Benjamin Tal Economic Outlook

I was lucky enough to be able to attend a talk held by Benjamin Tal, CIBC’s head economist. As would be expected from an economist his talk was laced with statistics, bar graphs and acronyms. Unlike most economists he is actually quite interesting to listen. He was able to get the audience laughing at several points during the presentation and the hour flew by. I have taken a few of the more relevant points he made and listed them below. If you are interested in reading more about Benjamin Tal feel free to Google him and you will find countless articles that he is quoted in.

The first point he made was he expected the Canadian Real Estate market to continue to decline for 5-7 more months and possible fall another 7 to 10% in value. Of course this is an average and will not hold true across all markets. Of course no one has a crystal ball, but it is encouraging to hear an “expert” discuss the light at the end of the tunnel and be reassured that we are not going to be in a free fall for the next 2 years.

At the end of the discussion one of the audience members asked him if he felt a fixed or variable rate was a better bet at this point in time. Now this is a question I get quite often so I was eager to hear his response. He basically said for the next 2 years it won’t make much of a difference if you are in a fixed rate or a variable rate, but once inflation really kicks in and rates begin to rise you would have been better off if you locked in at today’s fixed rate. He also confirmed something else that I had suspected and that is the days of seeing variable rates quoted with a discount are gone. No longer will banks be offering prime less 1.% or prime less .8%. The current scenarios of prime plus 1% will be here to stay. The premiums may decline slightly, but will not disappear.

Mr. Tal had quite a few more interesting insights on the market overall, the auto industry, the future of commodity prices (buy now because they are going to shoot up once demand picks back up) and the rise of Chinese and Indian economies, but since this is a mortgage/real estate focused site I won’t go in to the details.

If you have any questions or comments I would love to hear them. Also take a look at the video below. It was not from today’s talk, but he touches upon some of the same points.

Related posts:

1. 8 Economic Insights from Benjamin Tal A summary of 8 key take-aways from CIBC's head economist...
2. 50/50 Mortgage offers great 5 year mortgage rate I can now offer my clients the very low 5...
3. Thinking about a variable mortgage? According to research performed by professor Moshe Milevsky, choosing a...
4. Variable Mortgage Rates Staying Low??? Most Analysts agree the Bank of Canada will not raise...

Related posts brought to you by Yet Another Related Posts Plugin.