A perspective for Canadians

EVENTS –
The past weeks have been a roller coaster ride on the stock markets. Even economists & pundits – the “wizards’ are in new territory. Some publicly admitting – they “just don’t know”.

WHAT WE DO KNOW –
- Banks are pricing ‘risk’ into their rates so mortgage rates have been spiking. In Canada the Central Bank was surprised that the Big 5 Banks went a only quarter point down when the Central Bank went down a half point. Risk based pricing, so absent from the economy is back. But it will seek ‘right’ levels that we were previously used to.
- Governments around the globe will be saddled with debt from their cash injections to help manage the ‘markets’. So it will be in each government’s ‘best interest’ to promote a low rate policy.
- Fears of Inflation do not seem to be a near-term concern. So rising rates are an illogical presumption.
- And High Rates compete with the Stock Market for where investors will park their cash – and these days the stock markets need all the help they can get. YES low rates seem in the “best interest” of all.
IF higher rates are around the corner, its almost a good thing – as it will have meant the bailout worked, the economy is roaring ahead, and higher rates were brought in to cool things out…now that would be a change in headlines.
GOT A VRM Mortgage? Stop. Think.
In this time of change - Uncertainty breeds fear. Do not hastily exit an advantageous mortgage by listening to whispers of “lock-in-now” before mortgage rates climb. YES – if someone you know has a VRM mortgage with, for example a five year term, guaranteed to be half below prime – then why lock-in? It may well be a knee-jerk reaction to a rumor picked up by the Media last week, that said – “If you have a VRM, you can’t lock in fast enough”.
SILVER LINING –
And the fresh, international approach, (which seems to have begun in Europe), to planning and policy (the bailout) growing should ultimately calm “market turmoil”. Decisions today should be made with long-term views.
NEXT –
The US Dollar will likely not be the only International Benchmark currency. Likely a ‘pool’ of world currencies will emerge in what has finally been recognized, and is desperately being reorganized as one giant system called the “new global economy” - a now old term, that is finally about to reach reality - maybe. Funny how crisis can promt action.