This is a “teaser pic.”
UCC Mortgage Co. is on the move.
It has been a bit of a roller coaster finalizing things, but we finally have a date and the keys. 😊
The next few weeks should be busy.
But we’re very excited about this new chapter and will have more information share in the coming weeks.
Stay tuned.
As expected, the Bank of Canada slashed rates again, yesterday.
They cut the overnight rate by 50 bps.
This “supersized” or “jumbo” cut was widely expected by the market.
And its good news for those managing debt, especially those with variable rate mortgages or lines of credit.
But this is terrible news for the Canadian Economy!
In a typical rate cut cycle – especially when we are not too far removed from massive inflation and a society addicted to “cheap money” – the bank of Canada cuts 25 bps at a time.
For them to cut 50 bps and continue to leave the door open for further rate cuts (which is almost a certainty), likely means that they are not pleased with the current trajectory of our Canadian economy.
As much as I would like to think that they are cutting rates for the benefit of all those who they told to borrow cheap money during the pandemic times and are now facing more expensive renewals… they are not doing it for those people.
They are cutting rates fast because the economy is alarmingly slow.
Look around… construction is slow, real estate sales are still way down, business and personal bankruptcies are up, and unemployment is on the rise.
If I had to guess, it’s the unemployment piece that tipped the scales towards a “jumbo rate cut.”
A recent RBC report shows that the unemployment rate has been steadily rising, and they are forecasting the unemployment rate hitting 7% by early 2025.
That’s a significant increase and more than a percentage point above pre-pandemic levels.
To the Bank of Canada, rising unemployment is just as concerning as runaway inflation.
And they will do everything in their power to combat it.
By that, what I mean is, they will cut interest rates aggressively.
That’s about the only too they have left these days.
What will be interesting to see is if decreasing rates can address unemployment and deflationary pressures, as effectively and efficiently as the rate increases tackled inflation.
Let’s hope so!
For those of us in the mortgage and real estate industry, rising unemployment is one of the worst things that can happen.
When people are working, they at least have a fighting chance of rearranging their finances and priorities to best tackle whatever issues they are faced with at that time. Most recently, inflation and rising interest rates…
When somebody loses their job, it no longer matters what interest rate they have on their mortgage… if they don’t have money coming in, they likely won’t have money to pay their mortgage… regardless of what the rate it.
When it comes to real estate let’s not just assume the formula is as simple as:
Rates go up = real estate sales/prices down
Rates go down = real estate sales/prices up
We need to pay attention to everything else that’s going on, and why all of this financial engineering by the BoC, is needed.
Right now, the BoC is sending a clear message — they’re in panic mode over the economy.
There’s no time to raise one hike at a time.
And although cheap credit is great for consumers, the context in which it’s being delivered is more worrying than people realize.
Let’s see where this goes over the next week and months, but if I had to guess, we will start to see and hear more news about job losses, poor earnings reports, decreases in consumer spending and bankruptcies.
These are likely the types of headlines that the Bank of Canada is trying to stay ahead of…
Until next time,
Vince
P.S. This is your friendly reminder that just because the Bank of Canada cut rates yesterday, that doesn’t mean fixed mortgage rates are going down.
