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I really dont think there will be a big correction (by that I mean greater than 10% decrease) until the overnight rate (prime-rate) increases.
If bond rates increase, and hence, fixed mortgage rates increase, there will be a better advantage to switch over to variable mortgage rates and therefore it wont affect mortgage payments dramatically. The only way to dramatically increase the mortgage payments is to have the variable and fixed rates both go up.
This is why I think for the next couple years market will only be decreasing 2-4% per year instead of 10% a year.
So the real question is, when does the overnight rate start increasing? Is there any finance guys in the room that know when the BOC will start increasing the overnight rate?
most economists predict that it will stay the same for the next 18 months.
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