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Email this1:13 pm
September 7, 2018
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Loonie said
Inflationary pressures abound and are multiplying like rabbits. The question in my mind is what , if anything, would stop GICs from going to at least 6% this year? I suspect it's beyond the capacity of BoC. Maybe would require legislation, which would likely also be unpopular.Ever-increasing GIC rates may look good in theory, but the gap between inflation and GIC rates is significantly wider than last year. As long as that gap remains, higher GIC rates will still cost you. We were doing better last year, at least in this household.
I'm annoyed, but still lucky as it is all bonus income for us; we don't depend on it. It's really rough for those who do depend on it as they are the ones who can't afford greater risk or volatility in investments.
You are correct. Not that long ago, our Minister of Finance told Canadians that it was the right strategy to borrow big and invest (they say "invest" I would use the word "spend") because interest rates were historically low. But that is not the case now and I fear the interest (at current rates) on the Debt will be unbelievably large. We may feel sorry for those who can't afford greater risk or volatility in their investments, but you, I and the "middle class" are in for big tax increases. You can feel sorry for us too. Fed and Prov Govts need more revenue to service the staggering cost of the Debt in addition to their increasingly higher spending - and now we will be drawn more and more into a larger war in Europe as NATO members there become more nervous about Russian threats.
3:25 pm
March 8, 2022
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canadian.100 said
If you are hoping for 7% GIC by year end, you must also be hoping for an inflation rate of around 10%. Maybe that is not impossible since inflation in US exceeds 8% and Canada can not be too far behind.
Come to find out, the inflation measures between Canada and US are not based on the same thing.. But I do agree the system gives a comparable for the economists..
But in my world of Real Estate it's way more. Home renovations labour and material, rent prices, appliances, common home repairs etc etc it's probably more like 15-20%. These are big ticket items, not like a pound of butter going up 8%! Never mind home prices, which is 20% at least.
3:38 pm
October 21, 2013
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I'll worry about higher taxes when and if it happens. I think they will have to look elsewhere, fiddle with tax credits, push the debt forward some more and/or look to immigration, cap TFSAs etc. We'll have to see what they come up with. They will also get a lot more HST from inflated prices.
In the meanwhile I'm glad I've been taking tax-efficient sums out of our RIFs. Alas, we still have years to go for one of us. I can't see it ever getting any cheaper to do so. I wish they'd get rid of the mandatory withdrawal schedule. I'm a grown-up; I can make my own decisions about what I need to take out and when..
6:00 pm
September 11, 2013
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It's not only about being able to make our own decisions, RIFs are comprised of amounts on which taxes have been deferred and the people of Canada doesn't want to wait forever (e.g. maybe until death) for the income taxes on those amounts. So there's a minimum amount every year to make sure those taxes are gradually coming in.
If inflation is 20% I can expect internet, mobile, etc charges to go up the same so the profits available to pay my Bell, etc dividends should also be 20% higher, is the way I figure it.
11:01 pm
October 21, 2013
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I am familiar with the theory around the mandatory minimums. I just don't think it's a good policy, and that it likely doesn't hold water in terms of govt coffers. There are too many variables. I think it's just paternalism.
11:31 pm
November 18, 2017
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rpotter28: Home renovation and repair prices are very demand-driven these days. There's a limited number of tradespeople, and that's been diminished for two years by the plague. And people have been staying in their homes rather than moving, too. (There's a lot of real-estate trading, but a surprising amount of it is instututional, and new construction, not renovation.) I don't see inflation in that sector being diminished very soon.
RetirEd
RetirEd
8:45 am
September 30, 2017
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We'll see a 4% 1 yr on today's chart 
9:22 am
September 7, 2018
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hwyc said
We'll see a 4% 1 yr on today's chart
I see the Govt of Can 5 year bond rate is up to 2.81%. I wonder if that is sufficient to move 1 Year GIC to 4%? Mortgage rates have increased and the question - will more increases adversely affect the booming real estate industry?
9:33 am
January 13, 2022
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canadian.100 said
I see the Govt of Can 5 year bond rate is up to 2.81%. I wonder if that is sufficient to move 1 Year GIC to 4%? Mortgage rates have increased and the question - will more increases adversely affect the booming real estate industry?
Depends on how you look at it. If you think an adverse effect is maintaining unrealistically high bubble prices and rampant speculation, the answer is no. If you think an adverse effect is seeing prices and demand ease, the answer is yes. Funny how everybody clamours for lower home prices, until it effects the value of their own home.
9:35 am
September 30, 2017
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2 to 5 yrs is almost flat right now. I'm monitoring the 1 yr and trying to build a ladder with quarterly steps
9:36 am
October 21, 2013
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Deposit brokers are already showing 4% on one year GICs.
10:20 am
September 7, 2018
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lifeonanisland said
Depends on how you look at it. If you think an adverse effect is maintaining unrealistically high bubble prices and rampant speculation, the answer is no. If you think an adverse effect is seeing prices and demand ease, the answer is yes. Funny how everybody clamours for lower home prices, until it effects the value of their own home.
Demand for homes seems to continue to be strong; perhaps might level off, but I am fairly confident that there will no huge drops in house prices certainly not in Toronto, Vancouver etc. - the supply of homes has not kept up with demand and the country continues to grow population wise. Actually, I sold my principal residence so if there is a big drop in prices (which I really doubt), perhaps I will become a buyer and consider purchase of a principal residence again.
10:27 am
September 7, 2018
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Loonie said
Deposit brokers are already showing 4% on one year GICs.
Good to know! Since my target to start to buy a GIC specifically a one year GIC is 5%, perhaps this is coming sooner than later.
11:25 am
January 13, 2022
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canadian.100 said
Demand for homes seems to continue to be strong; perhaps might level off, but I am fairly confident that there will no huge drops in house prices certainly not in Toronto, Vancouver etc. - the supply of homes has not kept up with demand and the country continues to grow population wise. Actually, I sold my principal residence so if there is a big drop in prices (which I really doubt), perhaps I will become a buyer and consider purchase of a principal residence again.
We will see. Answers coming by Friday as realtor associations report May sales across the country. Don't be fooled by the CRA's "benchmark price" which relies on months of past sales to "predict" the current value. Look at average prices, or better yet, median prices. I think you might be surprised.
11:58 am
April 18, 2022
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canadian.100 said
Demand for homes seems to continue to be strong; perhaps might level off, but I am fairly confident that there will no huge drops in house prices certainly not in Toronto, Vancouver etc. - the supply of homes has not kept up with demand and the country continues to grow population wise. Actually, I sold my principal residence so if there is a big drop in prices (which I really doubt), perhaps I will become a buyer and consider purchase of a principal residence again.
The real estate market in Toronto is freezing up nothing is selling unless it's unique. Discounts 15% across the board. You sold your home timed the market hoping to buy cheap. Experts including Stats Canada have debunked supply theory. The problem IMO at least in Ontario is the industry runs the show, and, many immigrants living two to a room are unaccounted for in statistics. I predict real estate market falls at least 30% it has to or we will have a much bigger homeless crisis.
1:15 pm
May 26, 2022
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I'm in a suburb 20kms south of Vancouver. 6-7 detached houses have been on sale for 2 months ~1.5M - nothing is moving. 5 months ago they would have all been gone in < 1 week at 300k over asking
1:48 pm
January 13, 2022
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NCC1701Z said
I'm in a suburb 20kms south of Vancouver. 6-7 detached houses have been on sale for 2 months ~1.5M - nothing is moving. 5 months ago they would have all been gone in < 1 week at 300k over asking
Same with the island.
1:59 pm
January 11, 2020
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How would you feel if you were the guy that bought at 1.8 mil 5 months back…..
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