Bank of Canada Caused Rents To Rise By Double Digits In 17 Of 24 Canadian Cities Surveyed – January 17, 2019
Well, rents in Canada are rising in all major Canadian cities and these rent increases have little to do with a lack of housing and more to do with the CMHC and the Bank of Canada. The Bank of Canada currently run by Stephen Poloz who was appointed under Stephen Harpers Conservatives has done something that I’m not even sure has happened before in Canadian history. Stephen Poloz has kept interest rates in Canada lower than interest rates in the United States. Interest rates in Canada are 1.75% and interest rates in the United States are 2.25%, now if you listen to any expert in the United States they’ll tell you that disaster was created by dropping interest rates to near zero and keeping rates there for basically Obama’s entire currency.
When the United States real estate market crashed, Canada’s real estate market didn’t crash, the only thing that happened in Canada’s real estate market in 2007-08 was a few subprime lenders were spooked and left Canada. Ocfourse those subprime lenders soon returned to Canada once they realized that Canada was ok. During the U.S crash, there were calls primarily from Lobby groups involved in real estate for the then BoC governor Mark Carney to lower interest rates, something Mark Carney was slow to do.
So conveniently when Mark Carney was replaced with Stephen Poloz, the new governor Poloz quickly cut interest rates, then he cut them again and again and he kept them there, now I have to remind the reader that the Canadian housing market didn’t crash and I have to also point out that lowering interest rates didn’t help Alberta’s economy with then Prime minister Stephen Harper or current Prime minister Justin Trudeau. So, it’s pretty obvious that Poloz cut interest rates to appease the real estate Lobby. That said, bankruptcies are up in Canada, not very much but they’re up and they’re going to continue to happen because the Bank of Canada is picking winners and losers and currently the winners are the owners of real estate.
The losers are the people who rent and are hoping to purchase real estate in the near future. The worst problem of all currently are the unsecured loans and also the auto loans, these loans along with crazy rental prices and other things are going to put the Canadian economy at serious risk of an economic crash. I’ve been saying it for years it’s better the Canadian economy crash now rather than a few years from now because we’re losing our tradespeople, our private sector is shrinking and Canada is becoming increasingly reliant on imports.
Oddly enough Canada is heavily dependent on trade with China and the United States and via some bad decision making from current Prime minister Justin Trudeau, if something isn’t done soon, we could be talking about massive hyperinflation hitting Canada in the not so distant future. The problem with what Poloz did by lowering interest rates when he didn’t need too is that when we have the next crisis lowering interest rates will actually accelerate the problem, because lowering interest rates in a crisis will make the loonie extremely low, during crisis typically people go to the U.S dollar, during a commodity boom people return the Canadian dollar and the crash that’s coming is going to be a deflationary crash, the problem that Canada has is we’ve created an environment with a lot of price controls which won’t allow our economy to correct itself.
When it’s all said and done in my opinion Stephen Poloz will be the worst Bank of Canada governor in Canadian history.
Rents Rise By Double Digits In 17 Of 24 Canadian Cities: Padmapper – huffingtonpost.ca
Interesting times ahead.