Bank Stocks and Mortage Rates
Bank stocks are Canadian darlings of the moment: a lot of people are concentrating on the relatively high dividends and solid blue chip stocks, still scared after the tech fallout of 2000.
I’m sticking with the mining sector for now but will be looking to diversify next year. However bank stocks will not be my first pick, because it’s still not clear which ones will take a bigger hit from the sub-prime mortgage problems. This is not a big issue in Canada, at least not yet, but I still think there are going to be some repercussions for the Canadian banks when the rates are raised.
I’m biting my nails, not sure whether to convert our Scotia Flex mortage into a fixed one. If Bank of Canada raises the rate just once this year, I wouldn’t even be thinking about it, but the rumour is it may happen twice and that means we’ll take a “hit” starting in September, and then again next March. Clearly this calls for a spreadsheet. (I hate this, makes me feel all grown up).