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Technology Bank Of Canada's Stephen Poloz Suggests Buying A Smaller Home, After Hiking Interest Rates

09:20  16 july  2018
09:20  16 july  2018 Source:   huffingtonpost.ca

Bank of Canada caught between rate hike and trade war

  Bank of Canada caught between rate hike and trade war Bank of Canada caught between rate hike and trade warWhile another interest rate increase seemed a sure thing on May 30 - when the central bank dropped oft-repeated language pledging a cautious approach to setting monetary policy - attacks on Canadian trade policy by U.S. President Donald Trump dimmed the economic outlook within days.

The governor of the Bank of Canada , Stephen Poloz , had some advice this week for Canadians facing higher housing costs thanks to the Bank ' s interest rate hike : Just buy a smaller house. The Bank of Canada isn't going to stop hiking rates to save you money on your mortgage payments.

After Hiking Rates , Bank Of Canada Suggests Buying Smaller Homes . The governor of the Bank of Canada , Stephen Poloz , had some advice this week for Canadians facing higher housing costs thanks to the Bank ' s interest rate hike : Just buy a smaller house.

a man wearing a suit and tie: Stephen Poloz, governor of the Bank of Canada, at the G7 Finance Ministers and Central Bank Governors meeting in Whistler, B.C., May 31, 2018.© Provided by AOL Inc. Stephen Poloz, governor of the Bank of Canada, at the G7 Finance Ministers and Central Bank Governors meeting in Whistler, B.C., May 31, 2018.

The governor of the Bank of Canada, Stephen Poloz, had some advice this week for Canadians facing higher housing costs thanks to the Bank's interest rate hike: Just buy a smaller house.

"People who don't qualify for a mortgage on the house they wish today have multiple avenues of adjustment," Poloz said during a press conference announcing the rate hike, "one of them being to just go ahead to buy a smaller or less expensive home."

One (perhaps cynical) way to view his comments is: You're on your own. The Bank of Canada isn't going to stop hiking rates to save you money on your mortgage payments.

Tariffs, mortgage rules key to Bank of Canada rate decision: Poloz

  Tariffs, mortgage rules key to Bank of Canada rate decision: Poloz The effects of U.S. steel and aluminum tariffs and tighter mortgage rules will "figure prominently" in the Bank of Canada's July decision on interest rates, Governor Stephen Poloz said on Wednesday. In a speech promising increased transparency from the central bank in an age of economic uncertainty, Poloz said there was "a litany of things we simply do not know" these days, which is why the bank is "particularly data-dependent" right now.With the next rate decision set for July 11, Poloz said the bank was working to incorporate in its projections the effects of U.S.

Mr. Poloz first joined the Bank of Canada in 1981 and occupied a range of increasingly senior positions over a 14-year span, culminating in his appointment as Chief of the Bank ’ s Research Department in 1992. After his departure from the Bank in 1995, he spent four years at BCA Research

The governor of the Bank of Canada , Stephen Poloz , had some advice this week for Canadians facing higher housing costs thanks to the Bank ’ s interest rate hike : Just buy a smaller house. It’ s estimated that the average home size in Canada doubled from the 1970 s to 2000, though that trend

Watch: Goldman Sachs evaluates Canada's odds of a housing bust (story continues below)

But while Poloz's comments may come off as insensitive — especially to would-be homebuyers who watched affordability deteriorate as the Bank tripled its key lending rate over the past year, to 1.5 per cent from 0.5 per cent — there may some wisdom in what he says.

Because we Canadians sure occupy a lot of space. According to a PricewaterhouseCoopers (PwC) report from 2017, Canadians own, on average, the third-largest homes in the world, behind only Australians and Americans. At nearly 2,000 square feet, our homes as more than twice as large as homes in Britain, despite the fact that our families are no larger than theirs.

a screenshot of a cell phone© Provided by AOL Inc.

It's estimated that the average home size in Canada doubled from the 1970s to 2000, though that trend has levelled off, largely thanks to high land costs in Toronto and Vancouver, which have pushed developers to build smaller homes (as have land use regulations requiring more dense neighbourhoods).

Bank of Canada's Poloz keeps markets guessing on July rate move

  Bank of Canada's Poloz keeps markets guessing on July rate move Bank of Canada's Poloz keeps markets guessing on July rate moveLoad Error

WATCH: Bank of Canada raises benchmark interest rate to 1.5%. WATCH: What the Bank of Canada ’ s rising interest rate means for you. Still, BoC governor Stephen Poloz previously signalled that the bank would be guided by actual data rather than trade rhetoric in its assessment of where

Central bank communications - Stephen S . Poloz , the Governor of the Bank of Canada , speaks to the Greater Victoria Chamber of Commerce. Interest - rate benchmarks — Deputy Governor Lynn Patterson of the Bank of Canada speaks before the Investment Industry Association of Canada and

Excessively large homes are a liability, economically and to the environment. Heating a 2,000-square-foot home in winter, then air conditioning it in summer, makes for very high energy use and a large carbon footprint.

Earlier on HuffPost Canada:

  • Canadian Real Estate To Be Listed On Chinese Amazon-Style Site
  • 1 In 5 Canadian Renter Households Give Half Their Income To The Landlord

And the explosion of sprawling suburban neighbourhoods has eaten up much of the accessible land around our city centres. Developers today, especially in Toronto and Vancouver, say one reason house prices are so high is that land supply is so low. In retrospect, it may not have been such a good idea to surround our cities with low-density, low-population neighbourhoods.

Today, those neighbourhoods are increasingly occupied by aging empty-nesters, often single seniors living alone in giant homes. Even in rapidly-growing cities like Toronto, suburban neighbourhoods are actually shrinking in population.

All this points to the need for better land use, especially if — as is the plan — Canada's population continues to grow rapidly through immigration.

Housing affordability eroded to its worst level in nearly three decades in Canada in the first half of this year. Market theory tells us the best way to reduce home prices is to increase supply. With the increasingly limited space we have, smaller housing units are a practical solution.

Poloz's rate hike doesn't help buyers much, but if it does nudge buyers away from the McMansion lifestyle, we may all be better off in the long run.

This article originally appeared on AMP: HuffPost Canada at https://www.huffingtonpost.ca/2018/07/14/stephen-poloz-smaller-home_a_23481995/

Bank of Canada expected to keep rates on hold, but reasons for a hike 'solid' .
While many economists think that last week's second quarter GDP miss may be enough for the central bank to stand pat for now — after hiking rates for the fourth time in a year in July — not all are convinced that they should wait. Derek Holt, head of capital market economics at Scotiabank, said the Bank of Canada has plenty of reasons for a hike this time around."Our longstanding house call for a hike tomorrow is admittedly marked by modest conviction, but there, nevertheless, remains a very solid case for continuing to hike and the risk of surprise should be higher than markets are demonstrating," Holt said in a note on Tuesday.

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