The MERIX 50/50 Wise Mortgage

“…the wise choice in today’s economy”

Don’t choose between Fixed and Variable. Choose Both!

Features:

– 50% of mortgage amount is at current 5 year fixed rate pricing (now at

– 50% of mortgage is at current 5 year ARM pricing (now at

4.64%)Prime-.40 %)

Ideally suited for:

– Customers who are unsure whether to go Variable or Fixed. This product eliminates the biggest dilemma facing

mortgage borrowers in today’s economy.

– Customers who want a low interest rate and are more risk-averse than a typical ARM client. The weighted

average interest rate

the mortgage is subject to interest rate risk.

– Customers who want added flexibility in paying down their mortgage. The two portions operate independently of

each other, so your customers can choose to make prepayments on the fixed portion which has the higher

interest rate or they can choose to pay down the ARM portion aggressively which in turn further minimizes their

future interest rate risk!

– Customers you may be on the verge of losing to a competitor.

on this mortgage is approximately 3.25% given today’s current pricing! And only 50% of

Instructions:

.

Submit the deal to MERIX as a 5-year fixed rate. Identify “50/50 Wise Mortgage” in notes to the UW

Additional Features:

– One collateral charge is registered

– Each portion operates independently in terms of payment frequencies, privileges, and prepayment penalties.

– Each portion has the usual 20/20 prepayment privileges.

– This product will be part of our regular offering (i.e. not a quick close).

–

Convertibility

:

– The ARM portion can convert to a fixed rate

extended.

– The ARM would convert at the then-prevailing MERIX rate for the term closest to the remaining term on the ARM.

This ensures

–

at any time without penalty, HOWEVER, the term cannot bethe two portions renew/mature on the same day.

Portability:

– The mortgage is portable, either to a new 50/50 product or lock in the arm portion prior to porting and port the

whole mortgage as a blended fixed rate.

–

No penalties charged in either scenario.

Rate Hold:

– 120 days rate holds on purchases, 60 day refinances.

No Transfers/Switches permitted. No pre-approvals

Additional Info:

– Max amortization is

35 years Max LTV is 95%

–

– Product will qualify at the 5 year fixed rate (

– Second Homes permitted.

15 bps rate premium applied to both portions for Stated Income or Non owner occupied Rental.unless the 3 year published rate is higher).

Compensation

however will be paid separately on each portion.

Regular 5 year term compensation applies. Compensation is the same for both ARM and Fixed

Sponsored

By The Walkers

Saturday, May 1 at 9:00 AM

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 Start Point: Bell Park

1. 13816 19A Avenue – clothes, shoes, furniture

2. 13868 19A Avenue – house hold items, books, clothing, ect.

3. 13561 19 Avenue – kids toys, miscellaneous

4. 13936 18A Avenue – brass head and foot board, TV., TV stand, household items, miscellaneous

5. 13885 18A Avenue – cedar scrubs, perennials, household items

6. 13899 18A Avenue – miscellaneous

7. 13768 18A Avenue – bedroom furniture, miscellaneous

8. 13781 18A Avenue – miscellaneous

9. 13761 18A Avenue – miscellaneous

10. 13690 18A Avenue – miscellaneous

11. 1921 138A Street – kids toys, books, decorative accessories, brand new car tires – 2009 Toyota Sienna, miscellaneous  

12. 13885 18 Avenue – all house furniture, drum set, keyboard, ect

13. 13761 18 Avenue – miscellaneous

 

Amble Greene:

1. 1741 Amble Greene Drive – furniture, pictures, black curtain rods,        basketball hoop, aluminum shutters, household items

2. 1693 134B Street – kids toys, miscellaneous

3. 13521 19 Avenue – furniture, sports equipment, books, fabric,                  miscellaneous

 

Chantrell Park Estate:

1. 2289 138A Street – household items, appliances, trailer, miscellaneous

2. 2281 Chantrell Park Drive – miscellaneous

 

Elgin:

1. 14088 31A Avenue – miscellaneous

2. 14099 21A Avenue – miscellaneous

3. 14136 29 Avenue – miscellaneous

4. 14240 29A Avenue – household items, kids toys, ect.

Sponsored

By The Walkers

Saturday, May 1 at 9:00 AM

 

Addresses, Sales Lists & Maps Available:

13824 19A Avenue

 

Start Point: Bell Park

1. 13816 19A Avenue – clothes, shoes, furniture

2. 13868 19A Avenue – house hold items, books, clothing, ect.

3. 13561 19 Avenue – kids toys, miscellaneous

4. 13936 18A Avenue – brass head and foot board, TV., TV stand, household items, miscellaneous

5. 13885 18A Avenue – cedar scrubs, perennials, household items

6. 13899 18A Avenue – miscellaneous

7. 13768 18A Avenue – bedroom furniture, miscellaneous

8. 13781 18A Avenue – miscellaneous

9. 13761 18A Avenue – miscellaneous

10. 13690 18A Avenue – miscellaneous

11. 1921 138A Street – kids toys, books, decorative accessories, brand new car tires – 2009 Toyota Sienna, miscellaneous  

12. 13885 18 Avenue – all house furniture, drum set, keyboard, ect

13. 13761 18 Avenue – miscellaneous

 

Amble Greene:

1. 1741 Amble Greene Drive – furniture, pictures, black curtain rods,        basketball hoop, aluminum shutters, household items

2. 1693 134B Street – kids toys, miscellaneous

3. 13521 19 Avenue – furniture, sports equipment, books, fabric,                  miscellaneous

 

Chantrell Park Estate:

1. 2289 138A Street – household items, appliances, trailer, miscellaneous

2. 2281 Chantrell Park Drive – miscellaneous

 

Elgin:

1. 14088 31A Avenue – miscellaneous

2. 14099 21A Avenue – miscellaneous

3. 14136 29 Avenue – miscellaneous

4. 14240 29A Avenue – household items, kids toys, ect.

 

By Martin Crutsinger  WASHINGTON — The International Monetary Fund says the global economy, after enduring a crippling recession, should see better-than-expected growth this year, led by strength in China and other developing countries.

In an updated economic outlook, the IMF forecast that the world economy would expand 4.2 per cent this year, faster than its previous projection and a sharp improvement from 2009 when global output fell by 0.6 per cent, the worst performance since the Second World War.

However, the international lending agency warned that the recovery still remained vulnerable with the biggest threat likely to come from a surge in government debt burdens.

“The outlook for activity remains unusually uncertain,” the IMF said in its latest World Economic Outlook. “Although a variety of risks have receded, downside risks related to the growth of public debt in advanced economies have become sharply more evident.”

The IMF’s estimate that the global economy would grow 4.2 per cent this year, represented a 0.3 percentage point increase from the IMF’s January forecast. For 2011, the IMF projected global growth of 4.3 per cent, no change from its January outlook. The IMF expects wide disparities between regions with the United States and Canada outperforming Europe and Japan but lagging China and other developing countries.

For the United States, the IMF expects growth of 3.1 per cent this year, in line with private forecasters, after a 2.4 per cent plunge in the U.S. gross domestic product in 2009, the biggest decline since 1946. That compares with growth of 2.6 per cent expected for advanced economies as a whole. U.S. growth is forecast at 2.6 per cent in 2011, slightly above the 2.4 per cent predicted overall for advanced economies.

“Turning to Canada, the recovery there is . . . expected to be protracted, reflecting more moderate demand growth than in the United States as well as the substantial strengthening of the Canadian dollar,” the report said.

It said output growth is projected at 3.1 per cent in 2010, up from 2.6 in the IMF’s previous projection in January. However, its current projection of 3.25 per cent growth in 2011 was down from 3.6 per cent in the previous report. Recent Bank of Canada estimates projected growth in Canada at 3.7 per cent this year and 3.1 per cent next year.

“Canada entered the global crisis in good shape, and thus the exit strategy appears less challenging than elsewhere,” the IMF said. “The main priorities are returning Canada’s debt to a downward trajectory, ensuring that financial stability remains intact — amid rising house prices — and raising Canada’s labour productivity and potential growth.”

The IMF forecast that China’s economy would surge 10 per cent this year and that India would grow 8.8 per cent. But it looked for the 16 European countries that share the euro currency to see economic growth of just one per cent in 2010.

The new forecast was prepared for upcoming meetings of global financial leaders, including daylong talks in Washington on Friday involving the Group of 20, which include the world’s richest industrial countries and major developing states including China, Brazil, India and Russia.

The U.S. delegation will be led by Treasury Secretary Timothy Geithner and Federal Reserve chair Ben Bernanke. The G-20 talks and weekend discussions at the IMF and World Bank are expected to focus on overhauling financial regulatory systems and rebalancing global growth to make the recovery more sustainable.

Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney will lead the Canadian delegation.

U.S. Treasury officials who briefed reporters Tuesday on Geithner’s agenda said they believed support was growing for a financial risk levy along the lines of one proposed by U.S. President Barack Obama that seeks to raise $90 billion from the largest American banks to recoup losses from the $700-billion financial bailout fund. Flaherty has said Canada would not support such a levy.

The U.S. officials said they expected another key discussion topic would be the need to eliminate global imbalances, a goal that Obama and other G-20 leaders set at a summit in Pittsburgh last September. The rebalancing effort would mean countries with large trade and budget deficits would seek to boost savings and lower domestic demand while countries such as China that are running huge trade surpluses would transition to more domestic-led growth.

To foster the change in China, the Obama administration has been pressuring Beijing to allow its currency, the yuan, to rise in value against the dollar. American manufacturers contend the yuan is undervalued by as much as 40 per cent, giving Chinese producers huge trade advantages over U.S. companies.

However, the Treasury officials did not answer directly when asked whether the U.S. complaints would be brought up in the G-20 discussions. The administration has been recently seeking to temper its rhetoric with China on currency issues in hopes a softer tone will gain better results.

The IMF said it was essential for China, now the world’s third-largest economy, to do its part to assist in combating global imbalances.

The IMF said even with global growth rebounding, unemployment was likely to remain high in the United States and other developed countries over the next two years, given the severity of the downturn in those countries. The Associated Press http://news.therecord.com/Business/article/700389

Bank signals higher interest rates only weeks away, as dollar soars

By Julian Beltrame, The Canadian Press

OTTAWA – The Bank of Canada signalled Tuesday it is poised to start raising interest rates in a matter of weeks, a move that will make borrowing costs higher on everything from car loans to mortgages.

Over the last few weeks, Canadians have already felt the impact of expectations that rates were due to rise – most major Canadians banks started hiking fixed-rate mortgage rates by as much as 0.85 per cent.

But with the central bank now saying it is prepared to move off its emergency 0.25 per cent overnight rate as early as June 1, the whole menu of variable and short-term rates are being brought into play.

“The one that will be affected is the prime lending rate… so the whole gamut will go up when the Bank of Canada raises its rate,” said Bank of Montreal economist Michael Gregory. Those include variable-rate mortgages, lines of credit and short-term car loans, he said.

The bank is also risking sending the Canadian dollar into the stratosphere by moving significantly and robustly before the U.S. Federal Reserve moves off its own zero per cent interest rate policy.

The loonie soared within minutes of the central bank’s 9 a.m. ET policy statement, which, while leaving the rate unchanged for now, made no secret of where it is headed.

The bank’s governing council declared that with the economy and inflation growing faster this year than had been previously thought, there was no need to stay with its “conditional commitment” to leave rates unchanged until the end of the second quarter, or after June 30.

“This unconventional policy provided considerable additional stimulus during a period of very weak economic conditions,” the council wrote.

“With recent improvements in the economic outlook, the need for such extraordinary policy is now passing, and it is appropriate to begin to lessen the degree of monetary stimulus.”

Hence, the council went on, it was withdrawing the conditional commitment.

The bank also said it was ending its key emergency lending instrument that helped inject liquidity into money markets during the crisis, which economists called a clear signal about the central bank’s future intentions.

The dollar rose about 1.5 cents shortly afterwards, breaking through the parity ceiling with the U.S. greenback. It closed up 1.58 cents at 100.12 cents U.S.

The currency move suggested that while the market had expected bank governor Mark Carney to signal a tightening bias, it was surprised by the hawkish tone.

“Removing the conditional commitment to keep rates on hold until July and ending purchase and resale agreements are as good as cementing a June 1 hike,” said economists Derek Holt and Karen Cordes Woods of Scotia Capital in a note to clients.

Holt added in an interview that the language from the bank opens the door for a bigger-than-expected hike in June, perhaps by as much as half a point.

Not all analysts believe the market is right to anticipate a June hike, however. Some say Carney is still leaving himself some wiggle room to stay at the lower bound until July 20, while others are advising the governor to wait until the Fed acts.

“I would keep rates unchanged until the Fed moves, because otherwise you create this problem on the Canadian dollar,” said Brian Bethune, chief economist with IHS Global Insight.

A strong loonie is regarded as a brake on economic growth because it makes the price of Canadian exports less competitive in foreign markets.

In the statement, the central bank conceded the point, listing the “persistent strength of the Canadian dollar,” along with poor productivity and low U.S. demand as “significant drags” on the Canadian economy.

But economists suggested the bank’s language suggests it is prepared to live with a strong loonie.

Even so, economists that favoured a rate hike said the bank can only get so far ahead of the Fed. They note the Canadian bank has flown solo twice before in the past two decades, only to have to subsequently pull back.

“The need for emergency rates have passed but we still have a need for low rates,” Holt explained.

C.D. Howe’s monetary policy council, a sampling of nine economists, sees the bank’s policy rate rising to 2.5 per cent by the spring of 2011. That is a significant hike from the current level, but it is still below what would be considered normal and only slightly above the rate of inflation.

While the tone on interest rates was hawkish, the bank’s view on the economy was only mildly more rosy. It upgraded this year’s growth to 3.7 per cent, from a previous prediction of 2.9 per cent, but it lowered its forecast for 2011 to 3.1 per cent, and it believes 2012 will only bring a 1.9 per cent advance.

It now expects the economy to return to full capacity in the spring of 2011, a full quarter before the previous estimate it made in January.

The bank did raise the temperature, slightly, on inflation.

It said core prices have been firmer than projected, but that they were expected to ease slightly in the second quarter of this year and remain near the bank’s two per cent target over the next two years.

Total headline inflation, which includes volatile items such as gasoline prices, was expected to be higher than two per cent this year, but returning to target in the second half of 2011.

• The Bank of Canada held the overnight rate target at 0.25%, but surprised markets by removing the conditional commitment to keep rates there until the end of the second quarter of 2010. This increases the likelihood of a rate increase in June.
• The Bank of Canada has recognized stronger-than-expected near term growth in both the global and Canadian economic recovery, but remains cautious about the great amount of uncertainty that remains as monetary and fiscal stimulus unwinds.

Taxes take up greatest part of household income By The Canadian Press VANCOUVER, B.C. – A prominent think-tank that’s often critical of government spending policies says Canadian families spend more than two-fifths of their total income on taxes.

The Fraser Institute says its annual Canadian Consumer Tax Index calculated that taxes ate up 41.7 per cent of the average family’s income in 2009.

That’s up from 1981 when taxes accounted for 40.8 per cent of a family’s income, or 33.5 per cent in 1961 when the Fraser Institute first compiled the index.

Interest rates must rise, but some analysts wonder what’s the hurry

By Julian Beltrame

OTTAWA — It’s a minority view, but some economists are advising the Bank of Canada to hold off on raising rates — for a long time.

The reason, says Carl Weinberg of U.S.-based High Frequency Economics, is that the Canadian economy is not nearly as strong as recent data suggests and inflation is at acceptable levels.

He says Canada’s central bank could easily keep interest rates at record lows until next year and not worry about inflation getting out of hand.

That flies in the face of the prevailing view of economists, who believe Bank of Canada governor Mark Carney will start raising rates in July — or possibly even in June.

Carney is expected to give a strong hint into his thinking this week, starting on Tuesday with a scheduled interest rate announcement.

No one thinks he will move this week on the policy rate, which is at an emergency level of 0.25 per cent, but the governor is expected to issue a new forecast on both growth and inflation that will tip off when he will act.

Carney made a conditional pledge last spring not to raise rates until the end of the second quarter of 2010 unless inflation becomes a worry.

That’s going to be a high hurdle for him to jump if he does intend to move early, says Michael Gregory of BMO Capital Markets.

“If they go before June, there’s only one reason if they wanted to maintain their credibility, and that’s the inflation projection has changed,” he said.

“But that’s sending a pretty sharp inflation warning and I’m not sure what’s on the ground now justifies ringing that alarm bell.”

Statistics Canada reported last month that the core inflation rate, which the Bank of Canada watches closely, was 2.1 per cent in February while overall inflation was 1.6 per cent.

Both are within the central bank’s target range for the annual inflation rate, set at between one and three per cent.

The Canadian Press

 

By Derek Scott, The Canadian Press

VANCOUVER, B.C. – Buying a house in the hot housing markets of Vancouver, Toronto and other major cities in recent years has been a possible dream for some first-time homebuyers only because many of those houses had suites they could rent out.

But new rules coming into effect April 19 will all but wipe out that advantage in the eyes of banks handing out mortgages.

“It makes it much more difficult for people with rental properties to qualify for their own mortgage on their personal residence,” said Vancouver mortgage specialist Patrick Mulhern.

The new regulations are designed to prevent speculation in the market, said Jack Aubrey, of the Canada Mortgage and Housing Corporation.

But Vancouver mortgage agent Mike Averbach said the new rules will do little to prevent investors from gambling in the housing market.

“They haven’t decreased risk,” he said. “They’re just not allowing you to use the income.”

Currently, landlords can use 80 per cent of their rental income to offset monthly mortgage payments. That means, if they receive $1,000 per month in rental income, they can use $800 to offset a $1,200 mortgage payment, leaving only $400 to be debt financed.

But under the new rule, only 50 per cent of a landlord’s rental income will be used. Even then, that money will not be used to offset their monthly mortgage payment. It will be added to their total income, forcing them to qualify for the entire monthly mortgage.

For instance, a person earning $100,000 per year in regular income plus $12,000 per year in rental income will have a total income of $106,000 with which to qualify for a mortgage on their own home.

Rental income is essential for many of his clients, Averbach said.

In cities like Vancouver, where the average home price in February was more than $662,000, rental offset is the only way many people can qualify for a mortgage and the new rules will keep many of his clients in condos rather than houses, he said.

“Putting a renter in your basement is not speculative, it’s reality,” he said. “It helps you pay your mortgage.”

The rule changes also make it more difficult for people to buy a property separate property to use as a revenue generator.

CMHC will no longer offer high-ratio financing on rental property not lived in by the owner. That means someone looking to buy a house as a rental investment will have to come up with a 20-per-cent down payment on the property, as opposed to five per cent before the rules changed.

The changes haven’t worried groups advocating for tenants.

Jeordie Dent, of the Federation of Metro Tenants’ Association in Toronto, where vacancy and availability rates have dropped over the last year, said he doesn’t see a negative impact on renters.

Instead, he said his group welcomes the changes.

Dent said too many people become landlords without the financial or intellectual wherewithal to properly manage their properties.

“Anything that strengthens mortgage rules, from our perspective, is a good thing.”

http://ca.news.finance.yahoo.com/s/03042010/2/biz-finance-new-rules-rental-properties-squeeze-first-time-homebuyers.html

 

Anticipation of Bank of Canada rate hikes are fuelling mortgage increases, high dollar

By Julian Beltrame, The Canadian Press

OTTAWA — The Bank of Canada has yet to officially start hiking interests rates, but already Canadians are feeling the impact of higher borrowing costs.

Analysts say expectations the central bank will boost rates June 1 at the earliest and July 20 at the latest have boosted the Canadian loonie and pushed the big banks to twice raise mortgage rates in the past two weeks.

The loonie has been steadily gaining ground for weeks and Wednesday closed above parity, at 100.08 cents U.S., for the first time in almost two years.But economists warn there is danger in the Bank of Canada moving ahead of the U.S. Federal Reserve on hiking rates, even if it is justified by the fundamentals.

“The Bank of Canada is basically going to fly solo,” said Benjamin Tal, an economist with CIBC World Markets.“The markets are already discounting 75, maybe 100 basis points and it’s already in the price of the dollar.”

Canada’s economy has sprinted forward following last year’s recession to record a five per cent advance in the fourth quarter of 2009, and expectations are the first quarter will show an even quicker pace.

More importantly, Canada has recouped nearly half of the total job losses of the downturn, while the United States still struggles with the disappearance of 8.5 million jobs, a decimated housing market and a financial sector still hobbled by an excessive overhang of debt.

In testimony to Congress on Wednesday, Fed chair Ben Bernanke suggested it will be some time before the U.S. starts raising the policy rate from the current near-zero emergency stance.

“The Federal Open Market Committee has stated clearly that they currently anticipate that very low, extremely low rates will be needed for an extended period,” Bernanke told a Congressional committee.

Economists say moving ahead of the U.S. — which is all but certain — could have some beneficial effects, such as cooling what many believe is an overheated housing market by making mortgage costs higher.

But the bigger problem is that higher rates attract more foreign capital into Canada and gives an additional lift to the loonie, something few, except for possibly cross-border shoppers, want.

Finance Minister Jim Flaherty said Wednesday that the strong loonie is a reflection of the relative strength of the Canadian and U.S. economies.

While true, said Liberal critic John McCallum, a former bank economist, there is a risk in raising rates while the U.S. keeps theirs low.

“Then our dollar could get even stronger and that would be really bad for exports and jobs,” he said.

While some analysts have speculated that Canada’s manufacturing sector is no longer as exposed by a strong currency as a decade ago, few disagree with the notion that currency appreciation is a net negative for the economy.

This week’s trade numbers showed the rebound is almost all due to energy, while the goods side registered a $4.4 billion deficit in February.

Carl Weinberg of U.S.-based High Frequency Economists was not impressed.

“You might think that the largest supplier of crude oil to the United States would be able to run a bigger surplus,” said Weinberg. “Blame the strong loonie for a lot of the woes of exporters, especially since so much of what Canada sells is priced in U.S. dollars.”

Given the signals the bank has sent, it would take a major reversal in the recent spate of good economic news, as well as easing inflationary pressures, to stay the central bank’s hand on rates.

However, Sheryl King, chief economist with Merrill Lynch in Canada, says she does not believe governor Mark Carney will get too ahead of the curve and will keep the increases modest.

She says the economy may be hot now, but she sees it cooling in the second half of the year, and Carney putting on his brakes until the Fed shows signs of joining him on the policy tightening track. http://news.therecord.com/Business/article/698287

Published on Tuesday, Apr. 13, 2010 The Globe and Mail Report on Business  

berman@globeandmail.com

For a glimpse of what the future may feel like in the Great White North, look Down Under.

Faced with a jumping housing market, a steadily improving job market and a commodity boom, all of which sound familiar to Canadians, Australian central bank chief Glenn Stevens is cranking up interest rates hard and fast.

The goal is to unwind emergency cuts and return borrowing costs to the historical average, and fast. Last week Mr. Stevens tightened again, his fifth quarter point move in seven months, leaving home builders furious and retailers begging for mercy because customers are disappearing.

The rapid rate increases have made the Australian central bank chief a controversial figure in a world where most central banks have been standing pat. He is a hero to many who believe that other bankers are leaving rates too low too long and courting inflation. Doubters believe he risks overdoing it and the Australian economy will suffer.

With Bank of Canada Governor Mark Carney widely expected to embark on a path to higher interest rates in coming months, Mr. Stevens’ actions and their consequences are a reminder to Canadians who haven’t had to deal with rising rates in four years just what it feels like. In short, it hurts.

Thanks to the $250 (Australian) a month in interest that the Stevens rate increases now are costing the average homeowner on a $300,000 mortgage, Australia’s roaring housing market is finally showing signs of slowing. Building permits are suddenly unexpectedly soft, price gains are tapering off and home loan approvals have fallen for five straight months. Some analysts are raising the prospect of an outright price decline.

At the same time, even though the country is enjoying a job boom, increasingly strapped consumers are apparently dealing with higher interest payments by cutting back on spending. Retail sales fell in two of the three most recent months.

These are all the aftershocks of a central bank dealing with the difficult transition from easy money that was pushed into the economy to cope with a perceived emergency to a post-crisis world where rates more truly reflect the realities of the business cycle.

The Reserve Bank of Australia is “reaching the point at which the central bank does make tradeoffs between economic growth and its desire to contain inflation pressures, and at the point where those tradeoffs where those tradeoffs become quite fine judgment calls,” said Avery Shenfeld, chief economist at Canadian Imperial Bank of Commerce’s investment banking arm.

“It’s premature to say they’ve overdone it because they intend to sacrifice growth at this point in the cycle,” he added.

At some point, Mr. Carney will face the same tradeoff.

There are some fundamental differences between the two countries’ economies that mean it will be a while before Canada gets to the same turning point that Australia is now reaching.

While many people view the countries as very similar, Australia has a big head start economically. It skirted the global recession, its housing market didn’t drop as much in the worst of the crisis and the jobs picture is much brighter. The Australian unemployment rate is 5.3 per cent, compared to 8.2 per cent in Canada.

The other big difference is geography – Australia exports more to Asia, which has been fuelling the global recovery, while Canada remains heavily dependent on the hard-hit U.S.

Still, once Canadian rates start rising, they are likely to go up reasonably quickly. The Bank of Canada has a chance to hike at a scheduled rate-setting date next week, but most analysts expect the first increase closer to mid-year. After that, even the most dovish forecasters like Mr. Shenfeld lay out a scenario where Canadian rates climb over the next year and a half by much more than they have in Australia so far.

CIBC anticipates the Bank of Canada will take its benchmark rate up from the current 0.25 per cent to 2.5 per cent by the end of 2011. At the other end of the spectrum, Toronto-Dominion bank expects 3.25 per cent and Royal Bank of Canada forecasts 3.5 per cent.

At that point, as consumers feel the squeeze, having a thick skin becomes a key part of central banking. Mr. Stevens is blunt and seemingly unrepentant about the effects of his increases, judging by his recent statements. The hurt of higher rates is just part of economic life, so better to get it over with.

“If we wait too long do we end up having to do more of that (raising rates), and those people would actually end up in a lot more pain.”

http://www.theglobeandmail.com/report-on-business/pain-in-australia-is-a-peek-at-whats-to-come/article1532435/

 

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