{"id":11092,"date":"2023-05-22T13:40:30","date_gmt":"2023-05-22T20:40:30","guid":{"rendered":"https:\/\/www.stevesaretsky.com\/?p=11092"},"modified":"2023-05-22T13:40:45","modified_gmt":"2023-05-22T20:40:45","slug":"no-need-to-panic-yet","status":"publish","type":"post","link":"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/","title":{"rendered":"No Need to Panic, Yet"},"content":{"rendered":"\n

Happy Monday Morning!<\/p>\n\n\n\n

Inflation came in hotter than expected in April. Headline inflation ticked in at 4.4%, well above the 4.1% that was expected. It was the first month over month increase in the rate of headline inflation since June 2022. Naturally, panic ensured shortly thereafter.<\/p>\n\n\n\n

Markets immediately removed their expectations for a rate cut this year and have suddenly reversed course. There\u2019s now an 11% chance of a hike at the June 7 meeting, and nearly a 40% chance of a hike by September 6 according to OIS markets. Furthermore, Scotiabank, who has been incredibly hawkish throughout this tightening cycle is putting their stamp on another 25bps hike in June.<\/p>\n\n\n\n

That\u2019s bad news if you\u2019re sitting on a variable rate mortgage. According to Desjardins, there are a lot of people up shit creek without a paddle. More than 75% of all variable rate mortgages in Canada have already breached their trigger rate. In other words, the interest owed is greater than the original monthly mortgage payment. These borrowers, along with the banks who dished out these loans, are in extend and pretend mode as amortizations climb to dizzying heights.<\/p>\n\n\n\n

https3a2f2fsubstack-post-media-s3-amazonaws-com2fpublic2fimages2fae224e3b-bd93-4573-bb02-0a618d0800c2_1220x742-3952956<\/a>
Source: Desjardins<\/figcaption><\/figure>\n\n\n\n

It\u2019s estimated these borrowers will need to increase their payments by approximately 40% to maintain their original amortization schedule, assuming a renewal in 2025 or 2026, assuming interest rates follow the Bank of Canada\u2019s projected path.<\/p>\n\n\n\n

Suffice to say Tiff Macklem isn\u2019t making a lot of friends at cocktail parties these days. But rest assured, this too shall pass. In a presser this week Macklem assured markets that April’s inflation increase was an anomaly. \u201cInflation has come down. It is coming down. We expect it will continue to come down.\u201d<\/p>\n\n\n\n

In other words, an ongoing pause remains the most probable outcome from a governor trying to maintain whatever credibility he has left.<\/p>\n\n\n\n

To his defence, there are certainly reasons to expect inflation to ease further. After all, the increase was largely driven by shelter, a notoriously lagging component of the CPI basket. Mortgage interest costs, which Macklem largely controls, were up a whopping 29% from last year.<\/p>\n\n\n\n

https3a2f2fsubstack-post-media-s3-amazonaws-com2fpublic2fimages2f6b69796b-74b2-4436-9fc7-d7e3654ebc19_844x654-9393914<\/a>
Source: Ben Rabidoux<\/figcaption><\/figure>\n\n\n\n

If you strip out mortgage interest costs headline inflation would have ticked in at 3.6%. That\u2019s a staggering 0.8 percentage points, which makes it the largest contribution to CPI on record. Surely we can all see the irony here.<\/p>\n\n\n\n

Let\u2019s also not forget that monetary policy works with long and variable lags. Higher interest rates have not been fully passed through. For example, only one third of all mortgages have actually endured an increase to their monthly mortgage payment. That number will push higher over the next few years as fixed rate mortgages come up for renewal, prompting highly indebted households to pull back on their spending.<\/p>\n\n\n\n

https3a2f2fsubstack-post-media-s3-amazonaws-com2fpublic2fimages2f10aa5d16-800c-4373-a62c-8b52cee34fb0_753x687-3693112<\/a>
Source: Bank of Canada<\/figcaption><\/figure>\n\n\n\n

While it\u2019s true the housing market has accelerated higher in recent months which is cause for concern on the inflation front, we must also acknowledge that this is largely a function of inventory, not demand. New listings on a national basis ticked in at another 20 year low last month. Clearly this is not sustainable, at some point sellers will return to the market. Demand has likely peaked for this spring and should cool as it usually does in the summer months. In other words, no need to panic, yet.<\/p>\n\n\n\n

<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Happy Monday Morning! Inflation came in hotter than expected in April. Headline inflation ticked in at 4.4%, well above the 4.1% that was expected. It was the first month over month increase in the rate of headline inflation since June 2022. Naturally, panic ensured shortly thereafter. Markets immediately removed their expectations for a rate cut […]<\/p>\n","protected":false},"author":1,"featured_media":11093,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[70],"tags":[],"acf":[],"yoast_head":"\nNo Need to Panic, Yet - Steve Saretsky<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"No Need to Panic, Yet - Steve Saretsky\" \/>\n<meta property=\"og:description\" content=\"Happy Monday Morning! Inflation came in hotter than expected in April. Headline inflation ticked in at 4.4%, well above the 4.1% that was expected. It was the first month over month increase in the rate of headline inflation since June 2022. Naturally, panic ensured shortly thereafter. Markets immediately removed their expectations for a rate cut […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/\" \/>\n<meta property=\"og:site_name\" content=\"Steve Saretsky\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/stephen.saretsky\" \/>\n<meta property=\"article:author\" content=\"https:\/\/www.facebook.com\/saretsky91\" \/>\n<meta property=\"article:published_time\" content=\"2023-05-22T20:40:30+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-05-22T20:40:45+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.stevesaretsky.com\/wp-content\/uploads\/2023\/05\/No-Need-to-Panic-Yet--5454974.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Steve Saretsky\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@https:\/\/twitter.com\/SteveSaretsky\" \/>\n<meta name=\"twitter:site\" content=\"@SteveSaretsky\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Steve Saretsky\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/\",\"url\":\"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/\",\"name\":\"No Need to Panic, Yet - Steve Saretsky\",\"isPartOf\":{\"@id\":\"https:\/\/www.stevesaretsky.com\/#website\"},\"datePublished\":\"2023-05-22T20:40:30+00:00\",\"dateModified\":\"2023-05-22T20:40:45+00:00\",\"author\":{\"@id\":\"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/21dcfa049c53088c3f577e61e857c1e4\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/#breadcrumb\"},\"inLanguage\":\"en-CA\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.stevesaretsky.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"No Need to Panic, Yet\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.stevesaretsky.com\/#website\",\"url\":\"https:\/\/www.stevesaretsky.com\/\",\"name\":\"Steve Saretsky\",\"description\":\"Vancouver Real Estate Blog\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.stevesaretsky.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-CA\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/21dcfa049c53088c3f577e61e857c1e4\",\"name\":\"Steve Saretsky\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-CA\",\"@id\":\"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/0d45900a2542f7770ef6a15f1ad4ccdd?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/0d45900a2542f7770ef6a15f1ad4ccdd?s=96&d=mm&r=g\",\"caption\":\"Steve Saretsky\"},\"description\":\"Born and raised in Vancouver, BC. I have a passion for Real Estate, creating a business, and connecting with people. I build my Real Estate business on human relationships not leads and numbers. I believe in advising my clients on making the best real estate decisions not on closing another commission cheque. My goal is to help people build wealth through real estate.\",\"sameAs\":[\"http:\/\/www.buyvancouvercondos.ca\",\"https:\/\/www.facebook.com\/saretsky91\",\"https:\/\/twitter.com\/https:\/\/twitter.com\/SteveSaretsky\"]}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"No Need to Panic, Yet - Steve Saretsky","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/","og_locale":"en_US","og_type":"article","og_title":"No Need to Panic, Yet - Steve Saretsky","og_description":"Happy Monday Morning! Inflation came in hotter than expected in April. Headline inflation ticked in at 4.4%, well above the 4.1% that was expected. It was the first month over month increase in the rate of headline inflation since June 2022. Naturally, panic ensured shortly thereafter. Markets immediately removed their expectations for a rate cut […]","og_url":"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/","og_site_name":"Steve Saretsky","article_publisher":"https:\/\/www.facebook.com\/stephen.saretsky","article_author":"https:\/\/www.facebook.com\/saretsky91","article_published_time":"2023-05-22T20:40:30+00:00","article_modified_time":"2023-05-22T20:40:45+00:00","og_image":[{"width":1280,"height":800,"url":"https:\/\/www.stevesaretsky.com\/wp-content\/uploads\/2023\/05\/No-Need-to-Panic-Yet--5454974.png","type":"image\/png"}],"author":"Steve Saretsky","twitter_card":"summary_large_image","twitter_creator":"@https:\/\/twitter.com\/SteveSaretsky","twitter_site":"@SteveSaretsky","twitter_misc":{"Written by":"Steve Saretsky","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/","url":"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/","name":"No Need to Panic, Yet - Steve Saretsky","isPartOf":{"@id":"https:\/\/www.stevesaretsky.com\/#website"},"datePublished":"2023-05-22T20:40:30+00:00","dateModified":"2023-05-22T20:40:45+00:00","author":{"@id":"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/21dcfa049c53088c3f577e61e857c1e4"},"breadcrumb":{"@id":"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/#breadcrumb"},"inLanguage":"en-CA","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.stevesaretsky.com\/2023\/05\/news\/no-need-to-panic-yet\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.stevesaretsky.com\/"},{"@type":"ListItem","position":2,"name":"No Need to Panic, Yet"}]},{"@type":"WebSite","@id":"https:\/\/www.stevesaretsky.com\/#website","url":"https:\/\/www.stevesaretsky.com\/","name":"Steve Saretsky","description":"Vancouver Real Estate Blog","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.stevesaretsky.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-CA"},{"@type":"Person","@id":"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/21dcfa049c53088c3f577e61e857c1e4","name":"Steve Saretsky","image":{"@type":"ImageObject","inLanguage":"en-CA","@id":"https:\/\/www.stevesaretsky.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/0d45900a2542f7770ef6a15f1ad4ccdd?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/0d45900a2542f7770ef6a15f1ad4ccdd?s=96&d=mm&r=g","caption":"Steve Saretsky"},"description":"Born and raised in Vancouver, BC. I have a passion for Real Estate, creating a business, and connecting with people. I build my Real Estate business on human relationships not leads and numbers. I believe in advising my clients on making the best real estate decisions not on closing another commission cheque. My goal is to help people build wealth through real estate.","sameAs":["http:\/\/www.buyvancouvercondos.ca","https:\/\/www.facebook.com\/saretsky91","https:\/\/twitter.com\/https:\/\/twitter.com\/SteveSaretsky"]}]}},"_links":{"self":[{"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/posts\/11092"}],"collection":[{"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/comments?post=11092"}],"version-history":[{"count":1,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/posts\/11092\/revisions"}],"predecessor-version":[{"id":11097,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/posts\/11092\/revisions\/11097"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/media\/11093"}],"wp:attachment":[{"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/media?parent=11092"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/categories?post=11092"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.stevesaretsky.com\/wp-json\/wp\/v2\/tags?post=11092"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}