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Pieces posted:But why does that matter? It kills our dollar. Cost of importing goes up, we pay it back in food, electronics, etc. I'm guessing you're referring to growth? It also makes our exports more attractive by lowering their cost in foreign countries, makes loans easier to service (which is going to go over so well in this thread). I'm not an expert in macro economics so I'll get back to work and let someone else cover this in depth e: plus our loonie has been very high over the last decade or so. Previously it was more common to see it in the 80c to 90c range instead of near parity with the dollar (which also has been rising recently which doubly impacts the loonie as it falls).
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Jan 21, 2015 17:16
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quote:
https://twitter.com/stephen_tapp/status/557932787718565888?s=09
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Jan 21, 2015 17:17
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Poloz talks about why they dropped the rate http://download.isiglobal.ca/bocbdc/2015-01-21.html
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Jan 21, 2015 17:19
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quote:
https://twitter.com/LJKawa/status/557931452047060993?s=09
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Jan 21, 2015 17:19
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81 cent cad lmao
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Jan 21, 2015 17:49
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If lower interest rates are good why don't we just make interest rates like -20% and blast off and make a housing boom on the moon and beyond?
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Jan 21, 2015 17:50
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Baronjutter posted:If lower interest rates are good why don't we just make interest rates like -20% and blast off and make a housing boom on the moon and beyond? Hey you know what they say, they aren't making any more lunar regolith.
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Jan 21, 2015 17:51
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B-but it's so hard being white! Waaaaaagh!
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Baronjutter posted:If lower interest rates are good why don't we just make interest rates like -20% and blast off and make a housing boom on the moon and beyond? Everyone should take 30 minutes this morning to read up on fractional reserve banking if you're serious about understanding what just happened. The bank of England and the bank of Canada website are a wealth of information on inflation targeting and monetary policy.
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Jan 21, 2015 17:59
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Also Ben rabidoux just lost his mindquote:
https://twitter.com/BenRabidoux/status/557943360611442689?s=09
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Jan 21, 2015 18:00
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Baudin posted:Poloz talks about why they dropped the rate I'm no macroeconomics wiz either but does he explain how this is going to help the oil industry (it won't) or get corporations to start spending the increasingly vast piles of cash they're sitting on (probably not) or coax even more overleveraged consumer spending (eh, maybe)?
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Jan 21, 2015 18:00
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So is lowering rates going to make this bubble pop faster, or make it drag on and get even worse?
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Jan 21, 2015 18:02
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eXXon posted:I'm no macroeconomics wiz either but does he explain how this is going to help the oil industry (it won't) or get corporations to start spending the increasingly vast piles of cash they're sitting on (probably not) or coax even more overleveraged consumer spending (eh, maybe)? Well you see, the housing bubble is too big to fail before the election therefore we must look busy, busy, busy!
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Jan 21, 2015 18:03
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triplexpac posted:So is lowering rates going to make this bubble pop faster, or make it drag on and get even worse? Well it makes mortgages even more affordable in the short term, so I don't see how it could help it pop faster at all.
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Jan 21, 2015 18:04
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gently caress it I'm buying a house. At this point its obvious that society, our financial institutions and our government are all completely abandoning financial sanity. Its going to be people who don't load up on massive amounts of debt who are going to foot the bill for this when the dust settles.
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Jan 21, 2015 18:09
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eXXon posted:Well it makes mortgages even more affordable in the short term, so I don't see how it could help it pop faster at all. It should encourage more idiots on "tight budgets" to spend $650k on a 3br house. Jesus loving Christ.
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Jan 21, 2015 18:09
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triplexpac posted:So is lowering rates going to make this bubble pop faster, or make it drag on and get even worse? Credit just got cheaper, so people can borrow more with lower monthly payments, so... I am just waiting to see what CI does when the BoC starts deploying unconventional monetary policy.
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Jan 21, 2015 18:12
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LemonDrizzle posted:Credit just got cheaper, so people can borrow more with lower monthly payments, so... Yeah, that was my first thought. But in theory now there will be even more people buying houses they can't afford, making things even worse when the rates finally do go up. I guess it doesn't make it happen any faster, it will just make the effects that much worse.
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Jan 21, 2015 18:15
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eXXon posted:I'm no macroeconomics wiz either but does he explain how this is going to help the oil industry (it won't) or get corporations to start spending the increasingly vast piles of cash they're sitting on (probably not) or coax even more overleveraged consumer spending (eh, maybe)? It does actually help oil companies, along with other industrial concerns by doing two things. One is that as noted, the loonie is crashing. Since all of their labour and service contracts are priced in canadian dollars, while their product is in U.S. dollars means that any decrease in the exchange rate helps their operating bottoms line. Further, a quarter point of interest may not sound like that much but when you're carrying billions of dollars in loans a quarter point can save you millions.
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Jan 21, 2015 18:16
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Have you all considered that maybe Downtown Dominic can afford a $900k condo on a $70k yearly salary?
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Jan 21, 2015 18:18
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Grand Theft Autobot posted:It should encourage more idiots on "tight budgets" to spend $650k on a 3br house. Jesus loving Christ. So basically what I got out of the explanation to the household debt : disposable income issue was that the lesser of the two evils is to increase both rather than income levels drop and debt stay the same? I.e. 160k:100k is 1.6:1 so they'd rather 170k:100k at a ratio of 1.7 rather than 160k:90k at a 1.77 ratio? Seems terrible.
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Jan 21, 2015 18:20
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triplexpac posted:So is lowering rates going to make this bubble pop faster, or make it drag on and get even worse? it'll make cheap credit more available e: beaten twice, but to expand: It will likely allow Canadians to go somewhat more into debt, and I suspect it's more aimed at reviving a dropoff in consumer spending before it gets bad JawKnee fucked around with this message at 18:30 on Jan 21, 2015 |
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Jan 21, 2015 18:28
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eXXon posted:I'm no macroeconomics wiz either but does he explain how this is going to help the oil industry (it won't) or get corporations to start spending the increasingly vast piles of cash they're sitting on (probably not) or coax even more overleveraged consumer spending (eh, maybe)? I only listened to parts of the presentation due to actual work getting done today but those aren't the core concern of the BoC. It's primary goal is inflation targeting. e: it completely helps the oil industries though, and does make borrowing cheaper. Corporations spending cash isn't something the gov't should really get too involved in.
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Jan 21, 2015 18:31
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I hope the loonie hits $0.75 by June. Yes please I'd love and extra 25 cents on the dollar when I cash out from my current shithole employer (my options pay out in USD). 
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Jan 21, 2015 18:36
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LemonDrizzle posted:Credit just got cheaper, so people can borrow more with lower monthly payments, so... It might surprise you but I'm not really offended by the rate cut nor am I against qe but that's because I love neo liberal, neo classical economics because it crushes the working man under the jack boot of capitalism.
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Jan 21, 2015 18:39
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I'm glad I'm in full debt repayment mode instead of trying to make money in stocks or buy things, because this is loving ridiculous.
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Jan 21, 2015 18:41
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Alright I have a dumb question: Let's say you have a fixed-rate mortgage that gets renegotiated every 5 years. So for years 1-5 you're paying things down at 3% Then after that rates go up to 5%. But the payments you've made so far have brought down your princple, so in theory wouldn't the monthly payments work out to be pretty close?
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Jan 21, 2015 18:43
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A friend of mine has decided to sell his mortgaged condo at a small profit thanks to the interest rate drop. He is a smart friend.
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Jan 21, 2015 18:46
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EvilJoven posted:gently caress it I'm buying a house. No it will be the rich who are ok when the dust settles. Doesn't matter if you're a renter or buyer when things crash, it's going to be the working class, regardless of home ownership, who has to pay for it all. When that happens your mortgage will be a huge stone around your neck. We will pay for this all in huge bailouts and tax breaks for those wealthy and powerful enough to demand them saying they're "too big to fall" and it will come directly through regressive taxes on the working class and severe austerity. We'll sell off our health system, privatize the schools, toll every neighbourhood street before we make the financial class at the top of all this actually pay for their actions. At the same time every idiot with a home they can't afford gleefully went along with this, expecting to get rich quick. It's been a giant con, and like the best cons, the victims always think they're "in" on it and will be among the winners.
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Jan 21, 2015 18:46
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The CAD has now dropped to $0.80 since CI posted. 
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Jan 21, 2015 18:50
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Man I better pay everything I owe to americans right now.
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Jan 21, 2015 18:52
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triplexpac posted:Alright I have a dumb question: Only if you extend your amortization period.
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Jan 21, 2015 18:57
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So far I'm feeling like my "The country's realpolitik will do whatever it takes to ensure that housing doesn't correct" thesis is holding up. Everyone in the country just got a bit poorer.
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Jan 21, 2015 19:16
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Whiskey Sours posted:Only if you extend your amortization period. Yeah my friend is telling me that even if rates go up in a few years, she'll have enough principle paid off that it will balance out. I was always under the impression that a 30-year mortgage would work like OSAP: you pay off mostly interest up front, principle in the back end. Your monthly payment over the 30 years is based off the original amount of the mortgage, the only thing that changes is the rates every 5 years.
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Jan 21, 2015 19:18
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Lexicon posted:So far I'm feeling like my "The country's realpolitik will do whatever it takes to ensure that housing doesn't correct" thesis is holding up. This rate cut has little to do with housing IMO. The BoC is basically making GBS threads their pants because they're afraid of the impending unemployment tsunami that's putting all those tough Alberta bulldoggers out of work.
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Jan 21, 2015 19:24
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Cultural Imperial posted:This rate cut has little to do with housing IMO. The BoC is basically making GBS threads their pants because they're afraid of the impending unemployment tsunami that's putting all those tough Alberta bulldoggers out of work. Yeah, but it's all butterfly effect man. If every one of these truck-nutted bulldoggers weren't leveraged out the rear end, the overall economic risk would be much more muted.
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Jan 21, 2015 19:26
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Cultural Imperial posted:This rate cut has little to do with housing IMO. The BoC is basically making GBS threads their pants because they're afraid of the impending unemployment tsunami that's putting all those tough Alberta bulldoggers out of work. Yup. Force the dollar to be lower so Ontario can pick up where Alberta left off.
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Jan 21, 2015 19:28
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I find it funny that this is being reported as if it's a huge shock when people were predicting it at least a week or two ago. Lots of people pointed out that Polosz talk of rate hikes a month or so ago was ridiculous Most people in this country don't seem to understand that the BoC only gives a gently caress about housing, indebtedness, oil prices, employment, etc. insofar as it affects inflation. Their mandate is inflation targeting and at some point even the most political BoC management has to act to meet that mandate.
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Jan 21, 2015 19:33
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triplexpac posted:Yeah my friend is telling me that even if rates go up in a few years, she'll have enough principle paid off that it will balance out. My wife and I are in a similar position - we're aggressively paying down the principle on our house after we bought a place about two years ago. I'm hoping to double all our payments and do lump sums on top of that next year to minimize our interest rate risk (which today is looking kind of silly, I guess). RE: mortgage principle vs interest: look at a good mortgage calculator (I have one I could share if you can't find one) and see how principle paydown vs interest changes over a 25 year mortgage at varying interest rates.
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Jan 21, 2015 19:38
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Baudin posted:I'm hoping to double all our payments and do lump sums on top of that next year to minimize our interest rate risk (which today is looking kind of silly, I guess). It can be done, but won't be easy. My dad had a similar strategy in the 90s. He paid off a 25 year mortgage in 7 years. The secretary at the bank called him "Mr. Lump Sum". Good luck!
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Jan 21, 2015 19:52
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Baudin posted:My wife and I are in a similar position - we're aggressively paying down the principle on our house after we bought a place about two years ago. I'm hoping to double all our payments and do lump sums on top of that next year to minimize our interest rate risk (which today is looking kind of silly, I guess). The problem with early payoff now is that, if/when the housing market pops all the cash you put into a single asset disappears. With interest rates low, it would be better to diversify investments and carry the mortgage at its low rate. You can then decide later if cashing out investments to pay off the house is needed, or abandoning the house and taking the credit hit is going to provide more value. On a very simplified level, it's foolish to pay back someone who is giving you money for less than the cost of inflation. They are, essentially, paying you to take that money and you should always keep this in mind. You won't see rates that low, of course, because banks take that cut for themselves, but you can still get very close to money being 'free'.
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Jan 21, 2015 20:21
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