Pipeline is DOA. It won’t be built. The latest announcement from the Feds about indemnifying costs for “political reasons” doesn’t change the fact. It doesn’t matter who owns it – KM, Enbridge, Federal Gov’t, …

It won’t be built because the protesters smell a victory and the BC gov’t is fully behind them. This is the only Canadian pipeline to tidewater left (courtesy of T2), and the protesters are 100% focused on stopping it. All of their marbles are on this.

T2 and gang have no stomach for the measures necessary to get the pipeline built – meaning dealing with the protests (arrest them in cuffs, charge them, and have them appropriately fined or face some jail time, depending upon the infraction). That’s not going to happen.

So it won’t be built. Expect KM to indicate this on May 31. Then expect a lawsuit. Feds will try to find another buyer, or buy it themselves, plus the costs of fighting the lawsuit. Lots of costs – but no pipeline…

#106 Conn Smythe on 05.17.18 at 10:21 am

#104 Calgary Rip Off

“Somewhere else, like Texas, Id have an acreage and servants for what I’m paying here.”

Sounds like a plan as long as you don’t mind packing a few guns so you can be like the good folks of Texas. Btw, how do you know you are dealing with a real true blue Texan? They make love with their cowboy boots on… Captain Garth, you do wear cowboy boots don’t you?:)

#107 georgist on 05.17.18 at 10:56 am

Even the FT is laughing at Toronto buyers:

> This was a strange message, at a time when large parts of Canada’s property market seem to be running on empty. Prices barrelled upwards for years, boosted by low interest rates, loose lending and waves of foreign money. But now things have cooled. New rules on bank mortgages are tightening credit, requiring borrowers to undergo stress tests to ensure they could cope with a big spike in interest rates, over and above the three increases in the base rate since July. New taxes on foreign buyers and empty homes are also hitting formerly super-hot segments like the condo market, feeding fears of oversupply.

First result:

https://www.google.com/search?q=ft+Sylvester+Stallone%2C+Pitbull+and+the+Canadian+Wealth+Expo+‘circus’

> Many people who piled in to the market in recent years are already finding that the sums are not adding up. Of the Toronto condo investors that took possession last year, for example, 44 per cent now collect less rent than the mortgage requires, according to CIBC Economics. Of those, more than a third are down at least C$1,000 a month.

Check out the comments. People are laughing at you guys (real estate people). You are a joke.

#108 HowDeepThePain? on 05.17.18 at 10:58 am

One question on these 5 year variable rates.

Is the bank contractually obligated to keep the rate 1% BELOW PRIME for the full 5 years? (I understand that prime will float up or down)

If not, that’s the worst sucker product ever.

Rates may change at will. – Garth

#109 Thanks Trudeau on 05.17.18 at 11:03 am

Just great:

https://www.theglobeandmail.com/canada/article-morning-update-border-agents-being-diverted-to-quebec-canadas-first/

Maybe LGTBQ museum and asylum seekers are not two things that play well together?

Down we go

#110 George on 05.17.18 at 11:08 am

Is Oaken Financial safe? I wanted to transfer money from RBC to their TFSA and buy 2year GIKs (3.10%)? Thanks!

#111 IHCTD9 on 05.17.18 at 11:11 am

#74 Waiverless on 05.17.18 at 12:45 am
#50 FOUR FINGERS WATSON on 05.16.18 at 8:16 pm
The mortgage rate on my first house was 14%. I can’t remember if it was fixed or variable.

How much did you buy the house for, what year was it and what was your monthly payment. There’s more to a payment than an interest rate.
________________________________

1. $125,000.00
2. 2016
3. $650.00.

^That’s just down the road from me, early 20’s couple – they’re just starting a family. House is nice – but a starter home. He and some buddies did a bunch of work last year, place is starting to look great! Guy has a sweet KX 450F that he rides a lot with his buddy who has a mint CR250. Nice truck, nice Honda Civic. Mortgage payment not even on the radar – it just gets inhaled out of their account every month with no thoughts on the event whatsoever.

So Mr. Waiverless, why are you not like this guy down the road from me? Buddy down the road has it better than 99% of any Boomer who ever lived: ~90K income and 650.00 monthly. He actually LIKES boomers for crying out loud.

So why are you so different?

#112 Conn Smythe on 05.17.18 at 11:14 am

#108 HowDeepThePain? on 05.17.18 at 10:58 am

“Is the bank contractually obligated to keep the rate 1% BELOW PRIME for the full 5 years? (I understand that prime will float up or down)
If not, that’s the worst sucker product ever.”

Do you think Canadian banks make billions on sucker products? Banks use fractional reserve banking and line their pockets. Even at 1% below prime, considering they paying nothing on deposits these days and the greatest financial invention of all time, fractional reserve banking, Canadian banks are doing just fine.

#113 New Pipeline on 05.17.18 at 11:37 am

Has anyone bothered to look at the diagrams of it winding into Vancouver, and the placement of facility structures? You would fall off your chair seeing the end product as documented. Now if a pipeline is to be built it must end at Prince Rupert. It has the best seaport in all of North America, so check it out for the facts.

#114 georgist on 05.17.18 at 11:46 am

> Banks use fractional reserve banking and line their pockets.

Nope, worse than that. Sorry.

https://bankunderground.co.uk/2015/06/30/banks-are-not-intermediaries-of-loanable-funds-and-why-this-matters/

Have a read – you are way out of date. By the way the above is the official Bank of England blog.

#115 IHCTD9 on 05.17.18 at 11:55 am

#105 PastThePeak on 05.17.18 at 9:57 am
___

Yep – same basic deal with the Ring of Fire in Ontario. Billions being blown by everyone involved actually trying to get something done. 10 years later, all potential investors have pulled up their stakes and left except for 1.

Not one bloody shovel of anything ever left the ground throughout the entire debacle.

I don’t think we’ll see a dime of investment for a big resource project in Ontario ever again as long as the Libs are at the wheel. I can’t imagine what all those companies are thinking right now – it’s just one shit show after another.

#116 FOUR FINGERS WATSON on 05.17.18 at 12:00 pm

#74 Waiverless on 05.17.18 at 12:45 am

#50 FOUR FINGERS WATSON on 05.16.18 at 8:16 pm
The mortgage rate on my first house was 14%. I can’t remember if it was fixed or variable.

How much did you buy the house for, what year was it and what was your monthly payment. There’s more to a payment than an interest rate.
……………………

That was a long time ago in a galaxy far far away and my memories of 1985 are a bit foggy……it was in Vancouver and the house was just under 100k and i was making maybe 22k at the time. I had 20% down.

#117 Gravy Train on 05.17.18 at 12:08 pm

#159 Fake News Again on 05.16.18 at 12:27 pm
“What an idiot that orange-haired monkey is. No one will vote for a president like that!”

#6 MF on 05.16.18 at 5:17 pm
“Man. Some of your posts [I] disagree with, but here you wrote the TRUTH.”

It’s a rare event when I agree with the two of you. Glad you both came to your senses! (Or were you just being sarcastic?) :)

BTW, Trump sued TV host and comedian Bill Maher for $5 million because Maher said that an orangutan’s fur was the only thing in nature that matches the shade of Trump’s trademark hair. Trump later withdrew his lawsuit. :)

#118 crowdedelevatorfartz on 05.17.18 at 12:12 pm

@#113New Pipeline
” Now if a pipeline is to be built it must end at Prince Rupert. It has the best seaport in all of North America, so check it out for the facts.”

******

Total agreement.
Prince Rupert.
Closer to Albertan oil fields, Closer to Asia, Less marine traffic (ships AND whales).
It will be finished( because they have already started building).

#119 Boots on the Ground in Ptown on 05.17.18 at 12:13 pm

How coincidental Garth. I received an email this AM that I thought was spam until I read it closer. Mortgage broker I know from some years back. Rarely ever get emails from them -he’s a great guy, not sleazy or pushy, and I hope for his sake that they’re doing well.

“We have a special opportunity to save you money, and do not want you to miss out. Our lenders are offering a variable rate special of 2.45% for any application submitted before May 31, 2018.

Is a variable rate a good idea?

*names omitted* are both in variable rate mortgages on our personal mortgages.. Also in a recent survey of over 4000 Mortgage Brokers more than 65% of them were also in variable rates.

This doesn’t mean you should automatically take a variable, but it always pays to review your options.

If you are interested in this call me at the office to discuss.

What if I am currently in a variable rate?

There is a really good chance your variable rate is higher than this current special rate. In fact, most variable mortgages from 12+ months ago ranged between 2.95% and 3.10%. If this is you, we definitely need to talk. Check out the example below to see how much this could be costing you.

Example:

$400,000 mortgage
Prime – .35% – current rate 3.10%
$57,000 – Estimated interest paid over 5 years

$400,000 mortgage
Prime – 1% – new rate 2.45%
$45,000 – Estimated interest paid over 5 years

​Potential savings in this example = $12,000 over 5 years

Also the lender will pay your legal fees, and appraisal cost to transfer your mortgage over, and will allow you to add on the penalty to the new mortgage up to $2500, so virtually no out of pocket expense to you.

Finally, if you ever decide to convert to a fixed rate​, we will offer you the protected rate guarantee. “

#120 Welcome to Slurrey on 05.17.18 at 12:17 pm

#54 Flop …….. it was sold for 3.8 mil

#121 Boots on the Ground in Ptown on 05.17.18 at 12:23 pm

Also yesterday I spoke with [email protected] about a recent notice regarding current Visa. Its “going away” and now will be called a shinier name. I never use the card so asked whats my current rate and whats the new rate, out of some suspicion I knew the answer. Oh its going from 14.5 to 12.5%. Hmm I say, whats the catch? Well, there’s no difference between the cards this will just phase in blah blah blah something about being adjusted twice a year. Hmm I say, ok so 14%er was “less variable” than the 12%er or what are you saying? Well, basically the 14%er was “updated (or adjusted, I forget the term used)” twice a year and this new *but shinier!* card will adjust once a month according to the prime rate, so its rate may still go down. (reassuringly said) Ah yes, I say, I see now- so this change is reflecting the fact that we’re in a rising rate environment. -No reply, while I got visuals of the words soaring over his head- He moved right into: And if you’d like to upgrade to the *shinier**shinier* card with rewards you can do that anytime at no cost. Heh heh oh I literally never use the card but thank you very much for your help today!

The banks ALWAYS win.

#122 Wrk.dover on 05.17.18 at 12:34 pm

We are still getting by well, in our twelfth year of $3000/month retirement income in NS after taxes and annual TSFA contributions. Or as Garth calls it living on air.

We just got back from our sixth device free fly away from the land line and desktop since October.

This particular vacation was to a five star all inclusive resort in Jamaica that came in costing each of us $6.66 CDN/hour from the time we arrived at the Halifax airport until we got back there 7.5 days later. Plus some tipping.

It was overkill, but too cheap to pass up.

Now I can enjoy being frugally grounded on my country estate for a half year stay-cation, as good as the short exotic ones were. I enjoy the maintenance work anyhow.

I am just bringing this up for comparison to your own carefully planned lives. May you all thrive!

#123 Conn Smythe on 05.17.18 at 12:51 pm

#114 Georgist

“Nope, worse than that. Sorry. Have a read – you are way out of date. By the way the above is the official Bank of England blog.”

Customer A goes into BMO and deposits $1000. BMO keeps a fraction on hand and loans out the balance to customer B. Customer B takes the loan and deposits it in TDCanada Trust. TD keeps a fraction and loans it to customer C. Customer C deposits the loan at CIBC. CIBC keeps a fraction and loans the rest to customer D and on, and on it goes… That is what is taking place this very moment across this great land of ours. I am not out of date my friend.

#124 James on 05.17.18 at 12:55 pm

#47 Professor SX on 05.16.18 at 7:59 pm

#29 Smoking Man on 05.16.18 at 6:45 pm
James LMAO @ Bird cage liner.
Im pretty open about my life. I Don’t mind sharing the highs and the lows on this chaotic road toward certain death.. Not one of you will out run it. Might aswell have fun on that ride.
Every once in a while I share some damn good market insites too.
Can you play a bit nicer? Were does all this anger and vendictavness come from? What is it I say that triggers you? Just tell me and I’ll stop doing it.
BTW over 2000 book sales with very little promotion. Tones of 5 star reviews….a extremely complimentary emails..
I call that success……. In spite of being a high functioning alcoholic and all.
Over to you.
…………………………………………..
2000….LMAO… the usual lies from jimmy stooge.. you lie constantly about everything
post the sales chart link……
Still in charge of engineering at de havilland?
___________________________________________
BTW over 2000 book sales with very little promotion. Tones of 5 star reviews….a extremely complimentary emails..
Unlike you I have three little ones to take care of a night, so I do not spend my time getting fall down drunk!
OK Dumbo, just googled your book, one review! Does that mean that the one review weighed tons?
Without promoting it further Garth, just to say there is a trail of crumbs to follow. https://www.amazon.com Under your book name /customer Reviews Nice try stretching the truth there Donald Trump.

“I call that success……. In spite of being a high functioning alcoholic and all.”

The famous last words of Dumbo!

BTW vendictavness spelled vindictiveness and I assure you sir I do not have one iota of that exacting sentiment in my temperament. I do have an aversion to mendaciousness and false bravado.
your serve

#125 IHCTD9 on 05.17.18 at 12:58 pm

#104 Calgary Rip Off on 05.17.18 at 9:47 am

… Newsflash: Possessions and housing are tools, not end in themselves. Prove me wrong by taking your money and assets with you when you die. You cant and wont be able to.

So if those tools enable you to learn more and change your state to one of better character, go for it. If the toys however become ends in themselves, you have become a slave, looking for appreciation and validation by others when you instead waste time and money on an image to uphold.
_____________

Correct, let’s expand on that line of thinking.

Is higher Education and a Professional career the same thing if the compensation for same is nowhere near adequate for the blood sweat and tears required to acquire them?

Sure, do it for the money if you get ahead for your efforts. But why bother if you won’t?

I know folks who like those letters behind their name, and the “status” they presume it gains them. I know only a few who get the paycheque (ie the real reason to acquire said letters) to go along with the “status”.

Why bother without the $?

If you boil out the BS – you need to ask yourself “Is what I do for a living valuable in and of itself (and why) – or would I retire tomorrow if I could grow a money tree?”

Or,

“Is the joy a Man may gain in shoveling horse sh!t out of a barn any less valuable than the joy of a surgeon who just saved someone’s life?”

The wife and I are both white collar, she’s got two degrees, and we would both retire tomorrow if we could. I can think of many things I’d rather be doing than the 9-5. Sure we like our jobs, but after 25+ years I expect just about any job to be worn pretty smooth.

Myself, I’d jump at the chance to go early morning fishing 3+ times a week, or explore every km of the EOTA trail system aboard the almighty Thanos punking Grizzly 700 SE.

#126 Dissident on 05.17.18 at 12:59 pm

#9 Stephanie on 05.16.18 at 5:23 pm
House prices will never collapse in Toronto. We are a tolerant, vibrant, interesting and post-feminist city which upholds human rights for women and transpeople. Toronto women are more likely to be educated, smarter, genetically superior and stand up for women than other humans.
To say that house prices will collapse in Toronto is misogyny. Do you see all of those cranes in the background? Do you see all of our recent condos in the downtown core? When you respect a woman’s right to her body and her right to dress for the weather, a country’s economy grows into prosperity. Please don’t shame a woman if she chooses to bare her chest or wear no underwear. It’s hot outside

– – – – – – – – – –

On behalf of women everywhere, please don’t post this parodic tripe. It’s absurdly written.

#127 Conn Smythe on 05.17.18 at 12:59 pm

#114 Georgist

I suggest you read your quoted blog to the end and realize it is not an official Bank of England publication.

“Bank Underground is a blog for Bank of England staff to share views that challenge – or support – prevailing policy orthodoxies. The views expressed here are those of the authors, and are not necessarily those of the Bank of England, or its policy committees.”

#128 Be Realistic on 05.17.18 at 1:04 pm

I don’t know how to break this to you guys but 1.3M homes in Richmond Hill are going around asking. Listings with NO PICTURES inside in Etobicoke are going for 950K – 100K over asking.

It’s all happening again.

#129 Conn Smythe on 05.17.18 at 1:13 pm

#124 James

“I do have an aversion to mendaciousness and false bravado.”

James, James… Must you use such vocabulary for poor Smokey? Simplify, simplify…

#130 jess on 05.17.18 at 1:16 pm

scrubbing data?

…”Banks are legally mandated to file suspicious-activity reports with the government in order to call attention to activity that resembles money laundering, fraud, and other criminal conduct. These reports are routed to a permanent database maintained by FinCEN, which can be searched by tens of thousands of law-enforcement and other federal government personnel. The reports are a routine response to any financial activity that appears suspicious. They are not proof of criminal activity, and often do not result in criminal charges, though the information in them can be used in law-enforcement proceedings. “This is a permanent record. They should be there,” the official, who described an exhaustive search for the reports, said. “And there is nothing there.”

https://www.newyorker.com/news/news-desk/missing-files-motivated-the-leak-of-michael-cohens-financial-records

#131 Conn Smythe on 05.17.18 at 1:17 pm

#128 Realistic

“I don’t know how to break this to you guys but 1.3M homes in Richmond Hill are going around asking. Listings with NO PICTURES inside in Etobicoke are going for 950K – 100K over asking.

It’s all happening again.”

Take a drive in south Etobicoke between Islington and Royal York and south of Bloor. 60 year old urine smelling bungalows are going for $850-$900k simply for their lot value. On one street alone, I counted 30 new homes built in the last 15 years and this will continue unabated…

#132 HowDeepThePain? on 05.17.18 at 1:47 pm

#112 Conn Smythe on 05.17.18 at 11:14 am
#108 HowDeepThePain? on 05.17.18 at 10:58 am
“Is the bank contractually obligated to keep the rate 1% BELOW PRIME for the full 5 years? (I understand that prime will float up or down)
If not, that’s the worst sucker product ever.”
Do you think Canadian banks make billions on sucker products? Banks use fractional reserve banking and line their pockets. Even at 1% below prime, considering they paying nothing on deposits these days and the greatest financial invention of all time, fractional reserve banking, Canadian banks are doing just fine.

+++++++++++

I think Banks do what they need to do in order to make quarterly. Everything else is roadkill…sorry staff and clients.
So two risks with Variable. 1) Prime goes up 2)Bank changes its discount to prime.
And unlike my unsecured LofC that the moved up to 3% over prime from 1.5% over prime for no reason, you are stuck with these clowns for the duration of 5 years.

#133 Waiverless on 05.17.18 at 1:49 pm

#111 IHCTD9 on 05.17.18 at 11:11 am

I don’t dislike boomers. I just wanted some context on the interest rate. I think you read too much into my post

#134 The Late, Great, Jim Lahey Sunnyvale Trailer Park Supervisor on 05.17.18 at 1:49 pm

#125 IHCTD9 on 05.17.18 at 12:58 pm

“I know folks who like those letters behind their name, and the “status” they presume it gains them. Is the joy a Man may gain in shoveling horse sh!t out of a barn any less valuable than the joy of a surgeon who just saved someone’s life?”

Wise words, IHCT9. What you are describing is the classical sh!t barometer I often spoke about when I roamed the earth in Sunnyvale Trailer Park. Here I am describing what the sh!t barometer is all about to my good buddy Bubbles…

https://www.youtube.com/watch?v=srq_MbsUTuM

#135 Smoking Man on 05.17.18 at 1:50 pm

I’m a fiction novelist damn it, of course, I mendaciousness.

In fact, mendaciousness is a great skill in life… Most people use it. But they suck… Lots of practice too get good at it.

Dr Smoking Man
Phd Herdonomics

#136 Asterix1 on 05.17.18 at 1:53 pm

#128 Be Realistic on 05.17.18 at 1:04 pm
I don’t know how to break this to you guys but 1.3M homes in Richmond Hill are going around asking. Listings with NO PICTURES inside in Etobicoke are going for 950K – 100K over asking.

It’s all happening again.
———————————————-

On behalf of Realists everywhere, please dont post this garbage. It’s absurd.

#137 Ubul on 05.17.18 at 1:59 pm

James @ SmokingMan

James has crossed from hate speech to real hate and smokingman-phobia territory.

The Ontario Human Rights Commission might grab him any time to repent his deplorable sins.

#138 Chris on 05.17.18 at 2:15 pm

The market keeps going against what you’ve been going on about for what? about a decade

Banks are still irresponsible, the government backs it, and you complain about it. Garth eventually one day you will be right, but till there is real change and bankruptcies are still a long way to go.

But the powers that be gotta keep pumping that CHMC full of mortgages backed by Canadians.

#139 itsjustanotherNYflat on 05.17.18 at 2:25 pm

New digs for Garth:

https://www.ctvnews.ca/lifestyle/85m-new-york-apartment-comes-with-trip-to-space-1.3933713

#140 Tater on 05.17.18 at 2:26 pm

#128 Be Realistic on 05.17.18 at 1:04 pm
I don’t know how to break this to you guys but 1.3M homes in Richmond Hill are going around asking. Listings with NO PICTURES inside in Etobicoke are going for 950K – 100K over asking.

It’s all happening again.
—————————————————————-

And yet you don’t back this up with any examples.

#141 Dissident on 05.17.18 at 2:30 pm

(le whoops, I posted this in yesterday’s…let’s try that again shall we)

How to make millennials mad:

https://www.marketwatch.com/story/want-to-make-millennials-mad-talk-about-saving-for-retirement-2018-05-16

https://www.marketwatch.com/story/millennials-havent-saved-two-years-salary-theyve-saved-one-weeks-worth-2018-05-17

I truly wonder how this pyramid scheme of CPP funds is going to pan out…

#142 jess on 05.17.18 at 2:31 pm

“because the public interest in criminal cases is greater.”

Tillerson says leaders who ‘conceal the truth’ risk freedom
By Laura Koran, CNN

======================

https://www.charitywatch.org/home
How outrageous can some of the conflicts of interest within a charity really be? You can judge for yourself from the three real life examples below.
https://www.charitywatch.org/charitywatch-articles/conflicts-of-interest-are-a-red-flag-for-donors-some-charity-insiders-may-take-unfair-advantage-of-their-position/183
Authorities to investigate Jay Sekulow nonprofit after ‘troubling’ revelations

Both The Guardian and The Washington Post have recent stories about the ACLJs and the millions they have steered to the Sekulow family over the years. (Jay Sekulow joined President Trump’s team of personal lawyers in June 2017.) Additionally, in late June 2017, the attorneys general of New York and North Carolina announced that they are examining the operations of CASE.

The potential confusion caused by the two ACLJs and the concerning related party transactions with the Sekulows should give donors pause. As CharityWatch President, Daniel Borochoff, told The Washington Post: “It’s more like a family business than a public charity … You would have to have a lot of trust in this family in order to want to give them your money.”

Daniel Borochoff also can be heard on NPR’s “All Things Considered” discussing the questions raised by the two ACLJs and the Sekulow family.

Questions Raised About Charities Involving President Trump’s Lawyer

missing suspicious reports -sars – so what would be the fine if one scrubbed the reports?

…”According to FinCEN, disclosing a SAR is a federal offense, carrying penalties including fines of up to two hundred and fifty thousand dollars and imprisonment for up to five years. The official who released the suspicious-activity reports was aware of the risks…. like documents being removed from a system, are of grave concern to me.” Of the potential for legal consequences, the official said,..”

#143 Mark on 05.17.18 at 2:43 pm

“But the powers that be gotta keep pumping that CHMC full of mortgages backed by Canadians.”

Finance Minister Flaherty (RIP) put his foot down in Budget 2013 and made it clearly the policy of the Government of Canada that the CMHC would not expand.

And that’s precisely what happened. It also marked the peak of the Canadian RE market price-wise.

Yes, the CMHC acts as the ultimate guarantor of the subprime segment of Canada’s RE market, but the policy stance adopted by Flaherty and the government of the day has been further adopted by the present sitting government. Which has actually taken steps to further tighten policy first brought about by their predecessors.

So far the decline in Canadian housing and the housing-led economy hasn’t been too disorderly. But with transactional volumes falling off a cliff as described in this blog, its certainly possible that things get uglier. Considerably uglier.

#144 James on 05.17.18 at 3:00 pm

#129 Conn Smythe on 05.17.18 at 1:13 pm

#124 James

“I do have an aversion to mendaciousness and false bravado.”
James, James… Must you use such vocabulary for poor Smokey? Simplify, simplify…
_______________________________
OK he is a lying wino!

#145 jess on 05.17.18 at 3:01 pm

tunagate price fixing

The one-count felony indictment charges that Lischewski carried out the conspiracy by agreeing to fix the prices of packaged seafood during meetings and other communications. The co-conspirators issued price announcements and pricing guidance in accordance with these agreements. Bumble Bee has already pleaded guilty and been sentenced to pay a criminal fine of at least $25 million as a result of the government’s ongoing investigation.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.

Lischewski is the fourth individual to be charged as a result of the ongoing federal antitrust investigation into the packaged seafood industry,

https://www.justice.gov/opa/pr/bumble-bee-ceo-indicted-price-fixing

#146 James on 05.17.18 at 3:05 pm

#131 Conn Smythe on 05.17.18 at 1:17 pm

#128 Realistic

“I don’t know how to break this to you guys but 1.3M homes in Richmond Hill are going around asking. Listings with NO PICTURES inside in Etobicoke are going for 950K – 100K over asking.

It’s all happening again.”

Take a drive in south Etobicoke between Islington and Royal York and south of Bloor. 60 year old urine smelling bungalows are going for $850-$900k simply for their lot value. On one street alone, I counted 30 new homes built in the last 15 years and this will continue unabated…
_________________________________________
Yes sir I agree, I live in Orchard Heights not far from there and although there has been a slow down you can see the spring fever starting again. Even in our hood.

#147 georgist on 05.17.18 at 3:15 pm

Conn Smythe

guess you’d better write to the bank of england, along with several other leading economists.

> The fact that banks technically face no limits to instantaneously increasing the stocks of loans and deposits does not, of course, mean that they do not face other limits to doing so. But the most important limit, especially during the boom periods of financial cycles when all banks simultaneously decide to lend more, is their own assessment of the implications of new lending for their profitability and solvency. By contrast, and *contrary to the deposit multiplier view of banking*, the availability of central bank reserves does not constitute a limit to lending and deposit creation. This, again, has been repeatedly stated in publications of the world’s leading central banks.

Garth – why do your readers refuse to accept documentation? Who knows better? BoE blog or some chump on here?

#148 Damifino on 05.17.18 at 3:32 pm

#138 Chris

The market keeps going against what you’ve been going on about for what? about a decade
—————————-

What Garth has been going on about for a decade is that you shouldn’t buy what you can’t afford.

That is still the message. What is unclear about that?

#149 Gravy Train on 05.17.18 at 3:36 pm

#135 Smoking Man on 05.17.18 at 1:50 pm
“… In fact, mendaciousness is a great skill in life… Most people use it. But they suck… Lots of practice to get good at it.”

Donald Trump gets an A+ in mendacity (and mendaciousness)! :)

#150 Myra Andrews on 05.17.18 at 3:36 pm

My understanding is that with a HELOC (home equity line of credit) let’s say at Prime they can change it at anytime to Prime + 1% for example (happened to me in 2008 during the credit crisis and it went from Prime to Prime + 1%). However for a 5-year term variable rate mortgage (not a HELOC) at say prime – 1% the -1% discount is in the contract and the bank cannot change that over the 5 year term. However, they can increase the rate when prime goes up.

As far as changing from a variable to a fixed rate during the 5 year term well they can make you pay the posted rate. That happened to me. In 1998 I had a 6-month convertible mortgage with Canada Trust (the rate can change every 6 months depending on the Prime rate). I decided to convert to a 5 year fixed rate (the fixed rate was lower) and they said they said they would convert it at the posted rate. I whined and they offered me 0.5% off the posted rate but everyone else was getting 1% off.

So check the terms on the variable rate mortgage if you think you might change to a fixed rate during the 5-year term.

Yes, they do compound monthly on a variable rate mortgage (Scotiabank and Tangerine are the exceptions) but it makes little difference at low rates.

To calculate it find the future value of $100 in one year at both rates: For example at 4.8% compounded monthly:

FV = 100 (1 + 0.048/12) to the power of 12 = 104.907 Subtract 100 and you get the effective rate (compounded once a year) equivalent rate of 4.907%.

Semi-annually

FV = 100 (1 + 0.048/2) to the power of 2 = 104.858 so 4.858%

So 4.91% versus 4.86% so not much of a difference -only 0.05%

#151 Damifino on 05.17.18 at 3:40 pm

#126 Dissident

Show a little charity. Stephanie is clearly off her meds.

#152 jess on 05.17.18 at 3:42 pm

141 Dissident on 05.17.18 at 2:30 pm

not just milli’s

ALICE – Asset Limited, Income Constrained, Employed.

The Project began as a pilot program in New Jersey, and has expanded to include 16 states, which represent nearly 40 percent of the U.S. population. United Way ALICE Reports use standardized measurements to calculate the cost of a bare-bones household budget in each county in each state, and to quantify the number of households that cannot afford even that. It is an alternative measure to the outdated Federal Poverty Level, which grossly underestimates the number of struggling families.

https://www.unitedwayalice.org/washington

#153 Be Realistic on 05.17.18 at 3:46 pm

Conn, you are dead on my friend. You’re now looking at 850K BARE minimum for a dump in MOST of Etobicoke, and I mean DUMP. Even 850K is lucky (Islington, Princess-Rosethorn, and even Eringate now!)

Now for all the detractors, just go on Housesigma and look all over the map of homes sold and what they sold for. You don’t need to be a rocket scientist. Everyone else wants to muddle up data to serve their biases, but just go look for yourself at simple asking and selling price. Yes 905 is behind the 2017 ball, but it’s coming back. Slowly but surely.

I don’t know who is buying these homes and how, but they are and it’s going to continue.

#154 SimplyPut7 on 05.17.18 at 3:51 pm

Cheap variable rates won’t matter if the bank says you don’t qualify for the amount of money you need to buy the new home/condo you are obligated to buy when construction for the home is finished next year or 2-5 years for condo buildings or if banks say no to the amount you need to flip overpriced homes in the GTA.

https://www.zolo.ca/toronto-real-estate/238-elmhurst-drive

I wonder how many private lenders are tired of the real estate market and just want out of their risky speculative investments.

https://www.theglobeandmail.com/real-estate/article-fight-over-failed-toronto-properties-highlights-increased-risk-in/

#155 Stan Brooks on 05.17.18 at 3:54 pm

It gets better by the day on the mental institution with patients running amok with no supervision.

Business group calls for lower tax rate for women-controlled companies

https://ca.finance.yahoo.com/news/business-group-calls-lower-tax-202218637.html

Free markets, my behind.

#156 Stan Brooks on 05.17.18 at 3:58 pm

Lower interest rates by the idiots at BoC will not impact fixed/long term mortgage rates, these are driven by US 10 Years treasures that are going higher and most likely will overshoot 4 %.

The incompetents at BoC influence short term variable rates which will make the problem much worse (what do you expect from them?) mid to long term.

They/BoC also influence deposit rates which will stay
low.

The last joke from BoC was the inflation is subdued sub-2 %, makes you wonder which planet they are living on.

So short term variable mortgages down, mod term fixed mortgages up, deposit rates capped creating very nice spread for banks.

Cheers (idiot) savers.

#157 James on 05.17.18 at 4:08 pm

#149 Gravy Train on 05.17.18 at 3:36 pm

#135 Smoking Man on 05.17.18 at 1:50 pm
“… In fact, mendaciousness is a great skill in life… Most people use it. But they suck… Lots of practice to get good at it.”

Donald Trump gets an A+ in mendacity (and mendaciousness)! :)
___________________________________________
He built a University on the merits of mendaciousness!
His Motto! I am Donald J Trump mendacious purveyor of all things erroneous and dissolute.

#158 Happy Housing Crash Everyone! on 05.17.18 at 4:29 pm

So many delusional SHYSTERS posting fake sales and fake prices. The market is crashing you dirty SHYSTERS. The numbers are clear and this using your manipulated fake numbers. You dirty SHYSTER monsters should be locked up for financial crimes. SHYSTERS =uneducated lazy morons who tell lies for money.

#159 Happy Housing Crash Everyone! on 05.17.18 at 4:31 pm

The worst part you dirty lying SHYSTERS post your stories that are no believable and we have seen your lies being proven wrong again and again.

#160 Happy Housing Crash Everyone! on 05.17.18 at 4:34 pm

#136 Asterix1 on 05.17.18 at 1:53 pm
#128 Be Realistic on 05.17.18 at 1:04 pm
I don’t know how to break this to you guys but 1.3M homes in Richmond Hill are going around asking. Listings with NO PICTURES inside in Etobicoke are going for 950K – 100K over asking.

It’s all happening again.
———————————————-

On behalf of Realists everywhere, please dont post this garbage. It’s absurd.

——————-

These dirty SHYSTERS would lie to their family for a sale. They are financially hurting as the market is crashing and sales are non existant. Nice to see SHYSTERS suffer.

#161 Be Realistic on 05.17.18 at 5:12 pm

Happy Housing Crash Everyone –

Judging by your posts you are incredibly angry to the point where your writing skills are non-existent.

The only shyster is you. You need to stop lying to yourself and join the real world.

#162 Conn Smythe on 05.17.18 at 5:32 pm

#144 James

“OK he is a lying wino!”

Now you’re talking and very funny my friend! You have a very sharp sense of humour. Bravo!

#163 Conn Smythe on 05.17.18 at 5:50 pm

#147 Georgist

Do you know how to read Georgie? From what you just posted:

“By contrast, and *contrary to the deposit multiplier view of banking*, the availability of central bank reserves does not constitute a limit to lending and deposit creation.”

Central bank reserves do not constitute a limit to lending and deposit creation? Do you understand that statement? They don’t constitute a limit because chartered banks continue to use the fractional banking system and fund it themselves via deposits and loans and when necessary by drawing their borrowing capacity from the central bank. Read this from Investopedia. Fractional reserve banking is alive and well mon ami.

https://www.investopedia.com/terms/f/fractionalreservebanking.asp

Once again, as I type, Canadian chartered banks are using fractional reserve banking all over this land. Of course there are restrictions on the reserve ratio, they can’t just run amok. Captain Garth didn’t correct you because you my friend are in error and hence the chump in this dialogue.

#164 Conn Smythe on 05.17.18 at 5:52 pm

More night time reading for you Georgie on fractional reserve banking.

http://www.canadabanks.net/default.aspx?article=Fractional-Reserve+Banking

#165 Rod on 05.17.18 at 7:03 pm

Cash is and allways be king..

#166 georgist on 05.17.18 at 10:05 pm

Conne smythe

https://www.ft.com/content/7f000b18-ca44-11e3-bb92-00144feabdc0

Main ft opinion writer:

“Strip private banks of their power to create money”

> I explained how this works two weeks ago. Banks create deposits as a byproduct of their lending. In the UK, such deposits make up about 97 per cent of the money supply.

Ft not good enough for you either? Also check economist Richard Werner.

You sir are full of rubbish, and lazy.

#167 georgist on 05.17.18 at 10:18 pm

And quoting a standard disclaimer from a site hosted bythe boe from a boe paper by a boe researcher. This is not WordPress!

Private banks create money, unconstrained by fractional reserve limits. What you learned at school predates coming off the gold standard.

Read and learn. Or be lazy and post housing propaganda. Your choice.

#168 georgist on 05.17.18 at 10:20 pm

Also your link, you haven’t readit:

> Most people have no idea how fractional-reserve banking works, but if the they understood its nature the fractional reserve banking will be exposed for what it is – a grand money-robbing scam imposed on the unsuspecting society

This is your link that all is as it seems? A joke.

#169 Conn Smythe on 05.18.18 at 7:00 am

Dear Georgist,

Is it possible we have misunderstood ourselves? Are you saying that fractional reserve banking is no longer done? The whole gist of my argument is that it is alive and well. What are you trying to tell me?

#170 Conn Smythe on 05.18.18 at 7:03 am

Further Georgist, what housing propaganda have I posted? Please elaborate…

#171 Conn Smythe on 05.18.18 at 7:05 am

Lastly, I am not endorsing fractional reserve banking, merely describing what it is. I am aware of its great money generating nature for the banks, enabling them to post billions in profits. What is your point cowboy?

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