Canadians are "scared" about potentially rising mortgage rates. And in response to this "fear" naturally, they rush out to buy overpriced houses before cheap credit dries up.
“There's definitely a sense of urgency among home buyers,” said Lynne Kilpatrick, senior vice-president of personal banking at BMO.This is like being scared of heights before deciding to jump out of an airplane. Here's a thought: Maybe if you're "terrified" of higher rates, you shouldn't be leveraging yourself to the teeth and buying a massively overpriced asset with borrowed money. But of course this is far too rational a thought to be covered by the mainstream media, we need to embrace the thought that what goes up will never go down, and that we don't need to be responsible for our actions because someone (presumably) will bail us out if we fuck up.
More than two-thirds of Canadians expect mortgageTwo-thirds? TWO-THIRDS?
ratesto rise over the next year, with about the same number of mortgage holders concerned about higher rates, a Royal Bank of Canada annual homeownership survey showed.
Translation: 1 in 3 Canadians is utterly fucking delusional that rates won't be going up. Has the Bank of Canada already told us for the last 12+ months that rates will rise by June/July?
Try even suggesting to a homeowner that they may face modest rate increases in the range of 50-100 BP by end of year (with potentially another 100-200BP rise next year), which STILL leaves us below historical norms and just watch their reactions:
-Are you kidding me, don't you know rates only go down or stay current?
-That CAN'T happen! You're dreaming...
-That BETTER not happen, or I'm fucked.
-If that happens, I will stab in the face.
-The government will save us.
What part of denial am I missing here?
Oh ya...they've been TOLD "It's OK"
On Tuesday, Bank of Nova Scotia forecast in its real estate trends report that home sales are expected to rise 10 per cent to 510,000 this year, while average prices are expected to jump 8 per cent to a record $345,000.
Like most economists' expectations, Scotiabank said the housing market in the spring should see a flurry of activity, particularly ahead of new sales tax regimes in Ontario and British Columbia and tighter qualifying criteria for insured mortgageAnd the stupid thing is...they're probably right. Prices probably do rise in the first half of the year, the most marginal buyers are always the last in before the crash...rush to buy before rates rise, the HST hits, etc...I'm sure that will work out spectacularly...