The Future of Canadian Interest Rates

27 August 2019

Did you know that the entire yield curve in Switzerland is at negative interest rates? No matter what the term or the time frame. The yield curve plots the same security, in this case, Switzerland government borrowings, across all years from 1-50. And they are all at negative interest rates. So when you lend the Government money, you will get back less at maturity.

What does that mean for Canada and Canadian real estate?

It says that financial investors, much smarter than me, believe that interest rates are not going anywhere for the next 50 years. So then, why is the government so concerned that home owners with mortgages will not be able to renew them in five years time. The Government says we need a stress test. A 2% qualifying surcharge on today's actual rates. To protect ourselves from who? And for how long? I guess it's for 50 years, or for when you die, whenever comes first!

Want to stay up to date on our monthly market reports?