{"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