The Trump Effect, The Human Effect, and Cancel Culture.

I asked myself today why I write my articles. Sure, I enjoy writing, and I do get overwhelmingly good feedback.

But I do have somewhat of a hidden agenda too. I want my readers (who have mortgages or are looking for a mortgage) to know that I analyze and think about economics and mortgages and finances (and politics) to the ninth degree. I’m analytical. I’m a thinker. And I want those people who are at the crossroads of making a decision to see that, and call me to apply my logic and analytical mind to their own situation too.

So, read on for some great reading, AND call me if you need or want to get my strategy working for you. Whatever your situation is, I’ll work it out with you. 250-858-7160, or david@olympicmortgages.ca. I answer my phone on weekends too.

And I don’t charge for my advice or phone calls. Yet.

The Rare Weekend Edition.

I promised you last time I would be sending out more often, so here we are. I usually send out on Thursdays, but hey, I like to buck even my own trends. Maybe the Saturday send-out will give you some more time to soak in all the juicy gossip, or adversely, maybe you’ll just be annoyed that my email is imposing on your weekend and will tempt you to click the unsubscribe button.

Don’t do that. Just click delete and ignore, or save this in your inbox until Monday morning. Because I get a tear in my eye with each and every unsubscribe (not really, but I do take them a bit personally).

It’s also the weekend edition because I’m veering off of the mortgage and real estate strategy talk later in the article, and getting into more human psychology and politics and stuff.

The Trump Effect on Rates.

Since the Trump win, we’ve seen a bump up in fixed rates. Why? The Trump plan is inflationary in nature. Trump’s goal is to make an already hot economy hotter. A hot economy spells inflation, inflation drives up savings and bond rates, which then drive up mortgage fixed rates. Bond yields were up just before and after the Trump win. Fixed rates increased by anywhere from 0.20% to 0.40% on 3 and 5 year terms (which are generally the fixed terms we primarily sell).

I’m Right About These Two Things: 1. Nothing Happens in A Straight Line, and 2. You Can’t Really “Bet on” Economist Predictions.

As you may or may not know, I pay $99 a month for the insider mortgage-logic articles and insider information from Rob McLister. He’s OK with me passing on some of the information over to you, so here was one of article titles from this week, which basically sums up where we are with mortgage rate predictions:

“Don’t Hang Your Hat on Economist Rate Predictions, Post Trump Win”.

For anyone that has read my articles in the past, you know I always say that economists are right generally only 50% of the time. Even they know that. Now, even economists are throwing in the towel on predicting where rates are going to go. Why? Well, Trump’s uncertainty brings exactly that; uncertainty. So without knowing which way government policy will go, there’s no real way of knowing how markets will react. Also, there are opposing forces at work here. On one side of the coin, we have inflationary forces that could drive interest rates up. On the other side of the coin, if Trump’s plan backfires and throws the US and Canadian economy into recession, fixed rates will come down.

These are just two factors out of several factors that drive bond rates up and down. My point is, is that we now have even less ability to predict what happens.

Nothing Happens In a Straight Line.

The McLister article does go on to say that economists general prediction is that in the medium to longer term, (in 1 to 2 years or thereabouts), rates are still coming down. The Trump effect on fixed rates at this point, we think, is just temporary.

Personally, I do think that fixed rates are still on their way down, in the medium term. Meaning, that while we have seen a slight bump up in the fixed rates, I think fixed rates will come down further. My best guess is that fixed rates are going to bottom out at 3.00% to 3.50% or thereabouts.

Opposing Forces Also Mean Opposing For Fixed and Variable Rates.

Let’s play this out a bit more, so we can try and guess what’s going to happen on the variable rate side, too.

If Trump imposes a bunch of harsh tariffs on our exports, it could mean trouble for some big industry here in Canada. That could have bad implications for our economy. When our economy suffers, Tiff Macklem and team will be more inclined to drop the BoC rate even more-so to stave off a deep recession.

So while Trump’s plan could drive fixed rates up, it could very well also be a catalyst to bring variable rates down. Again – opposing forces at work.

And we also have to remember some basic facts. We are a separate country from the US of A. We have our own bustling economy. We have many other trading partners. So while Trump’s policies could be challenging for us, we remember that we are our own country and we have economic strength no matter what happens.

So, keeping that in mind, we won’t lose our heads with the Trump win. We are in a declining rate cycle, no matter what. Bank prime rate is still very high at 5.95%. There is lots of room for the BoC to lower the Prime Rate. We have inflation in check, and our economy could be in a recession now, as we speak. So for Tiff and team, the plan hasn’t changed. They should keep lowering the rate steadily to get to an overnight rate between 2 and 3%, giving us bank prime at around 4% to 5%. Will we get back down to the low of 2.45% again? Probably not. Perhaps 3.75% at its lowest, is my best guess.

Choose Your Own Adventure. Sort Of.

Those that need to choose between a fixed or variable rate mortgage right now have some things to consider. Go fixed and get a lower rate than the variable now, but perhaps miss out on those lows that I don’t think we’ve seen yet. Or take the variable, start off at a higher rate, but ride the wave down.

While some don’t think that waiting for the lowest of the low is worth it, others will. We’re all different, and we have different risk tolerances. Also, my regular disclaimer: not everyone will qualify on the variable rate and may be stuck in a fixed rate anyways (the stress test is higher for the variable rate than it is for the fixed).

Here’s the kicker. There’s no wrong answer. You have to do what you feel is the right thing to do, or, take my advice, and be happy that you’ve made a good financial decision with my help. The fixed rate will bring stability and consistency, and let’s face it, we’re already about half way to three quarters down to the bottom. The variable rate brings a little more risk into the fold, but right now, the odds are that the rate is still headed down. The variable rate also gives the holder the chance to lock into the fixed rate when they do bottom out, without any penalty or fees.

I promised you the weekend edition with some extra stuff not related to mortgages or finance. Read on!

The Human Effect.

It’s been a week and a half now since the election sweep that has brought Trump and the Republicans near total control of our Southern neighbour.

So how did we end up here? Most general opinions claim that the US voted for change and for the prospect of a stronger economy, and a government that is more “for the people”. My own personal opinions on the previous statement aside (hint-they probably voted against their own interests), I have my own theory why this happened. I think there’s something deeper, and more basic, at work here.

Deep down, people want, or even need, a little bit of drama in their lives. A little something to liven things up. A little bit of unpredictability. The gamble that gives that shot of dopamine. It’s a little bit self destructive, isn’t it? You might shake your head and go “nah”, but deep down, you know I’m right. People are unpredictable and irrational. People make stupid decisions for stupid reasons, half of the time. (It doesn’t happen ALL the time).

Anyways, now the media will have a heyday for the next 4 years and Saturday night live can anoint another actor to take on the Trump impersonator role.

We Need To Tone Down The Politics and Debate The Issues

For any Trump supporters reading my email, I’m not necessarily saying that voting for Trump was a stupid decision. Let’s just say I do think Trump was the riskier of the two given that he is extremely unpredictable and his moves often seem more self serving versus “for the people”. Sure, he’s promised a lot of things, but didn’t really have any clear plan as to how to achieve those goals. Kamala wasn’t really all that much different in that she didn’t really present a plan either, but, she was probably the safer decision.

What I do think we need to do is worry less about what side we’re on, and actually be able to debate the issues at hand. Debating the issues doesn’t mean to make your point and then go in your corner and plant your flag, but rather, listen to the other side, actually consider what they have to say, think about if you could actually be wrong, and then decide. Maybe meet in the middle? I’m saying we need to listen and consider what the other side has to say. We have to have open minds. With open minds, we can enact change.

Can We Please Cancel Cancel Culture? How About Blocking?

Cancel culture, and more specifically “blocking someone” is really getting on my nerves. Why? We’re encouraging our younger generations that they can simply put someone out of sight and mind without actually dealing with the situation like an adult should. Don’t like someone? Block! Don’t agree with someone? Block! Did someone say something to hurt your feelings? Block!

Blocking someone might temporarily deal with a problem, sure. But did you really deal with the problem, like an adult? Growing up in the 80’s and 90’s, we couldn’t simply block out the bully. We had to deal with it, like adults. Blocking someone feels juvenile to me. Instead of blocking, try this, instead. Tell the person how you feel, and then, ignore them. Why ignore, instead of block? Because when you ignore someone, you’re actually empowering yourself in that situation. Think about it. Blocking someone is just being dependent on the technology to help you avoid that person. Ignoring that person is kind of like blocking, in a way, all the while proving that you’re a grown up, and can control your feelings and reactions without relying on your technology to do it for you.

So let’s teach our kids to try and deal with situations before instantly using the blocking mechanism. They will grow up stronger, more confident, and yes, able to deal with difficult situations like an adult.

Sure, go ahead and block the spammer that keeps ringing your phone. You know what I’m talking about.

Same thing goes with cancel culture, to an extent. Yes, I agree that those who have done terrible things should pay a price and face punishment. But there are too many people being cancelled for even the smallest mistakes or missteps. Let’s face it. We all make mistakes. And if we cancel everyone out who’s made mistakes, well, they’ll be almost no one left. We might be left in a very boring world devoid of opinions, imagination, debate, and, most of all, forgiveness. Someone who still has more good to give might not get the chance to because they’ve been cancelled. We’re going to miss out as a society if we keep cancelling and blocking everyone.

Forgiveness is a rare trait now in the world of cancel culture and blocking. Let’s bring back more forgiveness where forgiveness is due.

This took me way longer to write, and now it’s time for bed. Goodnight.

Signing off for now,

David Steinberg, AMP, BComm
Mortgage Psychologist and Property Strategist
(and Lead Broker and Owner at Olympic Mortgage)
250-858-7160
david@olympicmortgages.ca

Feedback is welcome. Send me an email and let me know your thoughts, or pick up the phone and call me – 250-858-7160.

We have moved!

After 10 years of being downtown, we have found a great new home. We are sharing an amazing space with our friends at V4 Pillars, in View Royal. We have 2 offices, a boardroom, a lounge area, and a wonderful reception area.

Our new office is located at #103-2311 Watkiss Way, Victoria, BC.