Ontario Agriculture

The network for agriculture in Ontario, Canada

This is a scary reality that may hit Ontario - hard. It won't take much to double an interest payment - maybe even triple and quadruple -- and still only be at 10 percent. I know driving into London - I see many homes that I can't figure out how everyday families afford. Pretty soon they may realize they can't afford them and this economy is back in the tank.

http://www.theglobeandmail.com/blogs/jeff-rubins-smaller-world/just...

Jeff Rubin

When money is free, it’s hard not to borrow it, even if the lender keeps warning you to be vigilant against debt. That’s exactly what Bank of Canada Governor Mark Carney has been telling Canadians while at the same time keeping their cost of borrowing as low as it’s ever been.

The obvious question, of course, is, if caution is warranted in borrowing, why is the cost of money so cheap? Since no one wants to pay more for their loans, particularly mortgage-holders, it’s a question no one bothers to ask Governor Carney.

But ask you should. Because the Bank of Canada’s free-money policy may lead you to places you’d rather not go.

A financial bubble is built on an unsustainable premise. Tomorrow’s bubble in the Canadian housing market is constructed on the premise that today’s record low mortgage rates will remain in place. And that, in turn, is based on the idea that inflation will continue to dissipate in the face of a slack economy.

Neither premise should be in your financial plan.

Today’s inflation rate is no more sustainable than today’s interest rates. Both are rear-view mirrors on where the economy has been, not where it is going.

Energy prices, which were falling a year ago, are now back on the rise. Just as the inflationary impact of those prices triggered the fatal rise in interest rates which, in turn, gave us the deepest postwar global recession ever, energy prices will once again push inflation and interest rates much higher. (See my post Financial Crisis or Energy Shock? for more on this.)

And this time the inflationary fallout won’t just be in the energy component of the Consumer Price Index. The impact will be much broader, as soaring transport prices encourage higher-cost local production to replace sourcing from cheap labor markets halfway around the world.

Stress test your floating-rate mortgage three or four percentage points from today’s level and take a good, long look at the resulting increase in your monthly mortgage payment. For some homeowners, that could be as much as another $1000 per month.

Twenty years ago a similar shock to borrowing rates caused Canadian housing prices to fall by an unprecedented 25 per cent. I know because I called it.

That call was as much about where interest rates were going as it was about where housing prices were heading. Based on current borrowing rates, today’s homeowners will be facing almost as large an increase as they did back then.

So heed Governor Carney’s caution when you decide how big a mortgage you can really afford to carry.

Because once the Bank of Canada starts raising your mortgage rate, it will be a very long time before they stop.

Views: 659

Reply to This

Replies to This Discussion

On a slight tangent, what lenders seem to be the most receptive to consolidating/refinancing farm loans at these lower interest rates? Anybody had any particularly pleasant experiences?
Dale, I've found both FCC and BMO to be first rate for our needs. Very flexible and accommodating.

On the topic of interest rates, 20%+ didn't last that long, but long enough to kill a lot of us. And we thought it was bad.

Well, 3% - 5% interest rates will end up killing off more people than 20% did because as nice as it seems to have low interest, it will get a lot of people way too far into debt. And when the rates inevitably go back up to more normal levels . . .

Low interest rates are likely the only thing that have staved off bankruptcy for a lot of beef and pork producers.
Dale, I found that FCC was very accomodating (once I got talking with the right person. It took a bit of persuading to get the person to look into my account to see what the fees would be andwhat the resulting rates would be.
At the end of the day we re-financed most of our fixed rate loans and we are saving money even after paying the fees.
This occured in February of this year.

Dale Ketcheson said:
On a slight tangent, what lenders seem to be the most receptive to consolidating/refinancing farm loans at these lower interest rates? Anybody had any particularly pleasant experiences?
Thanks guys.
It is time to start looking at longterm fixed rates, you do pay a premium but there is more room for the rates to go up than down.
See it as a insurance policy/ protection for stability

Wayne Black said:
Dale, I found that FCC was very accomodating (once I got talking with the right person. It took a bit of persuading to get the person to look into my account to see what the fees would be andwhat the resulting rates would be.
At the end of the day we re-financed most of our fixed rate loans and we are saving money even after paying the fees.
This occured in February of this year.

Dale Ketcheson said:
On a slight tangent, what lenders seem to be the most receptive to consolidating/refinancing farm loans at these lower interest rates? Anybody had any particularly pleasant experiences?
If you are looking for a loan calculator you can find one on the OMAFRA web site at http://www.omafra.gov.on.ca/english/busdev/download/calc_omafloan.htm. It can calculate a whole range of options. I have also attached it to this post.
Attachments:
Thanks Rob....and here I have been making up my own worksheets in Excel all these years....with less detail.

Reply to Discussion

RSS

Agriculture Headlines from Farms.com Canada East News - click on title for full story

Secretary Naig Presents 2025 Ag Leader Awards for Outstanding Contributions to Iowa Agriculture

Iowa Secretary of Agriculture Mike Naig this week recognized three organizations and one business that have made exceptional contributions to the continued success of Iowa agriculture. The honorees received awards during the 13th Annual Iowa Ag Leaders Dinner held on March 31 in Ankeny. The event culminated the state’s weeklong Iowa Ag Week celebration and included remarks from Gov. Kim Reynolds and a keynote address from United States Secretary of Agriculture Brooke Rollins. The Secretary’s Ag Leader Awards for 2025 were presented for Leadership in Community to the Iowa Pork Producers Association for their Bacon Buddies program. Nationwide Agribusiness was recognized for Leadership in Community for their grain bin rescue initiatives. Pheasants Forever received an award for Leadership in Conservation for partnering with the Department on water quality initiatives. The Iowa Foundation for Agricultural Advancement was honored for their Leadership in Agriculture Education for supporting

Analytical chemist explores contaminant impacts on water and soil quality

 Dr. Alistair Brown joined the Department of Soil Science as Manitoba Analytical Solutions (MASS) Lab Director and Assistant Professor, on October 1, 2024. His interest in analytical chemistry was sparked during his undergraduate studies when a course on ecotoxicology shifted his career focus. Today, Alistair explores the fate and toxicity of environmental contaminants in soils and water, including UV filters, pesticides, and perfluorinated compounds. Tell us about yourself I’ve been with my wife Kendra for 23 years, and I have two sons, Asher and Jude, who are 16 and 13 respectively, and our dog Ollie who turns two tomorrow. I am a mass spectrometry method validation specialist. I got my BSc (Biochemistry) from the University of Winnipeg in 2013, and PhD (Chemistry) from the University of Manitoba in 2019. In my post-doc, I developed analytical methods for federal compliance under the Cannabis Act (2018), after which time I worked with Environment and Climate Change Canada studying

Liberals introduce plan to support ag

The Liberals have released their plan for the Canadian ag sector

Cdn. ag groups releasing federal election priorities

The Canadian Federation of Agriculture wants the environment risk assessment required for AgriInvest to be removed

New amendments to recreational access regulation enhance land management and accessibility in Alberta

Minister of Alberta Forestry and Parks, Todd Loewen, signed an Order in Council to amend the Recreational Access Regulation, which oversees recreational access to grazing leases in Alberta. This amendment introduces several significant changes aimed at improving the management and accessibility of these lands. One of the key updates is the addition of a purpose statement under section 1.1, which clarifies that the regulation is designed to benefit Albertans by recognizing the economic, social, and environmental importance of agricultural disposition land. This statement sets the tone for the revised regulation, emphasizing its broader impact on the community. In a move to modernize communication methods, the requirement for a “facsimile number” as a reasonable contact method has been removed from section 4(1). This change reflects the evolving nature of communication technology and aims to streamline contact processes. The dispute resolution process has also been updated. Now, the d

© 2025   Created by Darren Marsland.   Powered by

Badges  |  Report an Issue  |  Terms of Service