Vancouver B.C. Real Estate – Interest Cuts, But Not for YOU

Again

With the global financial crisis in mind the Bank of Canada has cut interest rates.

The Drop

The overnight rate loan rate that banks charge each other dropped by a quarter of one percent to 2.25%.

They Say

“The weaker outlook for global demand will increase the drag on the Canadian economy coming from exports,” the central bank said in a commentary. “Lower commodity prices will also dampen the outlook, working through a deterioration in Canada’s terms of trade to moderate domestic demand growth. The marked tightening in Canadian credit conditions in recent weeks will restrain business and housing investment.

Lower Inflation

Inflation pressure reached its high in the 3rd quarter of this year and is expected to fall below 1% by mid 2009.

No Juice for the Little Guy

None of the BIG five banks trimmed their prime rates to customers. They say the credit market is tight so they are RELUCTANT to share the benefit.

Two Questions

Did we the people just give them $25 billion of our money to help them put the screws to us? Didn’t we the people give them another $12 billion in grease to make the economy smooth.

Vancouver’s Home Buyers and Sellers

My suspicion is that there are a lot of Vancouver Real Estate buyers and sellers who were hopeful that some of that grease would come their way. “The marked tightening in Canadian credit conditions in recent weeks will restrain business and housing investment.” It’s not just your Vancouver Realtor who is the bad guy, the Bank of Canada is now telling you that if you want to sell your home you had better be prepared to lower the price.

Why?

Simple, the Buyers are like the banks. They too are uncertain and RELUCTANT to borrow the money at higher rates to pay the price being asked. Strange how that works!.

I’m always happy to answer your Vancouver Real Estate question? Call or send me an email Twitter or Skype me at YatterMatters.

Larry

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed. **Numbers provided may vary as they are dynamically posted by the REBGV.

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

When Life Moves You - contact Larry:

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

julie Says:
October 22nd, 2008 at 9:07 am

I hear that the banks are now dropping rates… TD dropped .35

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2008/10/td-drops-prime-to-400.html

It’s like gas stations… price of oil drops and it takes them a few days to lower it… squeezing whatever profits they can out of a delay to respond to the market, but if the prices go up they respond immediately. 🙂

October 22nd, 2008 at 9:30 am

Julie,

The gas station analogy is perfect.

In the interim the cumulative interest differential earned by the big five ‘during the period taken to adjust rates’ costs the little guy a lot of money.

Example is signing up for a 5 year mortgage at 10:00 a.m. with a rate of 5%. Had the borrower waited till 5:00 pm they would have a lower rate of (using your TD example of – 0.35 % ) ending up with a rate of 4.65% for the same term.

During the term of the mortgage of 5 years that’s a lot of dollars!

BTW: Same applies to the submission of this post.

At 6:00 a.m. I am right, at 4:00 p.m I’m wrong.

I should have just given blood to the Red Cross. 🙂

julie Says:
October 23rd, 2008 at 12:03 pm

Haha! That will teach you for getting up so early to write in your blog!! 🙂 Next time you won’t be so keen.
And, hopefully anyone that needs a mortgage would wait a day after a rate drop before they sign on the dotted line (but rush to sign the second there’s word of a rise!!!).

Have a good day!

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