A lesson for Redcoats Hey Redcoats, I'm going to give you a little secret on interest rates. They usually work with a long and variable lag. The lag is about 1 year before we see the results of the monetary policy take effect. After 1 year, unemployment rises. After 2 years from peak rates, unemployment rises even more. Guess what happened in 1989 when Fed funds peaked around March in 1989? Well, the recession and job losses began about 1 year later in June 1990.
Im not cherry picking years here. One can look at the dotcom recession and the GFC and a similar story plays out. The damage has already been done when rates reach restrictive territory. You, fail to understand this.
Your comment about home prices possibly reaching a floor with peak rates has not historically played out that way. Home prices will have to reset to help further bring down inflation. If you're going to present an alternative view, at least have some meat and potatoes to back up your view from a historical context. Why didn't this occur in the 1990 housing recession in Canada? Rates dropped but yet home prices crashed shortly after. Why? Because people lost their jobs and they had to lower the interest rates to stimulate the economy again.
One last point Redcoats, you are assuming that rates have peaked and it's smooth sailing from here. How about this scenario. China re-opening, fueling demand for oil/commodities and hence fuels inflation which causes Canada to increase rates even further down the road. Don't think it can't happen? Think again. Remember, the US plans on going to 5%, how confident are you that 4.5% will be enough? This will put upward pressure on mortgage rates too.