The Bank of Canada has no wiggle room a BoC rate cut would only add to the cost of living – July 31, 2019,
If someone were to invest in Canada, their investments would in large part revolve around investments that are likely to get a bailout. The Private Sector in Canada not dependent on Government subsidies or Government contracts is extremely risky, primarily because of the combination of Stephen Poloz and Justin Trudeau. Stephen Poloz just so I’m clear wasn’t appointed by Trudeau he was appointed by Stephen Harper, primarily to serve the needs of the Real Estate Lobby. The Crown Corporation known as the Bank of Canada and the Crown Corporation known as the Canada Mortgage and Housing Corporation works in conjunction to achieve inflation targets.
Unlike most State Owned Crown Corporations the CMHC attracts foreign capital into Canada and it provides the Federal Government with a lot of money, part of the reason why Stephen Harper’s platform revolved around the appeasing the Real Estate Lobby, the downside to this is CMHC and the BoC are fueling housing unaffordability. Debt and insurance to protect that debt is extremely expensive and as Condos are being built where Rental Housing would be sufficient “a bank of real estate” holdings have been created which not only equates to money laundering but also equates to large Canadian cities having a housing shortage. Toronto and Vancouver don’t have housing shortages, what they have are housing that’s not based on Main Street demand, the housing being built in Toronto and Vancouver in large part is being built for Real estate investors/Flippers/Money Launderers etc. It’s a lot harder to launder money in Rental apartment housing, it’s a lot easier to wash money in Condo development.
You have to remember a few things about Canada, number 1 our housing market didn’t crash when the United States housing market crashed, in fact, the CMHC and the BoC helped to prevent the housing crash and secondly the housing pyramid scheme in Canada will more than likely crash only if the U.S market crashes, thereby allowing the BoC and the CMHC an alibi when the crash does happen.
By almost every metric Canada ranks as a country that will have some serious housing challenges in the future. Cost of living is not something to play with and unfortunately, the BoC has no wiggle room left. Can the BoC lower rates or even have a negative interest rate? Of course, it can, but try and remember that right now, not only is the cost of living as well as housing in general way too high for home buyers, it’s also very expensive for the poor and middle-class who rent. Renters don’t have access to the level of credit home buyers have and renters are facing an all-time high in rent prices. The reality is this is happening primarily because of the BoC and the CMHC.
Lower rates the price of housing will go up some more thereby fueling more Condo development. There’s little to no incentive to build Rental Housing in Canada. CMHC now not only offers mortgage insurance it also offers a downpayment loan for a mortgage? Think about that, think about the message that sends, it would be one thing if the CMHC was private, but no, just like the Bank of Canada the CMHC is a Crown Corporation and it’s picking sides, it’s picking the side of the Condos and Detached homes and ignoring the Renters. The BoC is the facilitator of all of this and we’ve reached a peak. At this point, unless the BoC is raising interest rates, it’s not worth talking about, until the BoC raises interest rates it’s irrelevant!
Bank of Canada unlikely to follow any Fed interest rate cut: experts
– TheCanadianPress
Interesting times ahead