Rate roulette

ride1

While nobody wants to believe it, today’s rates are an aberration. Temporary. A freak of nature. The feds crashed them in 2009 to stave off a depression. It worked, but spawned an addiction. Today cheap money’s bloated debt like never before and gone mainstream. Ask any 26-year-old horny for a condo if she thinks mortgages could be 6% in five years. “You,” she’ll say, “are, like, so totally gnarly.”

But it will happen. The cost of money will normalize. As the economy heals over the years to come, monetary stimulus will be withdrawn, which is as much fun as it sounds, and everyone will be paying more to borrow.

For real estate this is one momma of a problem. Current valuations are based on 2.8% mortgages, which will disappear for another generation or two. People who borrowed five-year mortgages in 2010, for example, will have to pay more in 2015. People borrowing today will be shocked in 2018. Hope they’re ready.

Now if this were America, it might be different. Not only can folks there write off mortgage interest from taxable income, but they can lock in a rate for 30 years. Ed wants to know how that can be.

“A colleague down in the US told me how he just locked his mortgage in for 30 years @ 3.75% (or thereabouts).  Just a quick look around here (i.e. CIBC) and one has to pay 6.75% just to get 10 years (and pray to god it’s not like the late-70s-early-80s around here by that time).

“Why are US lenders so much better to their customers than Canadian lenders? Is it completely impossible to lock in a mortgage for that long and that low up here?”

Actually, Ed, a 10-year mortgage is available now (from a bunch of the big banks) at 3.69%. In the States, 30-year home loans are currently sitting at 3.4%, just a tenth of a point above the all-time low.

So why the difference? More importantly, what is the best way to protect yourself from the inevitable swelling in years to come? After all, the 25-year average for a five-year fixed-rate mortgage is 8.25%. Just imagine where house prices would be right now if that sucker was still in place.

We have five-year mortgage terms because that’s what folks wanted in 1880 when the Canada Interest Act was drafted to protect them from being sucked into long-term loans at high rates. Section 10 of that act says this: every mortgage becomes open after 5 years, and you can get out of it by paying a penalty no greater than the equal of three months’ interest.

So banks have crafted the five-year home loan with a fixed rate, which the majority of people take. Banks also try to match borrowings and loans, and in Canada CDIC will not insure deposits of longer than five years. So, if rates fall and you want out of a five-year loan, you have to compensate the lender by making up the lost revenue (that’s where the ‘interest rate differential’ or IRD comes in). If rates rise, you’re protected until renewal.

In the US, 30-year locked-in mortgage rates grew out of the Great Depression of the 1930s. Prior to that, short-term, variable-rate loans helped fuel the banking crisis (and a real estate bubble in the 1920s) that almost destroyed the country. The big advantages of these things are obvious. First, you can forget about rising rates for most of your adult life. Second, if rates fall, you can simply refinance or change lenders – they’re always open. And that means if you win the lottery or become a rock icon, you can pay it off at will.

But stop dreaming. The three-decade, locked-in borrowing will never come here. So what’s the best alternative?

Easy. The 10-year mortgage.

As I said, they are available from lots of lenders at 3.69%, which is about 1% more than a five-year loan. The additional payment is insurance against higher rates in the future, and means for the first half of this loan you’ll fork out more than if you’d opted for the five-year model. On a $400,000 mortgage that’s a difference of $200 a month, or $12,000 over five years. But if a five-year mortgage in 2018 jumped to 6% (highly likely), then payments would rise (over the 5-year rate) by about $750, or $45,000 over the term. This means by spending $12,000 extra in the first five that you save $30,000 in the next half decade.

Okay, that makes sense.

But there are other reasons 10-year loans are starting to garner more attention. One is that 1880 law which means all mortgages go open after five years. In this case it means after sixty months you have a borrowing which can be trashed at any time with a relatively small penalty. Most lenders will also allow early repayment of 10-year mortgage with lump-sum payments, or increased monthly payments.

Should you do this? Does it make sense to blend-and-extend to a 10-year loan if you’re already into a fixed term?

There’s no easy answer. Do the math. Balance the extra payments now against potentially higher ones later. If you’re a security freak, go for it. But also be aware you might be better off investing the extra money in a balanced and diversified portfolio kicking out 7% or 8%, then using that to pay down the principal upon renewal.

Or, move to Detroit. Prices there are up 14% in the past year. Remember your gun.

204 comments ↓

#1 DAVE on 04.21.13 at 6:05 pm

first?

Don’t go there. — Garth

#2 chopper on 04.21.13 at 6:12 pm

I take the last bit of advice but move to Florida instead, everything is cheaper car insurance, food and most of all houses.

#3 Carnival Man on 04.21.13 at 6:15 pm

Rate will rise I tell you, not now but they will, there is not such thing as price increases.

#4 james on 04.21.13 at 6:22 pm

garth, thanks again for the post. i remember a number of posts that suggest that for the extra differential you were recommending not worrying about the extra 5 year term. for someone looking for a new mortgage and debating a 5 vs 10 yr term is it truly the piece of mind that is the sway as it was suggested a 5 yr coupled with investment would be better?

#5 VanPerfecto on 04.21.13 at 6:22 pm

So many pundits out there. Whom to believe? Shiff says America is tanking

http://moneymorning.com/ob-article/schiff-us-will-win-currency-war.php?code=3243#.UXRl2WOnbD0

#6 None on 04.21.13 at 6:29 pm

What is your opinion on the Halifax market? I think it’s poised for a correction just like everywhere else but people think that ship building contract alone will keep the market inflated. I think that’s rediculous. What are your thoughts?

There has been no spring market in HRM. — Garth

#7 Old Man on 04.21.13 at 6:36 pm

There has been a well defined tradition with mortgages in Canada as to who controlled the lending. This went from the Insurance companies to the Trust companies and ended up for the most part with the banks; did you ever wonder why the banks bought out most of the Trust companies; it was all about control. Now am all for a longer term to lock in a renewal; I also say sell out to rent and wait a few years; those who are renting wait for a better day, and do not buy a new home now.

It is all about the cost of money, now and in the future, so what does one do? I say lock in for more than 10 years with an insurance company if you have the equity to qualify. The reason is simple as you will be paying a premium initially, but with rising modest wages with be paying with cheaper dollars over time.

There is a bigger reason, as you can budget for say 15 years with a well defined payment that is real, and can sleep at night for the longterm.

#8 espressobob on 04.21.13 at 6:37 pm

#6 Van Perfecto

Peter Schiff is an idiot! There I said it.

#9 blase on 04.21.13 at 6:40 pm

“like, so totally gnarly”

Is this a 26-year-old from 1984? That would make her 53 then, right?

#10 william valgardson on 04.21.13 at 6:42 pm

Heard today over coffee. Victoria. 33 year old. Nice house. 750,000.00 mortgage. Wants to sell. Can’t find a buyer. Took it off the mkt, put it back on. Wants to move. Can’t move. Don’t know what equity is in it, if any. House a block over. Assessed 750,000. Sold, 520,000 so the rumour goes. Not too promising for the person with the 750,000 mortgage. Yet, today, when I went gallivanting, sold signs everywhere. Prices are right for some people. It would be nice to have the figures. Are the sales because prices have come down enough to lure buyers?

#11 AK on 04.21.13 at 6:47 pm

#6 VanPerfecto on 04.21.13 at 6:22 pm
“Whom to believe? Shiff says America is tanking”
——————————————————————–
Shiff is an idiot!!

Yeah, Gold is going to $5,000.00

Enough said..

#12 blase on 04.21.13 at 6:47 pm

Great post Garth. This is information that 99% of Canadians would never learn, and you ante it up for free. You are a true Canadian hero. I will have a shot of Maple Syrup with my watery Korean beer in honour of you.

#13 Old Man on 04.21.13 at 6:53 pm

Try and find a lender for a renewal of 10 to 15 years that is closed if you have equity to weather the storm that will break for a 3 months bonus of interest in case you want to sell during that period of time for whatever the reason might be. There is no such thing as a closed mortgage on any term, as know one trick that used to break any mortgage to make it fully open without any penalty whatsoever, for a sale, but that is for another time except for some legal fees that can be eaten with a shell game.

#14 Shawn on 04.21.13 at 6:54 pm

ALL HAIL CHEAP 10 YEAR MORTAGE RATES

This article is an excellent description of the difference between Canadian and U.S. rates.

I do find it interesting that today in Canada you can get a 10-year rate only 1% or so higher than the five year rate.

About two years ago I did a lot of checking into this and the 10-year rates were more like 3 or 4% higher. At least as advertised.

For those who could not afford a big rate increase I think the 10-year rate looks like a pretty good choice.

Rates are actually at the lowest in history in Canada. In fact interest rates world wide are generally lower than in ALL of recorded history. This at a time when it seems we are awash in debt.

It defies logic. Are we also awash in savings? Are a very few massively wealthy people awash in savings that can be loaned to the masses? Or is it just the government bond buying?

With rates at record lows you almost HAVE to bet they will rise.

#15 Tom Vu on 04.21.13 at 6:59 pm

Love to see typical inbred Saskatchewan family taking local rapid transit.

#16 Freedom First on 04.21.13 at 7:22 pm

Great post Garth!

People are funny. When interest rates are high, people think they will never go down, and when interest rates are low, people think they will never go down. I believe Garth has referred to this in the past as “recency”. Recency can be applied to anything. Avoid assumptions. They can destroy you. Liquid, balance and re-balance, diversify, and live debt free. Works for me. Freedom First.

#17 Freedom First on 04.21.13 at 7:24 pm

#17…….I meant: “when interest rates are low, they can never go UP”

#18 HAWK on 04.21.13 at 7:31 pm

#6 VanPerfecto on 04.21.13 at 6:22 pm

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

His analysis regarding QE and the debt fueled economy make good sense, but his timeline seems dubious. One day the debt will simply spiral out of control, but it’ll be quite a while.

As the lone superpower, controller of the world’s most powerful military, financial systems and the Petro dollar, I think Uncle Sam will be able to keep the party going for several more years, maybe even a decade or two.

#19 frustrated on 04.21.13 at 7:36 pm

Here is my take on interest rates. I never thought I would see a 5 year mortgage for under 2.99 so you never know what will happen. I think the best thing to do is 1 year mortgage at a time until we see rates start to rise. When they rise is will start off slow, they cant raise it too high and too fast. When the rates rise, then lock in for 10 years. Who knows, maybe you will see a 5 year mortgage go lower before it goes higher. I wouldnt be surprised if you see a bank give a 5 year mortgage under 2.49

#20 baddog on 04.21.13 at 7:56 pm

Nobody has the ability to acurately predict where interest rates will be 5 years down the road Mr. Turner. Last year you were 100% sure that they would be going up this year. They’re not. They went down. In 5 years they might be triple. Or only 1% higher. Or even lower. Maybe even the same. No one knows. You do make a good argument but you did last year as well and look what happened. 5 year rates dropping even further took everyone by surprise. Even you. Just sayin’.

Rates have remained low because the economy weakened. This will change. You can deny it, or ready for it. Your choice. — Garth

#21 Ballingsford on 04.21.13 at 8:01 pm

Stuff! Stuff you need and stuff you want. Is it a want or a need! I want to get an 8″ cooks knife that’ll run me about $150. I have the chef’s knife that ran a bit more, but is the cook’s knife a want or a need? Probably a want since I have about 30 other knives that’ll do the trick.

Do l WANT a bigger place or NEED a bigger place for my stuff?

Lately I’ve been thinking that if I passed away, how much stuff would people have to go through and decide what to keep and what to throw away. I’m throwing away accumulated STUFF now to ease their agony.
And guess what! I don’t need a bigger place for my stuff any more.

But, I still need that cook’s knife. ;-)

#22 Old Man on 04.21.13 at 8:06 pm

I will give you a lesson about cost of money, as this old man who was a player in Toronto came to me over a cup of coffee during the 1970’s. He placed a second mortgage on a home for $100,000 at 15% with a first mortgage that was about $30,000, and told him he was insane. He smiled at me, and said borrowed the money with a bankline at 11%, and this home in Forest Hill has a huge equity, and the person is in trouble, so if all goes wrong, can pay off the first mortgage.

He said will be in first postion making a huge spread all the way with 4% using the bank money, so said my second mortgage is really a first mortgage, and if all goes down might go foreclosure via the courts to own this house to add to my portfolio of losers in life.

#23 Cliff on 04.21.13 at 8:09 pm

There is no such thing as normalized rates, rates track inflation. Next.

Current rates were deemed ’emergency’ by central banks because they are unrelated to inflation. Next. — Garth

#24 CrowdedElevatorfartz on 04.21.13 at 8:15 pm

@#10 Blase
your comment…
“Is this a 26-year-old from 1984? That would make her 53…….”

Ummmm, no.
1984 was 29 years ago……
That would make her 55.

Either way, a broke boomer heading towards retirement with nada in investments

#25 Nodebt on 04.21.13 at 8:17 pm

Thanks for the great info Garth !

#26 Cliff on 04.21.13 at 8:17 pm

They have been cutting rates for 35 years to stave off recessions. Holding rates at zero was the last gasp. During The next recession they will not be able to cut rates, I don’t understand why your not more negative on prices. Anything close to mean reversion will be a lot more than 15%.

There is not one uniform real estate market (as I have explained many times). Some will correct far more than others. The national average will reflect that diversity. So, where do you live? — Garth

#27 CrowdedElevatorfartz on 04.21.13 at 8:21 pm

Nice to know the ‘adult” in the photo driving the quad runner spent more on his ‘toy” than the “house” in the back ground
Those kids are doomed to flipping burgers

#28 Blacksheep on 04.21.13 at 8:27 pm

Shawn 16,

“This at a time when it seems we are awash in debt.
It defies logic. Are we also awash in savings?”

“Are a very few massively wealthy people awash in savings that can be loaned to the masses?”
———————————————-
That’s exactly how the system works, lot’s O rich dudes. How did you know?

#29 VINCE on 04.21.13 at 8:33 pm

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#30 habbit on 04.21.13 at 8:38 pm

#17 tom vu real funny. Now run along. Goof

#31 DA, why don't you talk about all the foreclosures in Kelowna on 04.21.13 at 8:41 pm

Garth, you mentioned once that if a person has the ability to buy a house in Canada with cash, then they should get the banks to lend them money equivalent to the houses worth, it would be designated as an investment loan.

That loan would be used to invest in the stock market, then the interest the investor has to pay back to the lender is tax deductible, hence you have a virtual tax deductible mortgage.

Do you still hold with that process?

I never advocated buying to invest in the stock market. Let’s be clear on that. The principal, however, is sound. If you buy for cash, then take equity out to build an investment portfolio, the interest is deductible from taxable income. In a time when loans can be had for 3% and well-managed portfolios have returned over 8% for three years (and the loan interest is deductible) it makes sense. The key is risk. Manage it. — Garth

#32 Good Authority on 04.21.13 at 8:44 pm

“Current rates were deemed ‘emergency’ by central banks because they are unrelated to inflation. Next. — “Garth
OK, I’ll try. We will stay within 1-1.5% of the US mortgage rates for the next 30 years as anything much higher would take our dollar to new highs and our business would crash. We know who the masters are. He who is allowed to print money forever, controls all.

#33 Poltawadiva on 04.21.13 at 8:48 pm

#23 regarding “stuff”

If you ever wonder what will become of your “Stuff” go to an auction, where contents of an estate are auctioned off. That precious and expensive stuff will get 10% on the dollar (if lucky). That 8″ cook’s knife will probably fetch $5. Or it might go as a lot – all of your knives for $10

It’s a sobering lesson on how much our “stuff” is worth to others.

#34 Eleanor on 04.21.13 at 8:48 pm

Hi Garth,

Coud you please elaborate on this part

“in Canada CDIC will not insure deposits of longer than five years.”

Thanks,
E

As it reads. This is why you can’t get a 7-year GIC. — Garth

#35 Andrew on 04.21.13 at 8:52 pm

Rates wont normalize becuase it’ll kill the ecomony which is now hooked like drugs on them being low.. Harper and his henchmen caused this mess . Unless canada starts exporting more goods rather them having a contruction industry that makes up 30 percent related to housing spells doom and if 70 percent own homes.. Higher rates will be a disater…look to japan for whats next… Dont forget the boomers retiring to add to the pain

#36 EXILED on 04.21.13 at 8:54 pm

Mr Turner: The picture is a family at very grave risk of personnel injury. Unaware of the dangers ahead. But only the one hand at the back ” rack ” is stopping the disaster.See the boot in front of the third wheel. Garth’s parable ” He’s the lone beacon of reason / safety.

#37 EXILED on 04.21.13 at 8:59 pm

Mr Turner: Or he is holding back the whole disaster with one hand. Now that’s good!

#38 NAGA on 04.21.13 at 9:06 pm

Future path of Interest Rates – possible Japan scenario – similar demographics a couple of decades later…..

In addition to demeographics we are also living through a period of technology revolution which is changing the way work is done and who gets rewarded for that work.

The economy in the western world and japan continues to struggle – mostly due to large Govt and Individual debt levels…..Corporate balance sheets are in good shape. Over the next couple of years these economies will continue to tither with recessionary forces – Europe and US biggest drag – although I agree that US has a better chance of coming out ahead but Obama is the drag on the economy…..

RE prices in most places in Canada will continue to surprise with their resiliency – perhaps sales volumes will be setting new expactations that lower sales atre here to stay – but prices will hold – but no real increase either – SFH prices in the GTA continue to be supported by lack of supply especially if looking for reasonable quality……….Trudeau is the only treath to RE prices (People confidence) and economy so we have at least to 2015 before any corrections to both….

#39 Shawn on 04.21.13 at 9:06 pm

BANK PROFITS ON FIVE YEAR MORTGAGE

Five year rates at 2.75% …

Makes me wonder…

What are they funding this with? They pay over 2% on GICA which would leave a thin 0.75% net interest margin which is thin gruel for a bank…

They could fund with no-interest deposits taking the risk that rates won’t rise or the deposits won’t be pulled away.

That would leave a 2.75% margin.

Knock off say 1%? for bank operating costs?

Leaves 1.75% for profit

This is risk free CMHC stuff…

So leverage it up what 15 times?

Now we are at 26.25% pre-tax profit

18.4% after tax…

Or if leveraged up “only” ten times we get

17.5% pre-tax profit, 12.25% after tax ROE… sounds reasonable?

Trick is to be a low cost bank… Can’t afford to lose too much of the net spread to costs…

Doubt you will find the specifics in a bank annual report…

#40 T.O. Bubble Boy on 04.21.13 at 9:08 pm

Flaherty’s “unintended consequences” continue around the GTA, where $999k is the official price of every listing that would have been $800k-$1.1M.

I’d be interested to see how many $949k loans the CMHC is still handing out (maximum amount for an insured mortgage with a 5% downpayment on a $999k house).

#41 Mark W on 04.21.13 at 9:13 pm

“In the US, 30-year locked-in mortgage rates grew out of the Great Depression of the 1930s. Prior to that, short-term, variable-rate loans helped fuel the banking crisis (and a real estate bubble in the 1920s) that almost destroyed the country.”

How short term?

How often could they adjust interest rates in this era?

#42 The Prophet Elijah on 04.21.13 at 9:20 pm

DELETED

#43 Buy when they cry, sell when they yell on 04.21.13 at 9:20 pm

I’m pretty sure that’s Honey Boo-Boo on the front of the quad.

#44 Bargains everywhere on 04.21.13 at 9:22 pm

#35 Poltawadiva on 04.21.13 at 8:48 pm

#23 regarding “stuff”

Poltawadiva, you couldn’t be more right. I’ve been to many auctions. Your fine china and crystal will go for pennies on the dollar. Your sterling silverware will be bought for less than bullion value and melted. Silver plate is worth nothing. Your grandmother’s beautiful silver plate tea set will go for about $25 – $50 max.

It was a very valuable lesson to learn.

#45 Tom Vu on 04.21.13 at 9:23 pm

#32 habbit on 04.21.13 at 8:38 pm

#17 tom vu real funny. Now run along. Goof

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

Why sign name Goof when post as habbit ?

I am impressed with Saskatchewan tribal habits.

Alpha Male on Quad is hunter- gatherer….if gets 4 flat tires/runs out of gas has enough back up so not gets boots dirty.

Go Riders go….

#46 Django Chained on 04.21.13 at 9:30 pm

espressobob
#6 Van Perfecto

Peter Schiff is an idiot! There I said it.
——————–

The same was said by real estate ‘experts’ when Peter Schiff was laughed at on national TV in 2005 when we predicted very correctly the coming US housing crash. Having myself researched at that point the credit expansion and bubble in the states I found his view points at that time to be very logical and correct.

I follow with interest his recent predictions as I believe he might be correct to large degree again on the coming very hard times for the US economy.

The only unknown is when (not if) would the ‘elastic’ dollar break taking down the economy with it. Then most of Peter’s predictions would become true to large extent at that point.

When the dollar looses its status of world reserve currency it is game over. Based on recent developments this time it seems is fast approaching.

The Europe crises is saving somehow the dollar for now, this is enforced by the fact that the dollar is still the reserve currency, but the effect is fading.

#47 GG on 04.21.13 at 9:31 pm

Talk to Japan about rate increases. I know … It different here. LOL.

#48 Smoking Man on 04.21.13 at 9:31 pm

What an eye opener, I’m in nf ny almost every weekend taking advantage of my very expensive charmens club stats at senica casino..

I sold my cottage 5 years ago, got tired of cutting grass, cleaning up empty bottles and used condoms all over the property every few weeks when my kids had parties..

It hits me this weekend, buy a water front property on the Niagara river on the USA side…. Only one hour to boarder, no 400 traffic jambs, Much to my shock, expensive as hell….

Then I look in nice areas in Buffalo close to marina or lake…. Shockingly expensive..

I thought for a second I was ahead of the curve… I well better be content with the Centre suite at Senica….. Free sort of….

#49 Cliff on 04.21.13 at 9:31 pm

I live in fort McMurray, but I have searched the entire country looking for buildings to buy and can’t find any compelling price to expense ratios, I even found buildings in Quebec that would be cash flow negative if I paid cash!!!!!
Given the high percentage of the economy employed in construction, and the fact It only makes sense for investors to build to sell not rent I expect a significant recession in Canada.

#50 Django Chained on 04.21.13 at 9:34 pm

Shiff is an idiot!!

Yeah, Gold is going to $5,000.00

Enough said..
———————–

He who laughs last, laughs best.

#51 Cici on 04.21.13 at 9:35 pm

#8 Old Man

Hello Old Man,

I like the description of your trailer park. Please give me a hint…in the US or Canada? East or West? Average price range?

Thanks!

#52 Popeye the Sailor man on 04.21.13 at 9:39 pm

Last month my Wife and I where three years into a five year fixed term @ 4% with Scotia Bank. We just did a blend and extend for another 5 years, and we managed to get 3.5% for the term.

I know rates will be higher in a couple of years and may be much higher after that. But I’m happy to have saved ½% for the next 2 years, and what ever the difference is from the rates over the last 3 years of my term. If rates are very high in five years I may consider variable or shorter terms, we will see.

I will be OK @ 7% in five years are you?

#53 Cliff on 04.21.13 at 9:43 pm

But on the plus side I’m raising money with local investors to purchase multifamily units in Houston in between downtown and the large medical centre.
It’s very easy to set up a LLC in America, don’t be lazy people its not just about protecting your self it’s a rare opportunity the cash flow is compelling, and everyone please sell your gold, if it doesn’t produce income it’s pure speculation to hopefully sell for a profit and then pay 50% tax….

#54 saskatchewan roller on 04.21.13 at 9:47 pm

Hi Tom Vu. A little jealous you are of a nice Sask family enjoying a paid for quad on their paid for land that is currently producing crops, oil, or covering a large potash deposit? Sucks to live in a region of Canada where your homes are so overvalued that you rely on this web site for an olive branch of advice so when rates go up you dont lose your 750sq ft condo. And im sure your version of rapid transit is a short 1hr commute thru three suburbs each way. Diverse yes we are, inbred is your dull thought that your home is a retirement fund.

#55 Bubu on 04.21.13 at 9:48 pm

#29 CrowdedElevatorfartz
“Those kids are doomed to flipping burgers”
……………………………………………….

I won’t be so sure about that.
The HONEY BOO BOO family is said to be taking in $15k – $20k per episode, other sources say that … $500,000 per episode salary (reportedly as much as $700,000 per episode) … for the whole family- is being paid to them.

And NO! Bubu and Boo Boo are not related, lol!

If they play their cards even halfway right, then those kids won’t have to flip burgers, but I can bet that they’ll be eating a lot of those!

#56 AK on 04.21.13 at 9:53 pm

#52 Django Chained on 04.21.13 at 9:34 pm
“He who laughs last, laughs best.”
——————————————————————–
Peter Shiff is a Bullshit Artist.

The day Warren Buffett buys Gold, is the day I sell all of my invstments and hide in a Bunker. :-)

Now run along and buy some Gold.

#57 The Prophet Elijah on 04.21.13 at 9:54 pm

#44 The Prophet Elijah on 04.21.13 at 9:20 pm

DELETED
——————————————————-
Garth how come this was deleted. It’s my first post and I was just making a case. Nothing profane was posted.
I don’t understand.

Not a gold-pumping blog. Go away. — Garth

#58 CrowdedElevatorfartz on 04.21.13 at 9:56 pm

@#57 Bubu
Total agreement. Judging by the size of waistlines. They kids wont have to worry about retirement. They wont see retirement.

#59 Interest rates could also go down further on 04.21.13 at 9:59 pm

Garth, on the one hand you say “today’s rates are an aberration…. The feds crashed them in 2009 to stave off a depression. It worked ” Then you say “mortgages could be 6% in five years. … it will happen. … For real estate this is one momma of a problem.” But a major real estate market problem will surely lead the country into a recession; given that rates were lowered to stave off a recession, what makes you convinced this time our govt will not do the same again?

Because they’re smarter than you. A credit bubble is a worse outcome than a housing deflate. — Garth

#60 Buur-nut-key on 04.21.13 at 10:03 pm

This clip has Schiff in it but the host is also very intelligent. It speaks about these ultra low interest rates

http://www.youtube.com/watch?v=Xf1TB75tpbs

#61 Jean Poutine on 04.21.13 at 10:05 pm

DELETED

#62 Tom Vu on 04.21.13 at 10:10 pm

#56 saskatchewan roller on 04.21.13 at 9:47 pm
===================================

No worries…apology accepted.

As you may be aware, Einstein wanted to be a realtor as was first career choice.

That said, in relativity speak, Saskatchewan = Thanking lucky stars NOT Manitoba (especially Loser-peg…ugghhh …..talk about Black Hole)

#63 KG on 04.21.13 at 10:15 pm

Rates have remained low because the economy weakened. This will change. You can deny it, or ready for it. Your choice. — Garth

Are you saying the Canadian economy will be better off from today in 5 yrs ?

Wait and see. — Garth

#64 not 1st on 04.21.13 at 10:18 pm

Nice to know the ‘adult” in the photo driving the quad runner spent more on his ‘toy” than the “house” in the back ground
Those kids are doomed to flipping burgers

____

Umm, hate to tell you but thats the Honey Boo Boo crowd making $200k an episode to act like fools. Ahh America, land of opportunity.

#65 not 1st on 04.21.13 at 10:21 pm

Garth, I know a lot of boomers just like you longing for 1980 when you could stick your money in the bank and earn a living from it. Ain’t ever going to happen again. The powers that be want that money out in the economy, not in deposits.

rates will normalize to maybe 2001-02 levels, 4% mortgages.

Actually it will be US growth that takes rates higher. Savers will never be satisfied, but borrowers will be spanked. — Garth

#66 Lookoutbelow on 04.21.13 at 10:25 pm

With the “emergency low rates” now the norm, the next group to get into serious financial trouble will be the retirees.

They have already suffered almost zero income from their bank deposits and of course putting money into the TSX will almost gurantee a negative return given the shrinking bank earnings and the collapse in commodity prices.

Hello Japan! Here comes deflation, did you see the retail sales decline last month?

There is a lot of daylight between bank accounts and the TSX. No reason retirees cannot enjoy good returns with completely acceptable risk. — Garth

#67 Timbo on 04.21.13 at 10:32 pm

remember your gun? lol

http://www.salon.com/2013/04/20/how_boston_exposes_americas_dark_post_911_bargain/

“Those who would give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.”

careful what you wish for…………..

http://www.bloomberg.com/news/2013-04-21/japan-inc-hesitates-to-invest-as-stocks-rally-on-plummeting-yen.html

“Japan’s trauma was greater still, Koo said. The wealth lost was three times gross domestic product. The U.S. crash cost a year of 1929 GDP. And just when Japan was showing signs of recovery, the 2009 global financial crisis hit. Then came the 2011 tsunami. After all that, the Nikkei 225 Stock Average is two-thirds off its 1989 peak. Land is cheaper than in 1981.”

It’s not over yet..older populations extract from savings…tick…tick….

#68 Big Al (New) on 04.21.13 at 10:33 pm

Nominal interest rates in Japan have been at .05% or less since 1996, please explain how in the current economic environment the Bank of Canada rate will rise to anything above what is now. Rates rise dollar rise exports die. If the States raise their rates then the Canadian rates will rise in lock step. But the US rates can’t rise or their cost of carrying the national debt will overwhelm their ability to maintain current programs and instantly crash their markets. Japanese rates for the last 20 years have proven that. The only reason they would rise is if inflation starts to spike, not likely in this stagflationary environment. Do you have any idea why Bernanke won’t be at Jackson Hole this year, scheduling conflict my ass.Certainly will be an interesting Spring Summer and Fall this year.

#69 Old Man on 04.21.13 at 10:48 pm

#53 Cici – will not disappoint, as in the Province is Ontario on 85 acres with hundreds of homes with 7 miles of paved roads. There is no debt, so all taxes, sewers, natural gas, telephone, water, high speed internet, natural gas, and satellite TV has all been bundled with a cost of about $5,000 a year.

There are no lease payments to be made, as when you buy a property the corporation gives you one share to do whatever you want on your land. Ok, a great home in this massive complex that is debt free will cost you about $52,000.

Now remember what I said as will not disclose this location, unless, as can be rolled over for a coffee and a donut at Tims, if someome wants to hook-up with me.

#70 AK on 04.21.13 at 10:55 pm

Nikkei: Nears a 5 year high.

Nikkei bulls charge

#71 Carnival Man on 04.21.13 at 11:02 pm

HA economy 5 years from now ! Will I be alive 5 years from now is the question.

#72 Oakvillain on 04.21.13 at 11:04 pm

Back in the 1980s, I wrote a book of Canadian mortgage tables. (Our rates are calculated slightly differently from the way it’s done in other countries, and use twelfth roots.) The interest rates started at 6% and went up from there. We didn’t cover rates lower than that, because at the time, rates as low as 6% seemed like a fantasy, and lower rates seemed impossible.

#73 Yikes on 04.21.13 at 11:20 pm

Hi Garth,
If the Canada interest Act states that penalties can not be greater that 3 months of interest payments could you please explain how they could have quoted me $20k? When I tried to get out of my 5.79% mortgage to get a 3.5% mortgage 4 years ago, the bank told me I would have to pay a $20k penalty. Three months of payments would have only been 25% of the penalty they quoted. How could this be? We’re the banks ignoring the Act or was there a loophole they found in the Act?

The 3-month fee is after five years. Prior to that they can charge the IRD. — Garth

#74 The Man From Nantucket on 04.21.13 at 11:21 pm

Garth: “……..After all, the 25-year average for a five-year fixed-rate mortgage is 8.25%…………”

Lovable host, I get your point, and I know that rates are going in a direction other than down.

That said, this 25 year period includes an ugly seven year block where we had nonsense in the 10 to 15% range.

Please tell me that we’re just as unlikely to see this as we are to see today’s rates last for 7 more years!

Any speculation as to what I should bet on 5 odd years from now at renewal?

Thanks for keeping this interesting,

#75 The Man From Nantucket on 04.21.13 at 11:28 pm

As for evaluating whether a 10 year mortgage is right for you, numbers are your friend.

Run them for every scenario that makes sense for your situation.

Back test them over several 10 year periods and see what happens.

Most of the time, you would have ‘won’ if you went with variable, or with terms shorter than the typical 5 year.

Several I know fell into the five year trap due to peace of mind considerations. The correct game plan, most of the time, is probably take the minimum rate you can get, and don’t accelerate payments, but rather invest the difference in something that beats the mortgage rate…….which today ain’t all that hard!

#76 RayofLight on 04.21.13 at 11:34 pm

In Tucson,AZ, for $150k -$160k you can buy a four bedroom, 1,600ft^2 with a double car garage. This is what the Canadian real estate reality will be in five years.

http://staging.tucson.com/homes/realestate/?format=althtml&template=star&action=page3&mlsdb=tni&mlsdb_tni_property=merged&proptype=Residential&propsubtype=Single+Family+Home&minprice=150000&maxprice=160000

#77 Devore on 04.21.13 at 11:44 pm

#67 not 1st

The powers that be want that money out in the economy, not in deposits.

Money in the bank is money in the economy. Do you think it just sits there in the vault?

#78 Dave on 04.21.13 at 11:54 pm

You do very little to convince me that rates are headed higher. The only point presented in your article is a meaningless statement about average rates over a 25 year period at 8.25%. Well so what????

In order for rates to rise there needs to be economic conditions in place to warrant a gradual increase in rates. Employment data and inflation are what drives rate movement. At this point, given recent economic news we are not even close to a rate increase…actually if anything current economic conditions would almost indicate the next move could be lower. Although in my opinion a prolonged pause in any rate movement is most likely while the BoC shuffle Tiff Macklem (PS – please use the blog name: T Mack) as their new governor. It should also be noted that both the USD and Yen are racing to the bottom with their government bond purchasing program.

Inevitably when interest rates do start to rise they will without question be done in quarter point increases and will be painfully slow.

Having said all that, know one can forecast rates out to 2018…that’s a silly guessing game.

#79 daystar on 04.22.13 at 12:26 am

It seems like there’s more than a few of us missing the mark with interest rates. Canada is not the U.S. . Canada is not Britain. Or Japan. To my knowledge, there are only 3 nations in the world using Q.E. . The rest are holding their own, more or less. Lets take a look and see how the rest of the world is doing:

http://www.tradingeconomics.com/country-list/interest-rate

What we will see is that the most developed nations in the world are also the most indebted and by no small coincidence, have the lowest interest rates and its related to public/private/corporate debt service but its also related to economic performance and currencies and the facts are that some nations can’t afford to service interest rates that are “normalized”. Canada, thanks to the lobbyist Harper, just became one of those nations.

So we ask ourselves, if the U.S. continues to Q.E. forever will Canadian interest rates stay low forever? The answer is no (at least, unless Canada somehow thinks it can Q.E. and get away with it and really, it can’t. I will explain). The Bank of Canada has always maintained that they watch core inflation as an indicator and if core inflation rises much above 2%, rates will rise. (much like the central bank of Japan come to think of it) So what could cause core inflation to rise in Canada… lets think about it.

Would increased trade deficits do it? Shrinking exports priced in nominal dollars would definitely reduce our money supply and as a consequence, our loonie would fall. Trade deficits would also cause more risk in the bond markets and that risk is reflected with higher interest rates. A falling loonie could definitely cause core inflation to rise as imports become more expensive. What would cause a falling loonie? A stronger U.S. dollar coupled with dramatically shrinking U.S. imports from Canada would be enough. Could shrinking U.S. imports from Canada in commodities alone be enough?

Bingo, ring the bell, I think we’ve got a winner! Sure, commodities alone could do it and anyone who is paying attention to the energy renaissance in the U.S. knows that the probability is much higher than it ever used to be specifically with oil and PM’s. In fact, the average Canadian would be foolish at this point to not look at what is happening south of the line concerning energy production and policy and say Canada is not at risk but Canada is most definitely at risk not just to lower commodity values in oil and PM’s but also in lower export volumes with energy and that has the tendency to drag down the entire TSX and Ventures as is happening right now. It will hurt speculation, shrink wealth, cause the loonie to tumble, hurt financials, yes, it has the strength to cause core inflation to rise in Canada and conversely, interest rates to go up. Possibly way up. 8% mortgages should not be surprising within 5 years and Canada is simply not ready for it but that’s what happens when a lobbyist runs the show.

Since Japan came up:

http://www.xe.com/currencycharts/?from=JPY&to=CAD&view=5Y

Expect Japan to run high inflation and big problems around oh… say May when the numbers catch up. High inflation means higher rates and this nation can’t afford it. What will happen to the Japanese currency and economy in terms of confidence? I predict Japan will continue to Q.E. because they have no choice and before year’s end, it will be obvious for all to see. All trained eyes will be on velocity from there but it doesn’t look good at all for Japan:

http://www.ctvnews.ca/business/japan-logs-record-83-4b-trade-deficit-in-fiscal-2012-1.1242978

Japan’s trade deficit is poised to balloon in 2013 as a result of their big drop in the Yen. This falling Yen will lead to inflation predictably and can Japan afford to raise rates? No, it can’t. A mere 2% rise in rates effectively wipes out their government’s entire budget spending with debt service alone without laying a dime on spending programs. Its Q.E. to infinity for them and this will shake up markets worldwide if I’m right, without question as Japan keeps rates at zero with Q.E. even through high inflation. Even with low external debt Japan’s public debt is a total mess there. If the Yen continues its fall without abating, confidence will wane, pressure to sell government bonds will become immense and hyperinflation could predictably ensue. It could happen as early as this year, I’m 100% certain within 5 years and force the world to rethink the nations who practice Q.E. with new found risk. The biggest financial global risk is Japan right now in my opinion, hands down.

#80 Mixed Bag on 04.22.13 at 12:27 am

The rate roulette is aptly titled.

On the one hand, the money you are saving now with a lower shorter term rate is a *definite* saving over the longer term rate. The longer term rate *may* save you in the long term, *if* rates are up considerably when the shorter term is up. What could you have done with the saved interest payments in the shorter term, and what is the lost money worth in the future?

To me, a bird in the hand is worth two in the bush. It’s why I went with a 2 year term a year ago at 2.49 %.

To have the bird in the hand hedge your bet further, take the lower shorter term, take the difference in the interest payments from the longer term rate, and apply it to your principal. So when the shorter term is up, and the rate is higher upon renewal, hopefully the amount of principal knocked down has worked out for you despite the higher rate at renewal.

Or invest the difference, as Garth suggests, and apply it at renewal time to knocking down the principal, to deflate the effect of the higher interest rate at renewal.

#81 Mixed Bag on 04.22.13 at 12:31 am

Further to my above post, if the 10 year and 5 year rates aren’t far apart, the 10 year should win. It’ll depend on the math.

#82 daystar on 04.22.13 at 12:31 am

More sobering thoughts on Japan:

http://www.clearonmoney.com/dw/doku.php?id=public:japan_government_debt

#83 Piccaso on 04.22.13 at 1:22 am

#78 RayofLight

I know, it’s even less in Texas where i’m at. Canadians are absolutely insurd paying that $400,00 to half a million for some 1.200 sq ft 2 story on a 50 sq ft lot.
Quit feeding the real esatate pyramid up there !!

#84 popados on 04.22.13 at 1:25 am

billy ,what frickin city are you gallivanting in and frickin ?

#85 Humpty Dumpty on 04.22.13 at 1:36 am

Hope its a Benelli….

http://www.youtube.com/watch?v=QXL40_G_Fxk

#86 cynically on 04.22.13 at 1:43 am

#34 Good Authority – Our neighbors aren’t masters of the universe because they can print money – they are masters because they are go-getting, innovating entrepreneurs with creative ideas and much research and development. Also they haven’t been a colony for the last 230 years!

#87 Teulon on 04.22.13 at 1:44 am

Garth
I don’t follow your calcs:
10 year rate 1% higher than 5 year rate will mean interest increase of ~ $4000/year on $400K mortgage, not $2400. Also your interest amount, even if correct at $2400/year in first five years , don’t reflect principal pay down. Please explain.

#88 Investx on 04.22.13 at 2:09 am

“But also be aware you might be better off investing the extra money in a balanced and diversified portfolio kicking out 7% or 8%, ”

So now the rate of return you’re proclaiming has reached 8%. First it was 5 to 6, then 6 to 7, now 7 to 8.

Hey, at least THOSE rates are rising!
LOL

An investor with a balanced, diversified portfolio of 60% growth and 40% fixed income should have enjoyed a 10% return in 2012, 8% over three years and 7% over the last nine. I regret you were not among this group. — Garth

#89 popados on 04.22.13 at 2:24 am

lots of red dots in bpoe land. where are you hiding?

#90 old codger on 04.22.13 at 2:27 am

#22 and #61,

hmmmm… rates were predicted to rise this year. They didn’t… Why? Because of a weakened economy (gee, who could have foreseen that). Our “smarter”, financial wizards in Ottawa had nothing to do with the bubbles we are experiencing. Lucky they’re smarter than us, eh?

#91 OZU on 04.22.13 at 2:36 am

HOW MUCH LONGER DO WE HAVE TO WAIT TO GET A HOUSE IN VANCOUVER !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

#92 Rate roulette — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 04.22.13 at 3:08 am

[…] While nobody wants to believe it, today’s rates are an aberration. Temporary. A freak of nature. The feds crashed them in 2009 to stave off a depression. It worked, but spawned an addiction. Today cheap money’s bloated debt like never before and gone mainstream. Ask any 26-year-old horny for a condo if she thinks mortgages could be 6% in five years. “You,” she’ll say, “are, like, so totally gnarly.” Continue reading → […]

#93 johnny d on 04.22.13 at 3:08 am

@ #56 Saskatchewan roller

Actually buddy, sask residents are one of the top leaders in debt growth in Canada. Both mortgage debt and credit card debt. Chances are that quad is acquired through a heloc haha

#94 popados on 04.22.13 at 3:15 am

bill. oh shes not a female.but a city.sorry….

#95 Onthesidelines on 04.22.13 at 3:40 am

Wait and see. — Garth

You should rein in your unsupported speculation and take your own advice re rates above.

Predicating a rise in rates on improving economic conditions in Canada and elsewhere is a pretty weak argument just now.

#70 above (Big Al) is about as correct as anyone is going to get to predicting anything about rates.

#96 Humpty Dumpty on 04.22.13 at 4:30 am

#9 espressobob on 04.21.13 at 6:37 pm

Peter Schiff is an idiot! There I said it.

Yup, coming from a guy whom would lick The Bearded One’s office glass windows after bringing him a doppio… Bob!

#58 AK on 04.21.13 at 9:53 pm

Peter Shiff is a Bullshit Artist….

Yup, coming from someone whom continuously states the Dow at 19000…. AKA = Obtuse

9/13/2011- Peter Schiff Testimony Before Congress

http://www.youtube.com/watch?v=FLmD9TeUC54

(2 of 2) Peter Schiff

http://www.youtube.com/watch?v=xZbQGpf3D_Q

Care to embarrass yourselves any further…..

#97 Dean Mason on 04.22.13 at 4:44 am

To A.K.

The Nikkei 225 was almost 39,000 about about 23 years ago. Now it is about 13,500. The 5 year high does not make much difference. Just 6 years ago it was almost 19,000.It is still short 5,500 points or almost 41% just to get to before the great world financial crisis started.Good luck.

The topic about interest rates is that they could rise may be 1%-3% over next 5 years but any economic upset like a banking crisis,debt crisis,stock market crisis or any other economic shock could easily force interest rates down. I don’t think they will stay higher for a lengthy period.It is in the best interest of central banks and governments,corporations to keep their borrowing costs low and down.

#98 World Traveller on 04.22.13 at 5:24 am

#23 regarding “stuff”

If you ever wonder what will become of your “Stuff” go to an auction, where contents of an estate are auctioned off. That precious and expensive stuff will get 10% on the dollar (if lucky). That 8″ cook’s knife will probably fetch $5. Or it might go as a lot – all of your knives for $10

It’s a sobering lesson on how much our “stuff” is worth to others.

*******

Try selling your stuff for an overseas move. Kijiji and craigslist can be your friend but it does take a bit of work, there are bargain hunters looking for already assembled ikea furniture though.

#99 Future Expatriate on 04.22.13 at 6:03 am

Schiff is a Fox News whore, an idiot, AND a jerk. Provides on demand the de rigueur Fox required “analysis” that America is ending until the conservatives get in the White House.

Anyone who watches Fox “News” deserves exactly what they get, in this world AND the next.

#100 drydock on 04.22.13 at 6:30 am

I see loose and looser instead of lose and loser are on the loose again.
It’s enough to make you weep.

#101 AK on 04.22.13 at 6:45 am

#100 Future Expatriate on 04.22.13 at 6:03 am
“Schiff is a Fox News whore, an idiot, AND a jerk. Provides on demand the de rigueur Fox required “analysis” that America is ending until the conservatives get in the White House.

Anyone who watches Fox “News” deserves exactly what they get, in this world AND the next.”
——————————————————————–

Very well said.

Perhaps the Moron from (Post #97) should make a note of it.

#102 AK on 04.22.13 at 6:48 am

#97 Humpty Dumpty on 04.22.13 at 4:30 am
“Care to embarrass yourselves any further…..”
——————————————————————-
The only one who embarasses himself is Schiff. But you are too clueless to notice.

#103 Raven on 04.22.13 at 7:16 am

“Gnarly” means good! L.A. Valley Girl Slang

Variable rates have over the long term always been a better bet. Fixed term 5 yr/25amt. rate average over slightly longer window of 35 years is closer to 9 1/2%.
Reversion to the norm (not the fat guy on Cheers).

U.S 25 yr term mtgs are great now but horrible at 20% rates of the Eighties. Why can’t banks allow assumable mtges anymore? That makes borrowers more in control of their borrowings and longer terms more desirable if rates are low.

If R.E. conditions deteriorate further in Canada then rates may dip before they rise in the short term. We are somewhat hidebound with our correlation to the rates set by Barnanke through QE. In our current race to the bottom with rates to devalue currencies to increase trade to boost economic standing between industrial nations we are seeing an aberration of normalicy.

History has proven that the resilience of the American Spirit has gotten the world through some pretty rough times. It will be no different this time! In 2008 when the world teetered on the brink of disaster the U.S. dollar rose gold fell as the world knew where to put their money when it seemed implosion was at hand. Their growing economy is our biggest threat to rising interest rates as they will dictate as they always have our viable interest rates.

#104 Chopper on 04.22.13 at 7:21 am

A good read on the interest rate dilemma.

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/surgical-versus-blunt-policy-tools/article11430049/?cmpid=rss1

#105 young & foolish on 04.22.13 at 7:44 am

Hahaha …. Real Estate is saved. So many people come here to find out when they can “buy”. It seems there will always be buyers.

I guess RE is more than just an investment, it’s a place to live (something everybody has to pay for, one way or another).

#106 neo on 04.22.13 at 7:45 am

Garth,

We are a credit based economy. Our economy cannot expand unless credit does. We have to FIRST develerage this current credit cycle before another one can form. aka. boom/bust. How is this going to be possible by 2015? The only time interest rates in Canada have gone up significantly in the last 20 years was in 1993 and that was by force due to bond vigilanties and public debt NOT private debt. The government gives lip service to private debt loads but it serves their self interest as well as their lobbie$t interests. No way the economy in 2015 will be robust enough to support higher interest rates. Especially if the housing market crumbles as you have been saying and it is 30% of the economy. You are way off on this one.

Rates will likely rise in 2015, as central banks have made it clear. I remind you all it took was a 0.9% hike – the effective impact of ditching 30-year mortgages – to crash housing sales. — Garth

#107 fancy_pants on 04.22.13 at 7:45 am

Dang, you lost me here…
“As the economy heals over the years to come”

+ it’s tough call on the rates:

There is a lot of downward pressure to keep rates low: currency wars going on between China, US and other big players it’s a race to the bottom to devalue one’s currency to improve trade surpluses. And which country wants to service their debt at higher rates? none. Raising rates here will also chase more jobs away and increase our trade deficit.

Potential upward pressure on rates is the looming mass of debt the sheeple have accumulated and the concern that that in itself is motivation to increase them. Not a strong argument in itself; F and co. have curbed debt appetite through a tightening of mortgage lending rules instead.

hmm. tough one but If I had a mortgage I would still go variable.

#108 Stoopid Idiot on 04.22.13 at 7:53 am

AKA Dr. Wayne

http://www.youtube.com/watch?v=iRAewRQl_ZY

#109 AK on 04.22.13 at 7:57 am

#100 AK on 04.22.13 at 6:45 am
#100 Future Expatriate on 04.22.13 at 6:03 am
“Schiff is a Fox News whore, an idiot, AND a jerk. Provides on demand the de rigueur Fox required “analysis” that America is ending until the conservatives get in the White House.

Anyone who watches Fox “News” deserves exactly what they get, in this world AND the next.”
——————————————————————–

Very well said.

Perhaps the Moron from (Post #97) should make a note of it.
——————————————————————–
It should read (Post #95- Humpty Dumpty)

#110 AK on 04.22.13 at 8:19 am

#108 Stoopid Idiot on 04.22.13 at 7:53 am
“AKA Dr. Wayne”
——————————————————————–

LOL. You are a funny guy!!

Have a nice day !!

#111 TurnerNation on 04.22.13 at 8:26 am

No position here, but for the yield hounds:

HOT.UN just listed in Canada. Almost 9% div.
What caught my eye is it’s all-USA with it’s properties. So, US exposure without the withholding taxes.
Added it to my watchlist.

http://www.ahipreit.com/portfolio/property-database

“AHIP’s initial portfolio of 32 hotel properties represents a total of 2,565 rooms – the largest and highest quality chain of crew lodging facilities presently serving the U.S. freight railroad industry. All of the properties in the initial portfolio operate under the Oak Tree Inn brand name (except one Best Western hotel).”

#112 Axxman on 04.22.13 at 8:33 am

Did Carney know what he was saying when he said that a condition that must exist before he raises rates is “you need to see a continuation of what is becoming a positive evolution of household debt and aspects of the housing market”. Huh?? What if we had a systemic problem with alcohol consumption in Canada and a politician’s (yes Mark – that’s what you are) response was “we will not raise the price of cheap liquor until people show us that they will stop consuming the cheap liquor”? Would anyone even being to think this politician was logical, let alone sane? What if Carney sat down in front of the Financial Stability Board and said ” we will not raise minimum capital requirements until banks raise their capital levels” – wouldn’t he be sent back on the #50 bus to the Basel airport within seconds? Can we send him away now instead of waiting before he embarrasses himself and Canada further?

#113 jess on 04.22.13 at 8:58 am

http://www.rooseveltinstitute.org/new-roosevelt/real-lesson-great-depression-fiscal-policy-works

Comparing Unemployment During the Great Depression and the Great Recession

http://neweconomicperspectives.org/2013/04/comparing-unemployment-during-the-great-depression-and-the-great-recession.html
http://money.howstuffworks.com/interest-rate4.htm

#114 thiscountryis going down the toilet on 04.22.13 at 9:02 am

You keep alluding to the mistaken factoid that ‘the fed dropped rates in 2009’

“The feds crashed them in 2009 to stave off a depression.”

this statement isn’t true……the fed crashed rates in 2001…..which I think preceeds ’09 by a few….eh?

Even if your statement was true…..and you align it to another fallacy you suggest…in that the fed doesn’t control mortgage rates….a commom fallacy so I forgive you……..by saying that ‘the fed carshed rates in ’09’…..kind of indicates that the fed does control rates…….and they do….by issuing billions of dollars in bonds…supposdley to be purchased on the market by ‘investors..( another fallacy) …they buy them back from themselves……and force private equity out of the market. C’mon ….do you think Bill Gross & PIMCO own any 30 year treasuries?

No but the US government sure does……as does the government of Canada who mimic the same strategy……the trillion in national debt the cdn fed admits to is only the tip of the ice berg……and they can’t pay it back at higher rates…….so don’t expect rates to go up any time…….the printing presses are going full blast until armageddon.

I said ‘feds’ not Fed. My statement stands. — Garth

#115 CrowdedElevatorfartz on 04.22.13 at 9:03 am

@#61 Jean Poutine
DELETED

Play nice Jean or Garth will nuke your comment……..

#116 thiscountryis going down the toilet on 04.22.13 at 9:04 am

btw

http://cnnfn.cnn.com/2001/10/02/economy/fed/

#117 not 1st on 04.22.13 at 9:10 am

#77 Devore on 04.21.13 at 11:44 pm

Money in the bank is money in the economy. Do you think it just sits there in the vault?

_______

Let me clarify. If its in deposits, banks will do fractional lending against it for boring things like more mortgages which will not be in high demand and don’t do much for the broader economy. They won’t lend to small business anymore either so thats dead money too.

They want you blowing it on consumer items cause that makes up 70% of our economy, but those are depreciating items that the bank will never give a loan for. So the best way to keep it out there is lower the interest rate to near nothing, you keep it in your pants initially, they turn the “mad men” marketing on you and voila, you blow it out there in the economy anyway but the way they want.

#118 Holy Crap wheres The Tylenol on 04.22.13 at 9:18 am

I have been advising youngsters for years that these easy action low rates will not bee here for long. Be prepared for the coming storm. By the way Garth nice photo of Honey Boo boo and her family going for a ride.

#119 timbo on 04.22.13 at 9:20 am

http://www.bloomberg.com/news/2013-04-22/caterpillar-profit-misses-analysts-estimates-on-mining-slowdown.html

“Caterpillar dealers reduced inventories amid a decline in mining capital expenditures, which will drop 20 percent globally in 2013 from last year’s peak”

20% is but a flesh wound. Austerity will help?……

http://247wallst.com/2013/04/22/chicago-fed-national-activity-index-goes-negative-for-march/

“The index fell to -0.23, versus a positive reading of 0.76 in February. March’s weakness also managed to pull the three-month average from February’s 0.12 down to negative territory at -0.01”

Growth..ha! Ben will save us………..

#120 Shawn on 04.22.13 at 9:22 am

WHY U.S. Banks sell their mortgages

Garth correctly (the word correctly being redundant here, I know) says that in the case of U.S. 30 year fixed rate mortgages:

Second, if rates fall, you can simply refinance or change lenders – they’re always open.

**************************************

This is precisely why U.S. banks cannot hold those mortgages on their books. The risk of funding these beasts with short-term deposits would be enormous.

So they are packaged up and sold to investors as Residential Mortgage Backed Securities. In effect this means they become funded by long term savings investments. The investors’ funds are locked in until the mortgages are paid off. And when rates fell steadily these past years it was these investors who suffered. The 6% they expected on mortgages from some years ago was never realized as borrowers refinanced and these mortgages were paid off.

The unanticipated consequence of selling the mortgages was banks stopped caring as much about the credit quality of borrowers. When people did not pay up it was the investors who suffered not the banks.

This went on until lending standards got so lax that defaults surged and the 2008 financial crisis happened.

Looking back it all seems predictable. Hindsight being 20/20.

#121 refinow on 04.22.13 at 9:24 am

Running in to fix your mortgages long term is exactly what the Bank’s want you to do…..

Why?

Because the 6 major Banks Bank of Montreal, CIBC National Bank, RBC, Scotia Bank and TD have “MANIPULATED” mortgage penalty calculations, that on a $500,000 mortgage, will create an approx $24,000 penalty to leave.

Hotel California Mortgages, “You can check out anytime you want…….But it will cost you big time to leave”

The Banks aren’t stupid:

1) They back end secularized their entire mortgage portfolios with CMHC….
2) If the housing market melts they will get a massive boost to profits via 5 digit penalties), if clients are forced seek liquidation as a possible solution.

We Canadians are so trusting with our Banks..

Yes it is different here…… Canadian Bank’s will actually profit from a housing meltdown.

#122 The American on 04.22.13 at 9:28 am

“In the US, 30-year locked-in mortgage rates grew out of the Great Depression of the 1930s. Prior to that, short-term, variable-rate loans helped fuel the banking crisis (and a real estate bubble in the 1920s) that almost destroyed the country”

So, basically, you’re saying what nearly took down the American economy in the 30s is precisely the same thing Canada has been doing (by LAW, mind you, which is insanity) all these years to create the mother of all real estate bubbles. Yeah, sounds pretty “prudent” to me.

#123 broadway skytrain on 04.22.13 at 9:29 am

cat misses and lowers fcast – this qtr missing earnings so far,,,
Caterpillar… Halliburton… Hasbro… Google… IBM… Microsoft… Yahoo… Ebay… McDonald… American Express… Bank of America… Intel… Target… Wal-Mart… Wells Fargo… Alcoa… Facebook…ConAgra…

“Eight S&P 500 companies including Netflix Inc. and Texas Instruments Inc. post their quarterly earnings today. Of the 106 that have reported so far, 72 percent have exceeded analysts’ predictions for earnings, data compiled by Bloomberg show.” You doomers are a riot. — Garth

#124 NoName on 04.22.13 at 9:34 am

http://www.salon.com/2013/04/21/meet_the_economics_whiz_who_outed_rr_partner/

Interesting read

Last several years austerity push was based on faulty spreadsheet.

#125 The Prophet Elijah on 04.22.13 at 9:35 am

Garth is been saying for years interest rates will be going up and is been wrong, he doesn’t seem to understand the relationship between the US FED and Bank of Canada, we can’t raise rates because they can’t – to put in layman’s terms. US can’t service the debt and must remain in a state of QE to infinity to keep purchasing assets that they can’t even put a number on since the flushing of Lehman Brothers in 2008 – a quadrillion dollars!?
By 2015 the only thing you are going to see is a collapse and tanks on the streets to contain the riots.
That will follow the emergence of a new currency or some sort of reset of the system.

‘Tanks on the streets’ in 18 months? You’re whacked. — Garth

#126 Toronto_CA on 04.22.13 at 9:42 am

“The latest numbers from the U.S. Commodities Futures Trading Commission show the value of the short positions against the loonie, as the Canadian dollar coin is known, have jumped $400-million (U.S.) to a record $7.4-billion.”

http://www.theglobeandmail.com/report-on-business/top-business-stories/speculative-bets-against-canadian-dollar-at-record-high/article11449916/

So the forex traders of the world know something we don’t know about the CAD? That maybe we’re about to get an economic smackdown from the housing market correction and lower commodity pricess which combined are a good chunk of our GDP?

#127 Buy? Curious? on 04.22.13 at 9:44 am

That’s Honey Boo Boo? I thought Honey Boo Boo is what you say every few days to Rob Ford as he goes for a stroll.

http://www.youtube.com/watch?v=mj8haZzvaE8

I can swear you can hear it from the security guard/Brad Lamb’s stunt double, “Honey, Boo Boo?” But then again, it’s CBC.

Rob Ford is the best Mayor Toronto has ever had!

#128 timbo on 04.22.13 at 9:53 am

http://rdwolff.com/content/global-capitalism-monthly-update-discussion-april-2013

“Rick Wolff, with occasional guests, will present an economic update and an analysis of some particular economic topics and then open the floor to questions, comments and a general discussion of where the US and world economies are going and the political implications. ”

Agree to disagree or is this reality unmasked?…..

http://www.cnbc.com/id/100658878

“The U.S. economy will officially become 3 percent bigger in July as part of a shake-up that will for the first time see government statistics take into account 21st century components such as film royalties and spending on research and development. ”

ah ha! just fudge the numbers…..Win!…..

#129 Smoking Man on 04.22.13 at 10:06 am

From Financial Post…. Today

Carney said this week he was pleased to see a cooling of record-high household debt levels a TV and moderation in the housing market from the bubble-like conditions of a year ago.

He took partial credit for the improvement, citing the bank’s own talk of rate hikes as well as the government’s move to tighten mortgage rules, although he said it was too early to raise a “mission accomplished” banner.

……………………

He’s taking credit for cooling the housing market, buy talking up rates.

I have been telling you dogs, that’s all it was, talk… For several years now..

Story goes on to say what will trigger rate hikes… Ba haha

All another fib…… Only and only when the Labour pool shrinks will rates have pressure to go up……. Any one see that happening anytime soon?

#130 neo on 04.22.13 at 10:07 am

Rates will likely rise in 2015, as central banks have made it clear. I remind you all it took was a 0.9% hike – the effective impact of ditching 30-year mortgages – to crash housing sales. — Garth

Crashing sales doesn’t mean squat. Crashing prices does. I’ve already mentioned several times that sales crashed for 12 months straight from May 2010 to May 2011 and prices continued higher and continue higher. The only thing Central Banks have made clear is rates will remain at emergency levels for the foreseeable future. Whether that is Japan, North America, U.K. or Europe. Rates are more likely to remain low in 2015.

#131 Daniel® on 04.22.13 at 10:12 am

Rates will be 3% or lower in 5 years.
Look at Japan, we’re following their graph.
Of course, it’s different here…

You bet it is. — Garth

#132 jess on 04.22.13 at 10:19 am

Budget and financial reporting each provide the public with detailed information on how the Government raised and spent financial resources.

start page 202 – tax changes

http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/spec.pdf
===============================
Automatic Information Exchange: Will Germany follow the US in going the extra mile? (22 Apr 2013)

Money remittance into tax havens tops $1.6 bln in 2012: data SEOUL, April 22 (Yonhap
The BOK said that only money remittance into the four tax havens — the Cayman Islands, Bermuda, the British Virgin Islands and Labuan, a small East Malaysian island — have so far been reported to the central bank, which indicates that the value of hidden financial transactions may be considerable.

Fresh crackdown on British tax havens (22 Apr 2013)
German Regulator to Examine Banks’ Business in Tax Havens (22 Apr 2013)

#133 Steve on 04.22.13 at 10:21 am

#119 Buy? Curious? on 04.22.13 at 9:44 am

Rob Ford is the best Mayor Toronto has ever had!

_______________________________________

Now there is a frightening thought!

#134 Spiltbongwater on 04.22.13 at 10:28 am

Garth 2009- rates will rise
Garth 2010 -rates will rise
Garth 2011 – rates will rise
Garth 2012 – rates rose 0.9% (lol, that rate increase didn’t affect my variable so WTF)
Garth 2013 – rates will rise

Spiltbongwater – it might rain tomorrow, it might be sunny.

You are about as accurate at predicting interest rates as I am the weather. Since I don’t have a face for tv, do you think I sould try to read the weather on the radio?

Garth 2009 – Rates will rise; 2010 — they did; 2011 — they did; 2012 — they will. — Garth

#135 Holy Crap Wheres the Tylenol on 04.22.13 at 10:35 am

Perhaps it is a good time to purchase a home America!
https://www.usbank.com/cgi_w/cfm/personal/products_and_services/mortgage/interest_rates.cfm

#136 AK on 04.22.13 at 10:49 am

#125 The Prophet Elijah on 04.22.13 at 9:35 am
“By 2015 the only thing you are going to see is a collapse and tanks on the streets to contain the riots.
That will follow the emergence of a new currency or some sort of reset of the system.”
——————————————————————–
Thank you for the laugh on this beautiful Monday Morning here in DT Toronto. :-)

#137 Holy Crap Wheres the Tylenol on 04.22.13 at 10:51 am

The IMF estimates Canada’s growth will ease to 1.5% this year, from 1.8% in 2012, but strengthen in 2014 to 2.4%. “I’m comfortable we’re in the right range,” Mr. Flaherty said. But that range is below what the global lending group expects for the United States. It predicts growth south of the border of 1.9% in 2013 and 3% next year, although the Bank of Canada sees this country benefiting through increased business spending and improved exports from a stronger U.S. housing market — when our residential sector is beginning to cool. I agree with this quote except the cooling of residential market.
Cool its going to get dam right cold here. We will be seeing Frozen McMansions as if they were the summer special at McDonalds.

#138 The Prophet Elijah on 04.22.13 at 10:56 am

#125 The Prophet Elijah on 04.22.13 at 9:35 am
Garth is been saying for years interest rates will be going up and is been wrong, he doesn’t seem to understand the relationship between the US FED and Bank of Canada, we can’t raise rates because they can’t – to put in layman’s terms. US can’t service the debt and must remain in a state of QE to infinity to keep purchasing assets that they can’t even put a number on since the flushing of Lehman Brothers in 2008 – a quadrillion dollars!?
By 2015 the only thing you are going to see is a collapse and tanks on the streets to contain the riots.
That will follow the emergence of a new currency or some sort of reset of the system.

‘Tanks on the streets’ in 18 months? You’re whacked. — Garth
——————————————————–
I mean drones patroling the skies and armored hummer’s. Then tanks in about 2016-2017ish – give or take a year, hard to get these right on the button.
The riots will intensify when they start digging into people’s retirement accounts to fund the debt.

-The Prophet has spoken

#139 not 1st on 04.22.13 at 10:59 am

I dare them to raise the rates. I’ll watch the massive sovereign debts all over the world go exponential as a result. I’ll watch consumer spending dry up to zero. I’ll watch people turn their keys into the bank. I’ll watch entitlement programs and pension plans turn negative and the stock market get a taste of its own ponzi medicine. Bring it on, they will only shoot themselves in the foot with that tactic.

The central banks have painted themselves into a corner. Because they wouldn’t let a natural correction occur, we now have a debt-growth stalemate everywhere. These rates are maybe going up a percentage point – thats it. Nothing to fear and I wouldn’t be locking down any mortgage for that. Variable is always the winner.

#140 Mike on 04.22.13 at 11:05 am

first?

Don’t go there. — Garth
———————————————————-
Why so bothered by these people. You are making me sad that I once posted “first” on the comment section.

You’re clearly a proponent of modern portfolio theory. Does that mean you recommend borrowing to invest before buying riskier assets to increase return? (and hence, risk).

#141 all_we_need_is_mortgage on 04.22.13 at 11:44 am

#137 The IMF estimates…
____________________________________
IMF – is ideological organization and is eager to provide any statistics what is requested from it.
It is absolutely safe for IMF to release such predictions since all related media channels are monopolized by the same nice people who requested that forecast. Then, after all, what does that forecast worth? If even university students now can prove that scientific model for that forecast is wrong: http://www.bbc.co.uk/news/magazine-22223190
How can we seriously claim, after that, that economy will take due course as a result of those notorious monetary stimulus… what economic growth?, what rate increase? … are you serious? without considerable systematic changes nothing can get back to normal.

#142 Dupcheck on 04.22.13 at 12:02 pm

I talked to one of my friends this weekend. He put an offer on a town home in Mississauga/Brampton border. I asked him why? It is hard to live with parents. True I said, but have you thought of renting? Why buy a place when prices will go down soon, and also you make something like 20$/hr at a job you don’t like. His reply was: well if i can not handle it it is easy to re-sell a home in GTA. Man people do not think of the losses at all. (RE fees, land transfer tax, breaking mortgage, moving, etc….). I told him to not buy and wait until the prices cool. We will see if he listens. I have recommended him this blog, but i don’t think he looked at it. Oh well….

#143 Twooping on 04.22.13 at 12:03 pm

In Surrey they managed to sell 27 of those 297 sq ft micro condos on the first day! What insanity. There are some positives though: while dropping a deuce, you could stir the rice on the stove and even answer the knock at the door.

#144 Humpty Dumpty on 04.22.13 at 12:16 pm

109 AK on 04.22.13 at 7:57 am

What a piece of cake you are….

You can even get the numbers right and you call me clueless…. Then a moron…

Try these post names also…

AKA = Dr Wanker
AkA = Obtuse
Aka = Troll

Whats the name you so often like to call use here..
oh ya…. I remember

LOSER!

Jimmy Buffet wrote a song about people just like you…

http://www.youtube.com/watch?v=3i6OrOZwtmA

#145 Tom Vu on 04.22.13 at 12:40 pm

My boat crew has pointed out a possible mistake.

The blog photo shows a very small slope on ground.
This is impossible/illegal in Saskatchewan.

This is why no SPCA in Saskatchewan…if dog lost can see running for days and thus intercept.

#146 down and out on 04.22.13 at 12:42 pm

#72 Oakvillian I remember that handbook, bought a revised edition in 2005 that started at 5% WOW still to high to be of any use .#69 Old Man since when did Manitouwadge get a Tim’s.

#147 The Prophet Elijah on 04.22.13 at 12:54 pm

#136 AK on 04.22.13 at 10:49 am
#125 The Prophet Elijah on 04.22.13 at 9:35 am
“By 2015 the only thing you are going to see is a collapse and tanks on the streets to contain the riots.
That will follow the emergence of a new currency or some sort of reset of the system.”
——————————————————————–
Thank you for the laugh on this beautiful Monday Morning here in DT Toronto. :-)
———————————————————
You mean you didn’t hear how the US government is stocking piliing tons of bullets, why stock if you don’t plan on using it? Put the pieces together, something is coming down the pipe, yo.

http://www.infowars.com/government-ammunition-stockpiling-story-breaks-through-media-censorship-and-goes-mainstream/

#148 Post Haste on 04.22.13 at 1:03 pm

Garth, I just came across the pic yesterday of the dog and the man lying on the bed – incredible and inspiring. My grandmother who passed away many years ago – while she insisted she wanted to be home for her final few days – her dog was always by her side, he rarely left other then to do his business – the love and devotion was so touching – it was just 7 weeks after her passing the dog passed also – I believe it was due to a broken heart – he sat by her bed even when she was gone – sad indeed!

Lately I have been noticing on the American TV channels of every yahoo who is pitching real estate investing. Yep, the day’s where people made claims of making $9,000 in 2 day’s are back. That maybe is why the Canadian realestate will take a hit – but bounce back in no time – we have become a society of wankers who want nothing more than to make money sitting on our keasters all day – western society is doomed! We just keep selling to the next dolt who thinks he can mark it up again, again and again until the next bubble – bubble licious!!

#149 Craig on 04.22.13 at 1:47 pm

Suffice it to say that no one here or anywhere, knows the future of interest rates or anything else.

Scary logic tells me the US Gov’t has painted itself into a corner with QE and HUGE HUGE debt. How can they possibly raise rates and not totally wipe out their economy. They have to borrow to service their debt as it is.

In Canada we are in a housing bubble I believe, which is why I will sell in a month or so and then rent while my cash might make me 3 or 4%. I will not gamble in the market with my house money. I will let it pay my rent for a few years and then according to MY PLAN houses will have dropped 30 – 35% or so and I can buy back in with $100K – $150K in my pocket tax free.

Whatcha think Garth, make sense?

#150 PTDBD on 04.22.13 at 1:57 pm

“72 percent have exceeded analysts’ predictions for earnings”…I could never accept that way of judging whether a company is improving, holding steady, or getting better.

Isn’t it just a reflection on how inaccurate the analysts are? Is that what we are betting on…”boyze, that company had lower profit and revenue than last year, but it blew away the analyst’s estimates, so it sure is doing great.”

It’s all smoke and mirrors in the stock market.

#151 Mike T on 04.22.13 at 2:13 pm

“By 2015 the only thing you are going to see is a collapse and tanks on the streets to contain the riots.”

the best thing a person that believes this can do is move to country where they don’t speak the language, tune out all outside distraction, and pay attention to what is important in your own life

also, research the Law of Attraction and the implications of believing in scenarios like tanks on the street….you may very well end up creating that reality for yourself

also, return to nature and observe

#152 Adam on 04.22.13 at 2:13 pm

#59

Because they’re smarter than you. A credit bubble is a worse outcome than a housing deflate. — Garth

——————-

Yet here we are….with both.

#153 AK on 04.22.13 at 2:22 pm

#147 The Prophet Elijah on 04.22.13 at 12:54 pm
“You mean you didn’t hear how the US government is stocking piliing tons of bullets, why stock if you don’t plan on using it? Put the pieces together, something is coming down the pipe, yo.”
————————————————-
That’s nothing new. It’s been going on for how long now?

#154 AK on 04.22.13 at 2:28 pm

#144 Humpty Dumpty on 04.22.13 at 12:16 pm
“Aka = Troll”
——————————————————————–
You are the one that uses about 15 different ID’s to post on this blog and you are calling me a Troll?

At least I post under a single ID.

Get a life!!!

#155 Timbo on 04.22.13 at 2:39 pm

http://timiacono.com/index.php/2013/04/22/existing-home-sales-slip-prices-rise/

“The National Association of Realtors reported that sales of existing homes fell 0.6 percent last month, from a downwardly revised, seasonally adjusted annual rate of 4.95 million units in February to 4.92 million units in March.”

rising wages are leading the way?….not..

http://www.washingtonpost.com/business/economy/wall-street-betting-billions-on-single-family-homes-in-distressed-markets/2013/04/21/ac4bdefc-a2e1-11e2-9c03-6952ff305f35_story.html

” Big investors are pouring unprecedented amounts of money into real estate hard hit by the housing crash, bringing those moribund markets back to life but raising the prospect of another Wall Street-fueled bubble that won’t be sustainable.”

ah that’s why……facepalm!……..

#156 TnT on 04.22.13 at 2:39 pm

#147 The Prophet Elijah on 04.22.13 at 12:54 pm

You mean you didn’t hear how the US government is stocking piliing tons of bullets, why stock if you don’t plan on using it? Put the pieces together, something is coming down the pipe, yo.
*****************

Even if this purchase was true… what is more likely the case:

1) The US government is preparing to use these bullets on its own people
OR
2) Some lobbyist / politician brokered a deal to purchase large quantities of bullets via some back door deal that keeps whatever bullet manufacture / people employed in the politicians riding…

Answer truthfully to see if you are a crazy follower or a leader of your own destination

#157 jess on 04.22.13 at 2:43 pm

the plot thickens

http://www.rts.ch/info/monde/4838865-les-banques-suisses-sont-l-ennemi-selon-herve-falciani.html

#158 Ralph Cramdown on 04.22.13 at 2:50 pm

#140 Mike — “You’re clearly a proponent of modern portfolio theory. Does that mean you recommend borrowing to invest before buying riskier assets to increase return?”

Modern Portfolio Theory? Really? Still? That whole thing is underpinned by an assumption that returns are normal or normal-ish. Benoit Mandelbrot wrote about this ain’t true, as did, more colloquially, Nassim Taleb of Black Swan fame. Basically, great theory as long as stuff doesn’t happen too often. Alas, stuff happens too often. Still, there’s nothing wrong with borrowing to invest as long as the stuff you’re investing in is going to move the right way.

#159 The Prophet Elijah on 04.22.13 at 2:53 pm

Or, move to Detroit. Prices there are up 14% in the past year. Remember your gun.

——————————————————
Garth and I are on the same wave length with the whole coming Greece like riots to America. While Obama is buying up all bullets he is taking away the 2nd amendement on gun control. Sound familiar, need I say Nazi Germany pre-WWII.

No you don’t, because that was your final post. — Garth

#160 AK on 04.22.13 at 2:55 pm

#96 Humpty Dumpty on 04.22.13 at 4:30 am
“#9 espressobob on 04.21.13 at 6:37 pm

Peter Schiff is an idiot! There I said it.

Yup, coming from a guy whom would lick The Bearded One’s office glass windows after bringing him a doppio… Bob!

#58 AK on 04.21.13 at 9:53 pm

Peter Shiff is a Bullshit Artist….

Yup, coming from someone whom continuously states the Dow at 19000…. AKA = Obtuse

9/13/2011- Peter Schiff Testimony Before Congress

http://www.youtube.com/watch?v=FLmD9TeUC54

(2 of 2) Peter Schiff

http://www.youtube.com/watch?v=xZbQGpf3D_Q

Care to embarrass yourselves any further…..”
——————————————————————–

Dude, you are the one that started the war. You attacked us first.

WTF is your problem? Espressobob and I called Peter Schiff an idiot. We did not call you an idiot.

#161 jess on 04.22.13 at 2:57 pm

Press Release: “The Retirement Gamble”
April 16, 2013, 3:51 pm ET
“The Retirement Gamble,” airing Tuesday, April 23, is an eye-opening investigation of a financial services industry that may be draining your retirement savings with every passing year
=

WHY YOU CAN’T AFFORD TO RETIRE:
FRONTLINE INVESTIGATES THE OTHER FINANCIAL CRISIS

FRONTLINE Presents
The Retirement Gamble
Tuesday, April 23, 2013, at 10 p.m. on PBS
http://www.pbs.org/frontline/retirement-gamble

#162 Craig on 04.22.13 at 3:37 pm

Canadian police and intelligence agencies will announce later today they have thwarted a plot to carry out a major terrorist attack, arresting two suspects in Montreal and Toronto, CBC News has learned.

Highly placed sources tell CBC News the alleged plotters have been under surveillance for more than a year in Quebec and southern Ontario.

The two men are expected to appear in court tomorrow.
RCMP are holding a LIVE update on the plot investigation at 3:30 p.m. ET

#163 baddog on 04.22.13 at 3:45 pm

#143 Twooping on 04.22.13 at 12:03 pm
In Surrey they managed to sell 27 of those 297 sq ft micro condos on the first day! What insanity. There are some positives though: while dropping a deuce, you could stir the rice on the stove and even answer the knock at the door.

LOL!

#164 neo on 04.22.13 at 3:55 pm

At #150PTDBD on 04.22.13 at 1:57 pm
“72 percent have exceeded analysts’ predictions for earnings”…I could never accept that way of judging whether a company is improving, holding steady, or getting better.

Isn’t it just a reflection on how inaccurate the analysts are? Is that what we are betting on…”boyze, that company had lower profit and revenue than last year, but it blew away the analyst’s estimates, so it sure is doing great.”

It’s all smoke and mirrors in the stock market.

____________________________________________

Shhhh..Don’t try to refute this circus with truth or Garth shall proclaim you a doomer. It’s not just analysts. Look at Alcoa for example. Three weeks before their earnings come out, they lower the earnings bar from 13 cents a share to 8 cents a share. Earnings come out at 9 cents and voila!! BEAT!! Garth rejoices and we know better.

#165 Victor V on 04.22.13 at 4:06 pm

How an obscure budget change could raise mortgage rates

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/how-an-obscure-budget-change-could-raise-mortgage-rates/article11345838/

#166 Canadian Watchdog on 04.22.13 at 4:20 pm

New GTA Home Sales Plunge By 47% y/y in March.

Game over.

#167 Tom Vu on 04.22.13 at 4:27 pm

Lately I have been noticing on the American TV channels of every yahoo who is pitching real estate investing. Yep, the day’s where people made claims of making $9,000 in 2 day’s are back. That maybe is why the Canadian realestate will take a hit – but bounce back in no time – we have become a society of wankers who want nothing more than to make money sitting on our keasters all day – western society is doomed! We just keep selling to the next dolt who thinks he can mark it up again, again and again until the next bubble – bubble licious!!

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

ATTENTION: All vixens on deck !

Someone has stolen my secret recipe !

I feel like Colonel Sanders…..so viorated !

#168 bull on 04.22.13 at 4:55 pm

For 5 vs 10 years … this is a tougher call than 5 years vs variable (which is a no brainer).

#169 Toronto_CA on 04.22.13 at 4:57 pm

A 47% drop in GTA new home sales? Lowest since the great recession? Well below long term averages?

1,102 new condos sold in the month, how many are being built or planned to be built? 60,000? so…60 months worth of inventory?

Yeah I don’t see prices staying up there.

#170 espressobob on 04.22.13 at 5:11 pm

#96 Humpty Dumpty
#46 Django

Some years ago a few of us retail investors had to rely on the credibility of mutual fund managers and their expertice to provide returns average or above. Names like Sandy Mcintyre, Francis Chou or Eric Sprott come to mind.

With the advent of ETF’s during this period, it proved to be a game changer. Lower mer’s and better diversification with index funds where and still are outperforming the vast majority of mutual funds!

In terms of controversy and ‘evil tidings’ many and others have jumped on this bandwagon. Names like Sprott (surprise) Schiff & Fabor are some of the frontrunners. Some even operate ‘Paysites’ Don’t forget Jim Cramer!

I ask myself who is the greater? The fool who prints to the gullible, or the fool who buys it!

Try doing some homework!

#171 Victor V on 04.22.13 at 5:31 pm

Iggy selling his Calgary mansion:

http://www.calgaryherald.com/business/story.html?id=8276391

#172 thiscountryis going down the toilet on 04.22.13 at 5:37 pm

Try as they might the liberal political engineers can’t reshape history bt recreating a politically correct version of the true name of Canada.

Starting in the 70’s with the Trudeau liberals buying into ‘the world is a village’ nonsense we began to hear stories of how Canada was derived from a extinct native word that no one had ever heard of….but being good little proagandists they persisted on spreading the manure. Trudeau wanted to reshape the country in his image….and did he ever stick it to us. Sustainable development of the third world by repositioning capital from the west to the east and moving millions of people around the globe was part of a master plan dreamed up the then PM of Norway……and the Pepsi commercial swooning over the ‘village concept’ was all over the telly.

The fact is that the Spanish and Portuguese had been here long before Cabot for the mineral and fishing…they found no gold or useful minerals…but fish galore……they marked the original maps…aca nada…meaning…theres nothing here…..the spanish and portuguese for ‘here is nothing’……the name stuck for hundreds of years………….centuries later a firtunate misplelling has Canada being used by Italians whop had no knowledge of the maps they were forging for use a decorative items to sell….and the country became Canada to the British royals on the grand tour who ‘rediscovered Canada’ in the 16th century…..whereas the admiralty maps still show aca nada…. on the eastern continent.

“In 1698, Father Louis Hennepin first recorded the similarity of the Spanish ‘aca nada’, meaning ‘here, nothing’. This refers to the derisive name applied to the region by the Spanish who had found no gold or riches in Canada. This is also similar to the Portuguese ‘cà nada’, also meaning ‘here, nothing’. “

#173 big town on 04.22.13 at 5:49 pm

In response to Cliff who cannot find an investment to buy that would not be negative return…I have been out looking at rentals in the Oakville area. The typical Soviet era cement high-rise built 50 years ago and not touched or updated EVER are renting out at $1,150 for a two bedroom. These units are dirty; grimmy; in great disrepair; and only a major refresh and thousands of dollars could make them presentable. Then I have looked at the new mini itsy bitsy teeny weeny closets DISGUISED as condos and they are coming in around $1,300 per month. I have seen some of the older apartments which have been renovated and they are asking $1,500 for those and it is bizarre that they are still vacant and not rented out yet. I tried negotiating into one of the refreshed units but I was sent packing quickly. Happy to have my little unit in Etobicoke. there you go.

#174 Victor V on 04.22.13 at 6:02 pm

Saw a banner ad on the Globe website for this realtor site. Looks like they are trying to drum up business given sales volumes have plunged.

http://howrealtorshelp.ca/

#175 happy on 04.22.13 at 6:30 pm

Rates will remain low until the US bond market implodes.

#176 TurnerNation on 04.22.13 at 6:33 pm

#162 Craig . Turn your tee-vee off. They’re playing us with a bad ‘B’ movie plot. C’mon, two guys with pickaxes on a rail line could swiftly disable it sooner – with predictable results.
Yet we’re always sold stories of a ‘sophisticated terror network’ who is, seemingly, always foiled at the nick of time. This time, lined back to [guess who] country.
Like I said get ready for biometric scanners at every turn now. Find the provider and invest in its stock.

#177 Humpty Dumpty on 04.22.13 at 6:52 pm

#160 AK on 04.22.13 at 2:55 pm

Proverbs 20:3

It is an honour for a man to keep from fighting, but the foolish are ever at war

War is a very strong word their princess…

If you felt that I attacked you (victim mentality), duded you serious help…

Whats wrong, you don’t like a taste of your medicine…

If your going to label people followed by insulting them, how come you can never offer a respectful arguement…

Proverbs 13:16

A sharp man does everything with knowledge, but a foolish man makes clear his foolish thoughts.

In the mean time, here’s Peter….

http://www.europac.net/commentaries/japan_steps_void

#178 Future Expatriate on 04.22.13 at 6:52 pm

#147 – Hey Elijah, you do know that the Biblical penalty for a false prophet (just ONE TEENY mistake) is stoning, don’t you?

#179 Dr. Hoof - Hearted on 04.22.13 at 6:53 pm

#171 thiscountryis going down the toilet on 04.22.13 at 5:37

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

I hear you.
I don’t believe the BS taught in history. Take a look at a globe…it is highly plausible that a trip from Europe to Iceland to Greenland to North America occurred far before Columbus.

Some rogue archaelogists have determined such things as copper mining in the Great Lakes Area, with distinct geology of such uncovered in Europe.

What about the ancient Caucasian guy they dug up in Washington State ?
http://en.wikipedia.org/wiki/Kennewick_Man
Sure quiet about that. Can you imagine what would happen to native land claims if this was ever settled?

Re Trudeau….he was part of that elitist group that wanted to open North America to non European immigration (GOOGLE Jacob Javits). Trudeau’s legacy was simply to destroy Canada…keep the Anglo – Franco divide and also get the herd voting that is typical of Non Caucasian groups.

Too bad that the females and metrosexual males were so smitten by that a$$hole….he sure as hell sucked them in . Latest irony was Justin Trudeau competing for Liberal nomination against his half – sister’s mother. Then again, this shows how desperate the Liberals are.

Not a political blog. Keep it in your pants. — Garth

#180 jess on 04.22.13 at 6:53 pm

food roulette

http://truth-out.org/video/item/15887-big-co
=
Corexit
http://www.whistleblower.org/program-areas/public-health/corexitmmodity-traders-pocketed-250-billion-profit

#181 Blacksheep on 04.22.13 at 6:56 pm

Craig 162,

“Highly placed sources tell”

“The two men are expected to appear in court tomorrow”.
——————————————————
Buncha pussies. They should just deal, with em merican style. No rights. No courts. Shoot first, then make the rest up to suit desired outcomes.

#182 Smoking Man on 04.22.13 at 7:17 pm

Wow FBI had got some explanning to do…. A clip just surfaced from Boston showing the younger brother leaving after the bomb went off.. With his back pack on…… O boy……

I hope clip is a fake…….

#183 oldcodger on 04.22.13 at 7:24 pm

#134 spiltbongwater…give it up; you’ll never ever win that argument. For example, just look at why real estate is fading so fast. Those soaring interest rates, have thoroughly dampened the demand.

#184 AK on 04.22.13 at 7:26 pm

#176 Humpty Dumpty on 04.22.13 at 6:52 pm
“Whats wrong, you don’t like a taste of your medicine…”

“In the mean time, here’s Peter….”
——————————————————————–
Which ID were you using when I allegedly insulted you?

For your sake, I do hope that Peter is making money for you.

#185 CrowdedElevatorfartz on 04.22.13 at 7:27 pm

@#138 & 147 The “Profit” Elijah

So I guess you’ll be “stock”ing up on beans, bullets and bibles?
That way you will have food, protection, reading material and (“Lord help us is mysterious ways”) toilet paper in a pinch?
Just sayin’……….

#186 espressobob on 04.22.13 at 7:29 pm

#176 Humpty Dumpty

Maybe you could learn to form your own opinion? Its not beyond your ability! Put some effort into it! Buy the way, what the hell is a doppio????

#187 Humpty Dumpty on 04.22.13 at 7:31 pm

#169 espressobob on 04.22.13 at 5:11 pm

Proverbs 29:20

Have you seen a man who is quick with his tongue? There is more hope for a foolish man than for him.

Why don’t you share with us ignorant people your study notes….

Perhaps then we may shift our position…. FYI

Faber is an Economist with a 1/4 spread portfolio
Shiff’s model is the Austrian School of economics
Sprott, well he’s just being billionare Eric
Cramer, why would you even mention that MAD MAN…

Duded may I suggest an americano. Those doppio’s are getting to your head…

Cramer’s No 1 quote…

“If you can’t find the next McDonald’s, I’ll find the next McDonald’s. But it’s vital to be with people who with looking for ’em, because they do exist. They are created.”

Americans love their Big Macs….

The Big Mac index: Bunfight | The Economist

Proverbs 23:9

Say nothing in the hearing of a foolish man, for he will put no value on the wisdom of your words.

#188 Tom Vu on 04.22.13 at 7:44 pm

Alberta loses battle for $120 million in corporate taxes

‘Ontario shuffle’ lets firms pay less tax elsewhere

Read more: http://www.calgaryherald.com/news/Alberta+loses+battle+million+corporate+taxes/8274486/story.html#ixzz2REr38Zfm

Alberta government coffers are short an estimated $120 million after the province lost a six-year battle against nearly a dozen corporations it argued were illegally avoiding paying tax.

Two of the firms — Canada Safeway Ltd. and Husky Energy Inc. — convinced the courts their sophisticated plans were a legitimate means of minimizing their corporate levy.

When the country’s top court refused last month to hear Alberta’s appeal of those decisions, provincial bureaucrats had to give up on collecting a share of the billions in earnings that 11 companies had shifted out of Alberta using offshore firms.

A high-ranking official with Alberta Finance and Enterprise — whom the Herald has agreed not to identify — said the province was deeply disappointed with the outcome.

“There was a lot of time and effort put into these cases and we believed we were right,” said the official, “but we’re not going to start badmouthing the courts in Alberta, nor are we going to start expressing displeasure about the Supreme Court of Canada.”

—————————————————–

Blah blah blah

Must see opportunity !

I have acquired this offshore Villains lair so that more parties can avoid taxes !

Have a look !

http://www.google.ca/imgres?imgurl=http://static.guim.co.uk/sys-images/Arts/Arts_/gallery/2008/11/03/water1.jpg&imgrefurl=http://www.guardian.co.uk/artanddesign/2008/nov/04/james-bond-architecture&h=276&w=460&sz=44&tbnid=dz7gpCaWELugtM:&tbnh=73&tbnw=122&zoom=1&usg=__rZKimx7XRgnOCvgLmsanb4oXxPE=&docid=UA2Qm0863nNQ3M&hl=en&sa=X&ei=78h1UdbaIKWUiQL674HADA&sqi=2&ved=0CEsQ9QEwBQ&dur=1961

After a few minor renovations,(granite , stainless steel , boat dock etc) I will be sending out applications

#189 Humpty Dumpty on 04.22.13 at 7:45 pm

#184 espressobob on 04.22.13 at 7:29 pm

what the hell is a doppio????

I give up!

Just buy, buy , buy, one of these…

http://www.nespresso.com/ca/en/home;jsessionid=4E52D2756ED57BEF9E7CCC72CE8885A0.node1

#190 CrowdedElevatorfartz on 04.22.13 at 7:55 pm

@ Humpty dumpty
Wow!
You can quote the bible verbatim.
Imagine if you had put all that brain power into something useful…..like inventing Pet Rocks or the Frisbee…… You’d be richer than Midas and probably own more Mufflers

#191 AK on 04.22.13 at 7:58 pm

#186 Humpty Dumpty on 04.22.13 at 7:31 pm
“Proverbs 29:20”

“Proverbs 23:9”
——————————————————————-

You are Moses now ? :-)

What are you going to give us next. The 10 commandments?

#192 AK on 04.22.13 at 7:59 pm

#186 Humpty Dumpty on 04.22.13 at 7:31 pm
“Sprott, well he’s just being billionare Eric”
——————————————————————–
So is Warren Buffett..

#193 Timbo on 04.22.13 at 8:02 pm

http://www.express.co.uk/news/world/394032/Tipped-off-Russians-withdrew-2bn-from-Cyprus-before-tax-raid-on-banks

Experts now fear deposits above the guarantee limit of 100,000 euros (£85,000) could see confiscation of anything up to 100 per cent.

Russians were tipped off….next time its in the mattress to be safe…..

http://money.aol.co.uk/2013/04/22/fitch-downgrades-uk-debt-rating/

“The agency placed the UK on an AA+ rating, following Moody’s downgrade of UK debt in February.”

About time…it’s all downhill from here…

#194 espressobob on 04.22.13 at 8:05 pm

#186 Humpty Dumpty

Nothing Personal! Why not educate yourself on economics & investing????? Your beating yourself up. Why? I’m hoping your better than that!

#195 TurnerNation on 04.22.13 at 8:12 pm

Folks let me explain how the world works: they pit A against B for the benefit of C.

Find out who C is and it all makes sense.

While we pick sides and battle ourselves into disarray.

Anyway, I’m sure you learned the Golden Rule in school, had it drummed into you: He who has the most gold, rules. (Figuratively speaking.)

Oh you didn’t hear of it? And nice guys like King James even edited a manual on how to be good. Meanwhile the ruling elites jet about the world with their private islands and offshore tax havens and standing armies. “We know he has WMD”. All that glitters is sold.
Be good, pay your taxes! Follow the 10 lines. How they laugh at us.

#196 Ralph Cramdown on 04.22.13 at 8:21 pm

#176 Humpty Dumpty:

Job 13:5

#197 Dr. Hoof - Hearted on 04.22.13 at 8:23 pm

Not a political blog. Keep it in your pants. — Garth

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

Sorry…… No room.

#198 Canadian Watchdog on 04.22.13 at 8:26 pm

MLS sale at 10 York St condos ready for summer of 2017. But..but..it's includes in today's average price.

#199 :):( Ying Yang on 04.22.13 at 8:28 pm

I would be willing to bet that if compared the same two mortgages, same rate, same time and same dollar value in a home. As well a similar geographic location that the US homeowner would fair better that hi Canadian counterpart. Right off the bat he can deduct on taxes! Here in the land of ice I foresee property values declining over the next decade. We can not deduct on interest and in fact are now handcuffed to cheapskate banks.

#200 Angry But Not Unhappy Twenty Something on 04.22.13 at 8:37 pm

Older brother of mine “tried to take advantage of today’s low rates”. A bank rep calculated IRD and blended rates for him. The numbers don’t make sense unless you use their posted rates.

I now see where those great quarterly profits have been coming from each year…yeesh.

#201 Waterloo Resident on 04.22.13 at 8:47 pm

What?
Where’s the usual story of a couple in their early 20’s, both earning $450,000 each, have already saved up 28.6 Million, and they wonder if they should jump to buy that $200,000 house, or just keep renting?

#202 habbit on 04.22.13 at 9:00 pm

#45 tom vu u filling in for westurdman goof eh. u almost adequate. lol

#203 Devore on 04.22.13 at 9:25 pm

#117 not 1st

They want you blowing it on consumer items cause that makes up 70% of our economy, but those are depreciating items that the bank will never give a loan for. So the best way to keep it out there is lower the interest rate to near nothing, you keep it in your pants initially, they turn the “mad men” marketing on you

Do they? Low interest rates have blown up consumer borrowing and inflated the value of leveraged assets (houses) to the point of marginal affordability. Even now, debt servicing is consuming a disproportionate amount of disposable income. Walk around malls, markets, shopping districts, does it look like retail is booming?

Once consumer debt growth reaches limits, which happens in very short order with asset-based lending, discretionary spending falls off a cliff.

those are depreciating items that the bank will never give a loan for

I disagree. So do banks and their HELOC portfolios. Want to borrow money to go on vacation? No problem. Consumer spending, small business financing, even debt repayment, all happens using this wonderful debt instrument. No questions asked.

Car purchases? You’ve basically always been able to buy a new or used car with 0 down, underwater on the loan as soon as you drive off the lot.

#204 Randy on 04.23.13 at 7:23 am

Don’t worry….We are born into this world without debt, and we leave the same way.