Mortgage Brokers Break Down Rising Rates & Falling Prices

July 29, 2022

Inflation is hitting us hard, and interest rates are on a non stop ascent. But what other numbers can we use to examine the current economic landscape? How will these metrics impact the Canadian consumer in the short term? This week’s episode takes a thorough look at important metrics like bond yields and the sales-to-listings ratio.
Marcus and Justin discuss what these metrics can tell us about the future of our economy. The first part of the episode outlines how bond prices move. As the Bank of Canada overnight rate continues to see hikes, yields of newly issued bonds go up as well. What does that mean for bonds that have already been issued at a fixed rate and currently trade on the open market? They drop in price because that’s the only way investors will buy them instead of the newly issued ones at higher rates.
When the stock market faces uncertainty, the bond market is where investors flock, but it is tough to time these purchases in a market where rates are still on the rise. The episode also compares the average home price in Ontario with the sales-to-listings ratio. Over the last 4 months,. We have seen fewer homes being sold relative to the number of homes listed for sale.
As the inventory available on the market goes up, it puts additional downward pressure on home prices as sellers meet the prices buyers are willing to pay. And this is exactly what we have seen starting in March and April, with an increased inventory leading to declines in the average home price. If you are watching the video version of this episode, you can see these exact numbers. Marcus Tzaferis and the Cannect Team

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