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Bigger they are the harder they fall

Ted Rechtshaffen: Inflation at 2.5% sans mortgages costs means it's time for the central bank to stop raising rates

This would seem obvious to most, and its what I have been telling people, another recent post stated BC has the highest exposure to Mortgage default, than any Province in Canada, something close to 30% of our economy is based on real estate. Well ya, we sell wood, and tons of it. When real estate went tits up in the US, lumber mills crashed, and BC produces a lot of lumber. Much of it exported.

... it takes time, since it has a lagged impact. If the CPI is now 2.5 per cent and the sizable interest rate hikes are having a lagged impact, doesn’t this suggest that we are done taming inflation with interest rate hikes?

Yes it does, mortgages are locked in for 90 to 120 days, so like 1982, there is a bit of a mad rush to get the deal closed before that deadline. People I have seen this story played out before, and it didn't end well. It ended with the biggest housing crash in Canadian History. Hmmmm I wonder what Garth has to say on this?

Our Central Bank is pushing for possibly 2 more 1/4 point hikes... so we have gone from

.25 - 4.75 in 17 months... hello... what has that done to mortgage debt servicing? Well I can attest to that... my variable rate mortgage was 1.5% and no I didn't expect it to stay there. But today I am now paying 6%... and will be possibly paying 6.5 % 3 months from now... Lucky for me, I paid down my mortgage over the last 10 years, but new buyers in the last 2-3 years are screwed.

Oh and a Recession? I think we are already there. Banks are reporting they are hording cash, preparing for defaults, companies are trimming down, all the techs are laying off, oil is sliding, because of slack demand, and hello, China just DROPPED, their interest rate... while others are still cranking up the screws on their economy's.

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