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: 664

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

John Deere Launches the New V452M Round Baler, Built for Productivity

John Deere (NYSE: DE) today announced the introduction of the V452M round baler to the North American lineup, providing enhanced productivity and precision to larger-scale hay and forage operations. The V452M headlines the newly updated lineup of VR and CR round baler models, introducing a new naming convention and advanced features purpose-built for heavy crop and silage conditions, while the current 1 Series round balers remain and continue to serve customers with their baling needs. "The V452M and the broader VR and CR model updates are designed for more density, more productivity and more actionable data," said Kaylene Ballesteros, John Deere marketing manager. "This update enhances our variable chamber and combination balers with features that support high-volume silage and heavy crop conditions, while complementing the proven performance of our 1 Series models. It's about giving our farmers and ranchers the right tool for their operation, whether they're baling 500 or 5,000 bale

John Deere Expands Operations Center Experience with New Customer E-Commerce Capabilities

John Deere Operations Center™ is now integrated with Shop.Deere.com enabling simplified parts ordering. Customers with factory maintenance plans can add parts for scheduled services directly to their cart and complete purchases. Customers and their approved John Deere dealers or independent service providers can jointly monitor and manage maintenance plans and parts ordering to help maximize uptime. Enhancing on-the-job convenience and expanding customer accessibility to machine data, John Deere unveils new user capabilities within John Deere Operations Center™. Customers utilizing Operations Center can now benefit from streamlined parts ordering through the newly integrated Shop.Deere.com feature. Customers with factory maintenance plans can add parts for scheduled services directly to their cart and complete purchases with confidence and ease. "We are continuously evolving John Deere Operations Center to simplify and enhance our customers' digital experience," said Katie Voelliger,

Tips and Tools to Make CBAM Emissions Reporting Easier

After a two-year transition period, full implementation of the European Union’s Carbon Border Adjustment Mechanism (CBAM) is set to begin on Jan. 1, 2026.   Designed to support the EU’s decarbonization goals, CBAM functions as a tariff placed on carbon emitted during the production of specific carbon intensive goods entering the EU single market, including aluminum, iron, and steel. This carbon tax requires companies to gather detailed supply chain information to determine the direct and indirect emissions associated with their products.  “CBAM charges a tariff on the embedded carbon content of certain imports from non-EU countries,” explained Amy Ryu, head of product at Tracera, an AI-powered sustainability data collection platform. This tariff is designed to counter the risk of “carbon leakage” that results from EU companies importing carbon intensive raw materials from abroad, as opposed to buying them from companies in the EU that must pay a carbon price. To that end, CBAM seeks

AEM Offers Recently Updated Industrial Ag Mower Safety Manual

AEM recently updated its Industrial Ag Mower Safety Manual in accordance with the association’s longstanding mission to provide up-to-date and industry-consensus safety materials that encourage safe equipment operation.  New updates include the use of pictorials from AEM’s Pictorial Database, modern formatting, and additional information on safe operation and maintenance. Its easy-to-follow pictorials and clearly stated safety warnings will help ensure operators understand the equipment's operation, capacity, mechanisms, maintenance, and intended uses.  “AEM member companies and their product safety experts play a crucial role in ensuring our manuals and safety materials represent best practices for safe equipment operation,” said AEM Safety Materials Manager Becca Basten.?“The Industrial Ag Mower Safety Manual is a longstanding safety resource for the operation of ag mowers, and it serves as a valuable resource for strengthening safety and training programs.”  The Industrial Ag Mow

Setting Foundations for Higher Yielding Soybeans

Timely planting, strong roots, balanced fertility, and disease control can help farmers boost soybean yields while keeping operations profitable and sustainable.

© 2025   Created by Darren Marsland.   Powered by

Badges  |  Report an Issue  |  Terms of Service