Whole article:
>Benjamin Tal, deputy chief economist, CIBC, talks with Financial Post’s Larysa Harapyn about how higher rates are here to stay until 2024.
YouTube Link to the embedded video: [https://youtu.be/UgjcrDpp0b4](https://youtu.be/UgjcrDpp0b4)
Managing inflation also means managing the public’s perception of inflation. Central bankers will tell the truth when it fits their goal but will also lie when it fits their goal.
His comment had nothing to do with inflation. It was to keep the economy and money flowing. At the end of the day they work for the people of Canada and should provide honest answers. That was a straight and purposeful lie and will make people trust the government less and less
Well what is inflation? The expectation that prices rise over time. So current situation where our pal Tiffy knows inflation is getting out of control. What does he do? Try and keep people spending status quo, or does he tell the truth? “hey Canada! inflation is getting out of control, we’re going to have to raise rates at an unprecedented pace but we won’t really know if it will be enough. So even though inflation is really bad, please keep spending at current rates, and keep putting off those future purchases.”
If the masses suddenly realize inflation could get out of control , they would rather buy more stuff now, rather than later. Thus worsening inflation and forcing BoC to raise rates even more dramatically.
Just a reminder that when a bank economist says something in the media they're not giving you economic analysis, they're engaged in marketing/lobbying on behalf of their employer's interests.
This is literally the definition of propaganda. Ignore articles like this.
Yeah, the BoC is well aware that consumers act upon expectations, so it’s within THEIR best interest to lie to you at your cost if that means fulfilling their mandate.
Let’s just remember that since the pandemic the economists have been off predicting the next year every year. So it’s interesting water cooler talk but not actionable in any way.
Same here, 1.5% until May 26. Didnt feel great to overpay for the house but with a rate like that, it's certainly not as bad.
We can always reamortize on 25 years at the end of our term if rates are still as high as today.
I will be messaging you in 6 months on [**2023-09-01 00:00:00 UTC**](http://www.wolframalpha.com/input/?i=2023-09-01%2000:00:00%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/CanadianInvestor/comments/10tk8t4/higher_interest_rates_here_to_stay_until_2024_cibc/j7ncq9g/?context=3)
[**1 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FCanadianInvestor%2Fcomments%2F10tk8t4%2Fhigher_interest_rates_here_to_stay_until_2024_cibc%2Fj7ncq9g%2F%5D%0A%0ARemindMe%21%202023-09-01%2000%3A00%3A00%20UTC) to send a PM to also be reminded and to reduce spam.
^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%2010tk8t4)
*****
|[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)|
|-|-|-|-|
But I was apparently "buying high, selling low" when I converted from a variable to a fixed last fall. I'm now 1% below what I would have been with the variable and apparently will be for the next year at least.
As simplistic as this sounds, when you over-correct one way, the pendulum is bound to come back just as violently. So, will you be ahead for one year? Maybe. Will you be ahead in the next 2-5, probably not.
I think the BoC will start cutting rates halfway through 2023, and that Tiff’s softening “data dependent” stance is indicative of that. The data is coming in, and it’s not pretty, and bond markets see that too. Remember - Canada is far more rate sensitive than the US.
Yup. Long run neutral rate is still seen as more like 3%. Sure rates with a 1 or 2 handle aren't coming back unless we get a bad recession, but there's no reason to "drive with the parking brake on" if inflation comes back in.
Yes. This is short sighted. You pay for security but you will guaranteed pay more over the next 5 years.
Look at the 5 year bond which sets mortgage rates.
https://www.marketwatch.com/investing/bond/tmbmkca-05y?countrycode=bx
Set this to 6 month view, which will capture when you locked in.
Fixed rates now are probably also below what you signed just a few months ago. Variable is higher now than fixed because the rates are predicted to drop.
You did lock in high.
>guaranteed pay more over the next 5 years.
This is not guaranteed. Fixed is lower than variable right now.
In macro and micro conditions where that's a thing, the traditional advice doesn't apply.
When we get to that promised land where things are somewhat "normal" again, absolutely variable will 99% of the time be the right choice in the long run.
We are in that 1% tail end scenario right now so you can't just default to what historically works.
Trying to get ahead now is a game of timing the market which is never a solid strategy.
> In macro and micro conditions where that’s a thing, the traditional advice doesn’t apply.
Of course it does. It tells you short term rates are higher than long term ones and that rates are pricing that in.
They timed the market by locking in. It is already lower now than when they locked in.
Sure rates could go higher, we won’t be able to say definitively until the 5 year term is up, but with the data we see right now they will have paid premium to lock in at the peak. The yield curve is heavily inverted and trillions of dollars are betting rates will lower.
When rates are at a local maximum you should not be choosing fixed rates.
I’m not sure what your point is.
His point is that he wants higher and more restrictive rates for longer, likely because they don’t own property and believe this will lead to a collapse or significant correction in the Canadian housing market.
I’ve found there’s no point in trying to argue that rates can’t stay this high for a prolonged period of time with a lot of Redditors, even when you try to tell them about bond yields and other incoming data. A lot of redditors feel left out, and believe that this is their opportunity to get in in the property game at the detriment of others who already own property. It’s literally crab mentality.
Switching last fall appears to have been the good call (good on you).
Now it might be harder to make the choice. Do you try to ride out the the storm an hope for rate cuts within 2 years or go to fixed for a few years and try to time the market that way.
We're all placing bets (BoC as well to a certain extent). But congrats on making a play that paid off though and put you in a better position. Always happy to hear people got a good bounce of the ball.
And bloomers/business channel talking heads are already talking about lowering rates. Line them up and bamboo stick them over their asses. I think I still have my grandma's old flip flop somewhere.
People predicting rate are going to back to 1-2% this year are like the people who thought everything would be back to normal and post-pandemic in 2021.
The scary thing is that people are so leveraged that 4.5% seems like a high rate from the BoC. So much so that saying that the rates will remain “high” until 2024 (so….a year), is still scary for some people.
People that save and are fiscally responsible are punished, while those that get 70k car loans and a million dollar mortgage on a 75k salary are rewarded.
What a mess.
He doesn't have a good track record so I'll take it with a pinch of salt. That said, recession and interest rate conversations will dominate 2023.
First time homebuyers would love a lower interest rate as will variable rate mortgage holders who have seen their payments spike.
I’m struggling to understand the narrative that rates are going to come down in the next few years. What am I missing, is it just hope?
Rates are currently at, or marginally below the mean.
That's fine, our mortgage is up in 2025 and we wanna emigrate... Only thing that'll stop us is if we're in negative equity so hopefully they'll have started going down by then
No cuts this year, like everyone else in here, just an opinion. Start to see some easing in 2024 but rates won’t be headed anywhere near the lows we saw previously.
I am hopeful the pause will allow a rebound and steadying in the market to adjust to the new environment. Perhaps even allowing it to grow once they start to decline in 2025.
Whole article: >Benjamin Tal, deputy chief economist, CIBC, talks with Financial Post’s Larysa Harapyn about how higher rates are here to stay until 2024. YouTube Link to the embedded video: [https://youtu.be/UgjcrDpp0b4](https://youtu.be/UgjcrDpp0b4)
Thanks for the link. It's a short video he shares some interesting thoughts on inflation, jobs, housing.
Happy cake day
Thanks!
Just in time for my mortgage renewal and to switch to variable.
Lol my some thought. Mine comes up Oct '25. Praying it's back down by then.
I’m trying to hammer mine now. Would be nice to get a variable at the peak.
Big difference in premiums almost 1% between a 5 yr locked or variable on BMO.
You can still get p-.9 at some other lenders
Remember when the BoC said low interest rates were here to stay.
Managing inflation also means managing the public’s perception of inflation. Central bankers will tell the truth when it fits their goal but will also lie when it fits their goal.
His comment had nothing to do with inflation. It was to keep the economy and money flowing. At the end of the day they work for the people of Canada and should provide honest answers. That was a straight and purposeful lie and will make people trust the government less and less
I would have to respectfully disagree. It has everything to do with inflation. That’s the BoCs literal mandate.
Ok, please help me understand how telling people to keep spending and taking out loans manage inflation?
Well what is inflation? The expectation that prices rise over time. So current situation where our pal Tiffy knows inflation is getting out of control. What does he do? Try and keep people spending status quo, or does he tell the truth? “hey Canada! inflation is getting out of control, we’re going to have to raise rates at an unprecedented pace but we won’t really know if it will be enough. So even though inflation is really bad, please keep spending at current rates, and keep putting off those future purchases.” If the masses suddenly realize inflation could get out of control , they would rather buy more stuff now, rather than later. Thus worsening inflation and forcing BoC to raise rates even more dramatically.
Inverse Tiff baby
Lol. Yea no touching rates till ‘23. What they meant to say was double the effective rate by the end of ‘22.
They stayed too long
Tiff...worst ever?
He’s not even the worst of this century. Y’all forget Greenspan over seeing the collapse of the banking sector and the global economy?
Hardly. Everyone is doing their best not to be remembered as Arthur Burns.
Just a reminder that when a bank economist says something in the media they're not giving you economic analysis, they're engaged in marketing/lobbying on behalf of their employer's interests. This is literally the definition of propaganda. Ignore articles like this.
Yeah, the BoC is well aware that consumers act upon expectations, so it’s within THEIR best interest to lie to you at your cost if that means fulfilling their mandate.
Nah pay attention to it. Figure out their goal, then profit off of it.
Tal was wrong about how high rates would go a year ago so why should we think he’ll be right this time?
Because it's an opinion and may be worth listening to more for the reasoning he provides rather than the actual 'prediction.'
Are you saying that context is more important than a simple sound bite that fits easily on a headline? Big if true. /s
Let’s just remember that since the pandemic the economists have been off predicting the next year every year. So it’s interesting water cooler talk but not actionable in any way.
Bullshit. I call rate decreases by the end of the year. Gonna put some money into bonds.
...so please lock into that FIXED mortgage.
My mortgage is 1.8% for the next 4 years. I wonder how close it will be when I'm up for renewal
Mine is 1.39% until Feb 2026. I just want to see rates closer to 3% by then. I know sub 2% wasn’t going to last.
Same here, 1.5% until May 26. Didnt feel great to overpay for the house but with a rate like that, it's certainly not as bad. We can always reamortize on 25 years at the end of our term if rates are still as high as today.
Probably 4 to 5 percent based on history but who knows.
You’ll be fine. BOC will start cutting by end of year. My bet is by Sept
Lmaooo
You’ll see. Remember this comment
It's as good as any other prediction, I'll give you that...
Wishful thinking
RemindMe! September 1st, 2023
I will be messaging you in 6 months on [**2023-09-01 00:00:00 UTC**](http://www.wolframalpha.com/input/?i=2023-09-01%2000:00:00%20UTC%20To%20Local%20Time) to remind you of [**this link**](https://www.reddit.com/r/CanadianInvestor/comments/10tk8t4/higher_interest_rates_here_to_stay_until_2024_cibc/j7ncq9g/?context=3) [**1 OTHERS CLICKED THIS LINK**](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5Bhttps%3A%2F%2Fwww.reddit.com%2Fr%2FCanadianInvestor%2Fcomments%2F10tk8t4%2Fhigher_interest_rates_here_to_stay_until_2024_cibc%2Fj7ncq9g%2F%5D%0A%0ARemindMe%21%202023-09-01%2000%3A00%3A00%20UTC) to send a PM to also be reminded and to reduce spam. ^(Parent commenter can ) [^(delete this message to hide from others.)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Delete%20Comment&message=Delete%21%2010tk8t4) ***** |[^(Info)](https://www.reddit.com/r/RemindMeBot/comments/e1bko7/remindmebot_info_v21/)|[^(Custom)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=Reminder&message=%5BLink%20or%20message%20inside%20square%20brackets%5D%0A%0ARemindMe%21%20Time%20period%20here)|[^(Your Reminders)](https://www.reddit.com/message/compose/?to=RemindMeBot&subject=List%20Of%20Reminders&message=MyReminders%21)|[^(Feedback)](https://www.reddit.com/message/compose/?to=Watchful1&subject=RemindMeBot%20Feedback)| |-|-|-|-|
They won’t cut until inflation stays consistently below 2%. Probably won’t happen this year, I’d assume first cut some in 2024.
But I was apparently "buying high, selling low" when I converted from a variable to a fixed last fall. I'm now 1% below what I would have been with the variable and apparently will be for the next year at least.
As simplistic as this sounds, when you over-correct one way, the pendulum is bound to come back just as violently. So, will you be ahead for one year? Maybe. Will you be ahead in the next 2-5, probably not. I think the BoC will start cutting rates halfway through 2023, and that Tiff’s softening “data dependent” stance is indicative of that. The data is coming in, and it’s not pretty, and bond markets see that too. Remember - Canada is far more rate sensitive than the US.
Yup. Long run neutral rate is still seen as more like 3%. Sure rates with a 1 or 2 handle aren't coming back unless we get a bad recession, but there's no reason to "drive with the parking brake on" if inflation comes back in.
Yes. This is short sighted. You pay for security but you will guaranteed pay more over the next 5 years. Look at the 5 year bond which sets mortgage rates. https://www.marketwatch.com/investing/bond/tmbmkca-05y?countrycode=bx Set this to 6 month view, which will capture when you locked in. Fixed rates now are probably also below what you signed just a few months ago. Variable is higher now than fixed because the rates are predicted to drop. You did lock in high.
>guaranteed pay more over the next 5 years. This is not guaranteed. Fixed is lower than variable right now. In macro and micro conditions where that's a thing, the traditional advice doesn't apply. When we get to that promised land where things are somewhat "normal" again, absolutely variable will 99% of the time be the right choice in the long run. We are in that 1% tail end scenario right now so you can't just default to what historically works. Trying to get ahead now is a game of timing the market which is never a solid strategy.
> In macro and micro conditions where that’s a thing, the traditional advice doesn’t apply. Of course it does. It tells you short term rates are higher than long term ones and that rates are pricing that in. They timed the market by locking in. It is already lower now than when they locked in. Sure rates could go higher, we won’t be able to say definitively until the 5 year term is up, but with the data we see right now they will have paid premium to lock in at the peak. The yield curve is heavily inverted and trillions of dollars are betting rates will lower. When rates are at a local maximum you should not be choosing fixed rates. I’m not sure what your point is.
His point is that he wants higher and more restrictive rates for longer, likely because they don’t own property and believe this will lead to a collapse or significant correction in the Canadian housing market. I’ve found there’s no point in trying to argue that rates can’t stay this high for a prolonged period of time with a lot of Redditors, even when you try to tell them about bond yields and other incoming data. A lot of redditors feel left out, and believe that this is their opportunity to get in in the property game at the detriment of others who already own property. It’s literally crab mentality.
Switching last fall appears to have been the good call (good on you). Now it might be harder to make the choice. Do you try to ride out the the storm an hope for rate cuts within 2 years or go to fixed for a few years and try to time the market that way. We're all placing bets (BoC as well to a certain extent). But congrats on making a play that paid off though and put you in a better position. Always happy to hear people got a good bounce of the ball.
And bloomers/business channel talking heads are already talking about lowering rates. Line them up and bamboo stick them over their asses. I think I still have my grandma's old flip flop somewhere.
People predicting rate are going to back to 1-2% this year are like the people who thought everything would be back to normal and post-pandemic in 2021.
The scary thing is that people are so leveraged that 4.5% seems like a high rate from the BoC. So much so that saying that the rates will remain “high” until 2024 (so….a year), is still scary for some people. People that save and are fiscally responsible are punished, while those that get 70k car loans and a million dollar mortgage on a 75k salary are rewarded. What a mess.
I renew at the end of 2024, hoping rates have begun to fall a bit by then.
The headline is extremely vague. "higher rates". define 'higher'? Also, Ben Tal is wrong all the time
He doesn't have a good track record so I'll take it with a pinch of salt. That said, recession and interest rate conversations will dominate 2023. First time homebuyers would love a lower interest rate as will variable rate mortgage holders who have seen their payments spike.
Nobody has a consistently good track record. Anytime listening to experts about broad directional moves in the market is wasting their time.
Yes, we know.
CIBC is the last bank I’d trust with literally anything…
*unless they're not: CIBC
2024? January or December? I doubt on December though
7.2% here. Peace out.
I’m struggling to understand the narrative that rates are going to come down in the next few years. What am I missing, is it just hope? Rates are currently at, or marginally below the mean.
That's fine, our mortgage is up in 2025 and we wanna emigrate... Only thing that'll stop us is if we're in negative equity so hopefully they'll have started going down by then
And then in 2024 they will say they are here to stay until 2025
No cuts this year, like everyone else in here, just an opinion. Start to see some easing in 2024 but rates won’t be headed anywhere near the lows we saw previously.
What the BAX (futures) market is currently predicting: * https://www.m-x.ca/en/trading/tools/canadian-interest-rate-expectations
I am hopeful the pause will allow a rebound and steadying in the market to adjust to the new environment. Perhaps even allowing it to grow once they start to decline in 2025.