Will The Bank Of Canada Raise Rates in September

[gwasser]

Actually although I don`t like rate increases because my variable mortgage payments go up, it may benefit landlords as it makes it more difficult to become a homeowner. Have you not noticed that your vacancy rate tends to go up with falling interest rates? That is becouse more people tend to buy. With increased rates the opposite happens.

You may like low interest rates but what about all those retirees living of GICs, their retirement income has fallen for years and these people were forced to increase their risk by moving into the stock and bond market. Then they got hit by the 2001- 2003 and 2007-2009 crashes because of the overvaluation of these markets. Now, with slightly rising rates, they can return to the GICs with whatever money they have left. Even at current levels living of GICs is no fat pot.

If you are in a high tax bracket, interest bearing income is not very good. After inflation and taxes you likely loose money. But if you as a retiree live of dividends and interest, quite often you are in a low or very low tax bracket and then you may make some money. Especially when combined with Tax Free Savings accounts, investing in GICs may become once again more viable. So higher interest is a two-edged sword.

To be honest, for significant higher interest to occur, we probably need a lot more economic growth and government debt. In todays world of slow growth and deleveraging, I doubt we see that that happen soon.

 

[Berubeland]

The way I see it is that every obstacle to home ownership will both eventually increase the amount of rent we can charge and especially increase the quality of the tenant pool available to landlords. This has been a subtle but persistent downwards pressure on landlord`s profits for years. I have seen major changes in the quality of available renters since I began working as a property manager.

Recent events which have increased the amount investors must put down as well as making it harder to qualify will decrease competition for rental housing purchases and consequently price. Lower prices will mean increased profits and cash flow for those who can qualify.

In the major centers it`s been incredibly difficult to find and buy a property with positive cash flow for many years. Imagine being able to buy an investment property not far from where you live, it`s always handy to be able to keep an eye on people who work for you. REIN members are being counseled to stay away from unprofitable property and informed about how to evaluate property and the fundamentals of investing in RE but you would truly be shocked by the number of investors who buy unprofitable properties because "RE always goes up" based solely on speculation and appreciation.

I look forward to a more balanced market in the Toronto area, savvy investors will have nothing to worry about long term.

Even the return of the 5% down and increased qualification for new buyers is welcome as these people must live somewhere while they save up the money. Again increasing the quantity and quality of your tenants which will increase ease of property management, lower turn over costs and increase rents.

It`ll take a few years for all of us to see the benefits of this on the ground, I for one will be breathing a sigh of relief. (Although I am sorry that you guys will have to pay a bit more)

 

[safsad]

Sure they will-the artificially low rates will hurt us in the long term if no action is taken

 

[Thomas Beyer]

QUOTE (safsad @ Sep 12 2010, 10:20 AM) Sure they will-the artificially low rates will hurt us in the long term if no action is taken
why ? as always, for 1000+ years .. some folks win .. and some don`t ..