It’s the 40th episode of a little mortgage podcast called Make Money Count. Boy is it a big one! Inflation has been ridiculously high. It was reported yesterday that the US annual inflation rate hit 9.1%. It isn’t too far behind that in Canada. This rate hike is an extreme measure. It’s the Bank of Canada’s way of showing that fighting inflation is the #1 priority.
Have a listen to this informative episode to learn about how we got here and what this means for Canadians going forward! Looking back on the last 2 and half years, it has been a murky timeline. The next two years may prove to be more of the same. The past 2 years: We prioritized short-term stimulus over long-term economic health. When COVID hit, Canada, the US, and many other countries decided that the best measure was to give everyone a ton of money to stimulate the economy.
Was this the right move? Well, for the politicians focusing on getting re-elected, it definitely was. Now with all of this money pumped into the economy, we are seeing costs skyrocket and a recession looming. COVID may have been an emergency, never-before-seen situation. However, it is now very clear that a more strategic and conservative approach to aiding the economy at the time should have been taken. The next 2 years: high interest rates likely leading to a drop in real estate prices.
Hopefully inflation has hit a peak, but it will likely take a few more half-point hikes to actually turn it around. Even with these actions, it is clear government officials are taking it a step further. Over the last several years, Canada and the US have really wanted to emphasize the transition to renewable energy sources. Now Joe Biden travelled to Saudi Arabia to meet with the PM. Increasing oil production is expected to be a topic of discussion. 18 months ago, taking this trip was unlikely to be on his radar.
A lot of our clients that are renewing are considering a 2-year term for their next mortgage with the hope that rates start to come back down in the back half of 2023. With the appropriate rate hikes, we could absolutely see this happening. Meanwhile, if you are in a position where you need access to home equity, this could very well be the last chance to maximize the value of your property on a refinance. Whether it is through a full refinance or a home equity loan, the staff at Cannect are ready to help you.
Marcus Tzaferis and the Cannect Team
