On 13th July, the BoC increased a jumbo of 100bps, which means the Bank Prime rate is now 4.70%, and most HELOC rates are 5.2%.
For all the homeowners who own a conventional variable rate, the mortgage is now between 3.85% and 4.20%. Most of the current variable rates see no change because they have static payments. As the BoC will set an increase again in September, a trigger point will come to the table for many owners. Investors who invest in their rental properties with HELOC should start to work out a strategy to balance the cost.
Don't expect the real estate market price to drop dramatically overnight. The massive house price reduction is not happening. But we are looking into a market where price reductions are constant and steady.
The mortgage rate won't stay this high in 2025. As the government works on inflation aggressively, we are looking at an immediate economic adjustment in the next 18-24 months. A recession is coming; we will see a sharp turn from 2023 through 2024. All landlords have a robust rental market for the next two to three years.
There is no Soft-Landing; we all embrace the situation together. I highly recommend that all the buyers and sellers hold their activities and return to the market in October or November. By that time, the big picture will be more precise.
Breath! Feel free to contact me if you have any further questions.
Step into July, what will the Canadian economy lead? First, we are heading on track to an inflation rate above 7% this summer, and the drumbeats warning of a coming recession are getting louder and more persistent.
Former Treasury Secretary Lawrence Summers told Bloomberg TV that there's an increasing risk that the recession he expects will start sooner, in 2022.
"The risks of a 2022 recession are significantly higher than I would have judged six or nine weeks ago," Summers told Bloomberg Television's "Wall Street Week" with David Westin. "If the economy did go into recession in the next six to nine months, then you'd probably see a reduction in inflationary pressures."
So, what should we expect in July?
I hope our first published in-sights helps you get a clearer picture of the future market.
4th July 2022, by Xinning Wu