Are we heading for double digit mortgage rates?.

This is the question many an economists are pondering. As inflation is creeping in and the Reserve Banks want to contain it by hiking the interest rates.

The current prediction by many an economists from Canada is that there is every chance we will head for double digit mortgage rates in Canada with in the next few years.


What do you think?.

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Sunny Leone a true Canadian DESI now back in India !.

Where does it all start: Countries that have low interest rates: Japan and the U.S. 0.25% and also from the Bonds that these countries float also provide everyone a shelter. But the yields that the Bonds provide are a lot higher than that are charged for the borrowing. Which is 0.25%.
So, people do have the capacity to borrow for everything. But the Banks have 200 times the capacity of the deposits that 'you and I' make with them. So, who has more capacity to borrow and from the Big Government Banks*+, You guessed it, the Banks of course. See their bottom lines and in each of their quarter!! They have made billions. While we are waiting in the Un Employment line. This money they make are from the funds extended towards the carry trades. Everyone is making it. Since you and I only borrow to spend and not for Business, we don't know much about it. But the Big guys have grown bigger with the cheaper money that the Banks can loan to them. Or by getting monies from the Governments. GM and its return of the extended funds by the Big Governments are proof positive. They will do it before the rates go up.

All of the gains that the Banks make are periodical. But the sure fire market is the Mortgage Market. Because it is a sitting duck*. So they "hit them" also and gradually, especially "when they are lying low". "That is their slogan". They do creep up. So, watch out..... Fee Fi.....

Fee-fi-fo-fum
I smell the blood of an Englishman.
Be he alive or be he dead
I'll grind his bones to make my bread.,

You have already started smelling it, just like the others. But this time it will be very very slow. Because the movement of monies, The world Money Flow Index that is, is what to watch for and the multi prongs that it purports to have is the next barometer to look at. I am not in the International Monetary Fund. May be I should find the charts on their website to bring it here. Or this might suffice.

This time they have co-ordinated their movement of interest rates and narrowed it down to a smaller time span differential. So, all the Governments are in it and playing a very careful hand at the move, just to curtail the uncontrollable flow that might take place with these quick electronic transfers. Which might topple the apple cart. Well, I am also waiting to see how they are going to juggle. You watch when the Canadian Bank of Canada interest rates move up and the speed with which the Canadian Dollar will move up.(Shoot) There is already a correction taking place and the Government knows about it too. That is in advance.

But your question is about the Mortgage interests. Please talk to a Mortgage Broker. Currently it is in a state of flux with the new rules for the qualification. Everyone must qualify for a five year open mortgage with a 30 year amortization etc.,.... Well it is nice to know..

Freddie.

* How to catch Ducks: Things don't move when they have a blurred vision. That is for sure. So, the easiest way of catching a duck is, get a pound of cheap butter and place it on the head of the Duck and let the sun do the trick. It slowly melts and runs into the eyes, there by blinding the vision. You got it. Catch it then. Now they say "Gotcha"!! Well.....that is another method.

*+ There is slight catch with the US Borrowing system for the Governments. They will have to make a budget. Get it Passed. Then go the Banks and Borrow the money for the Government's use. Banks CAN'T Print the money. ONLY The Government can Print the money. The Banks then Borrow the printed money from the Government. Now remember that they print much much more money for the Banks to Borrow. A slight twist. I can live with it. http://www.newmoney.gov/currency/100.htm