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Hey Hey Hey, Whats going On?


Ya, we've been singing this song for a while now. Chasing that Neon Rainbow called inflation is what has lead us to this point in time, what goes up must come down. And the Banks are not waiting, they have priced in what they believe to be happening in the near future.


Seems like just a few weeks ago (because it was literally a few weeks ago) all the pundits were stating without batting an eye, rates will not change unitl inflation hits 2%, which will be 2025 and not sooner. Opinions change more often and quicker than I change my underwear, so don't trust them. And don't tell my wife I have not changed my underwear.


So the long and the short of this message is, rates were jacked too high, and too quickly, and now the banks are pulling back to try and ease the pain... but economics are not playing ball. Recent stats show the labour market actually improved, showing unexpected strength in the Economy. Did banks get it wrong? The market sure seem to think so, with a pull back from record highs this week. But they don't really have a choice as Fixed mortgage rates compete with Bond yeilds and these have pulled back, in anticipation of cuts in the future. And the truth is, bonds are a good buy right now, as the price is going to go up as the overnight rate drops... ya I know... its complicated.


So the banks are advertising that they believe the yeild curve will normalize in the near future, possibly staring in March with the next Fed meeting. So the best bet right now, the one nobody is taking, is to go Variable rate, but its a full point above fixed? Ya, not for long.


Fixed rates will now be sticky as the banks are showing signs of desperation by making their cuts too soon, 1. To keep the business and 2. to avoid forclosures which they have projected are going to happen.


Its all gonna happen this year, so hold on to your shorts... and please change them a little more often than I do.





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