Its All Greek to Me
News and influences on the mortgage market written for Canadians who are interested in the factors that affect real estate. Duncan Seward is a BC mortgage broker with an expertise in bad credit mortgage applications.
The financial crisis in Europe will find its way back to Canada. The tragedy of the mismanagement of the Greek financial system is finding its way back to Canada. Our illustrious central banker, Mark Carney, is advising the feds that the Greek meltdown may result in negative growth. If you want to read the fine print it means another recession make be on its way.
The Greeks have been on a spending spree for the last few years. The Olympics (sound familiar), massive deficit spending, tax evasion (80% of the population cheat) and a populace that is not keen on financial restraint.
Greece is overwhelmed by a deficit it cannot manage and when austerity measures were introduced the Greeks rioted. Greece has gone to the European Union for assistance but the heavy weights like the Germans are unwilling to pour more money into a country that is unwilling to get its act together.
The rates on Greek bonds have plummeted to junk bond status. Compounding this bowl of not good are two other countries Portugal and Spain which are moving rapidly in the same direction and sinking fast are Ireland (remember the articles about the Irish power house?) and Italy.
How does this affect Canada? Plenty.
We sell a lot of stuff to Europe. A dramatic slow down in the European economy with ripple back to Canada in the form of reduced sales, job losses and bankruptcies. A big bowl of not good.
When the risk of lending rises, the cost of the money increases which will push up BC mortgage rates. In the next few months you will see bond yields rise and along with the rise will be an increase in the five year fixed rates. Increasing rates will limit the qualification for mortgages by first time buyers. Increasing rates will impact the ability of Canadians to refinance. Increasing rates will drive the price of houses down impacting Canadian’s wealth.
What to do? Money is cheap right now. Refinance, consolidate debt and lock in at rates that are near historic lows.
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Tags: countries, european, european-union, mismanagement, mortgage calc, mortgage insurance, mortgage refinance, olympics, portugal, traffic
