Bank of canada interest rate cut!

[aleksei]

Just wanted to throw this question out there. I welcome the opinions of some of you experienced members as to how this will affects us?

I ask this because from recent posts during the past month I have read more than once that due to the crisis in the united states banks in Canada have tightened their rules for borrowing money thereby making it more difficult to for homeowners and investors to obtain financing.

A cut in the interest rate, intuitively, contradict the above statement.

Again, how will this affect us? Positive, Negative, Neutral??
If i am not mistakes the rate has or is soon to be dropped by half of a point.


Thank you
Alex

 

[Jack]

Doesn`t mean that the banks will lower their lending rates to us, all that`s been lowered is the lending rate between the Fed`s and the Class I`s. Has the bank been passing on that savings to the consumer throughout the year, when there have been two other cuts? Um, no!

And besides - lower interest rates for real estate investors is a neutral issue. Sure, it gives us a lower cost of capital and easier access overall, but guess who else that benefits? Your tenants, who might also decide that they want to be homeowners, too! So any lower monthly payment benefits are usually offset by an increase in overall vacancy rates.

 

[Thomas Beyer]

QUOTE (aleksei @ Oct 8 2008, 06:49 AM) Just wanted to throw this question out there. I welcome the opinions of some of you experienced members as to how this will affects us?

I ask this because from recent posts during the past month I have read more than once that due to the crisis in the united states banks in Canada have tightened their rules for borrowing money thereby making it more difficult to for homeowners and investors to obtain financing.

A cut in the interest rate, intuitively, contradict the above statement.

Again, how will this affect us? Positive, Negative, Neutral??
If i am not mistakes the rate has or is soon to be dropped by half of a point.


Thank you
Alex
it may help to stabilize the market .. and may bring more buyers into real estate and stock investing .. or it may also prolong the wild overspending of many Canadians and Americans.

We used to earn money first, then spend it. Now we spend it first, then earn it maybe .. and pay back at higher interest rates !

I want it now: designer purses, designer jeans, a new car when 22 years old with no job, a new flat screen TV, .. now .. now .. now ..

America is not only addicted to oil, but especially to credit. So a rate cut will delay the necessary but bitter tasting cure: spend less, save more, cut expenses, move to smaller homes (or less homes )

So if you think we are not going into a depression, just a prolonged and deep recession, and thus, will have paying tenants for life, then yes, it is good: you will pay less on your mortgage.

If you think that a drop of the Dow of only 40% from its peak is insufficient, and more companies, banks and countries or counties or states like indebted California need to fail first, then maybe this rate cut is the wrong medicine.

It depends what you believe.

The economy, real estate, money, debt, interest rates, loans .. this is all man made ... so man can surely fix it .. (unlike global warming I shall add which is not man made)

Expect money to tighten, to become less available and thus real estate to retract to lower and more sustainable values that make more sense ..

We landlords will surely benefit from all this .. or so we smugly think .. more renters, more demand, lower vacancies, higher rents, thus higher asset values .. even if stocks like Boardwalk, Northern Property REIT, Mainstreet, RioCan got hammered just the same ..

The market is highly irrational right now ... so how do you argue with an irrational patient ? You give him medicine and wait ...