Sentences with phrase «risk of low interest rates»

Canada may need to hike minimum down payments to ease housing affordability woes and curb the risks of low interest rates, the head of Canada Mortgage and Housing Corp. said on Friday.

Not exact matches

Interest rates on 15 - year mortgage terms are typically lower than those on longer - term loans because the shorter duration of the loan makes it less of a risk to the lender.

But by talking instead of acting, he also runs the risk becoming another Alan Greenspan, the once infallible guru who infamously stuck to low interest rates and ignored the massive debt and housing bubble he helped create until it was too late.

And especially in the case of a business or a borrower who has lower credit scores, it's usually higher interest rates and fees that compensate for the higher risk the lender is taking.

«Pockets of risk have begun to emerge» following several years of exceptionally low interest rates that have changed how lenders and borrowers view debt, Morneau told a news conference in Toronto.

Risks abound, including the sustainability of the expansion and the durability of low interest rates.

Record - low interest rates also have caused some big institutional investors to search for returns in the high - risk, high - reward world of venture capital.

However, he says there's good reason to think Canada can manage the risks from debt, which he says is a natural consequence of several factors, including the combination of a strong demand for housing and the prolonged period of low interest rates maintained in recent years to stimulate the economy.

«The public funds, at least in Pennsylvania, are structured to enable the bank to make a loan that they might not be able to make without the public debt behind them by enhancing the loan - to - value, reducing the risk to [the bank], and then passing on some benefits [to the borrower] in the form of lower interest rates, which help cash - flow issues.»

The continuing highlighting of household imbalances, despite noting that the risks have in fact lessened somewhat in the past six months, suggests the central bank remains worried that with interest rates likely to continue at near emergency low levels, the dangers of something going off the rails intensifies.

«Interest rates can't stay this low forever, because there exists the real risk of the economy getting overheated,» says Alex Nikolsko - Rzhevskyy, an associate professor of economics at Lehigh University.

Counterintuitively, the central bank says lower interest rates are necessary to reduce the risk of a housing bust.

Financial stability risks have become topical in the wake of the global financial crisis and the subsequent extended period of very low interest rates.

Low interest rates have given a huge incentive to shift out of low - risk assets into stocks and corporate bonds in search of higher returLow interest rates have given a huge incentive to shift out of low - risk assets into stocks and corporate bonds in search of higher returlow - risk assets into stocks and corporate bonds in search of higher returns.

Those markets recovered shortly thereafter, on the premise that low interest rates and high stock returns were worth the risk and that the risk of war on the Korean peninsula simply wasn't that high.

Once the federal government achieved a balanced budget, that interest rate risk premium quickly disappeared and all levels of government benefited through lower borrowing costs.

ST gov» t bonds offer you the safest investment from a default risk perspective, but you earn a lower rate of interest on them.

To the extent that the factors affecting capital flows act to raise asset prices, lower interest rates and reduce risk premiums, it is harder for the markets to assess how much of the currently very favorable conditions are likely to reflect fundamentals and prove more durable.

Nonetheless, the retreat from the extreme risk aversion of nine months ago, the partial recovery of household net worth and the impact of low interest rates will offer support to private demand over the period ahead.

I can see the risk if you intend to sell and interest rates rise, but buy and hold seems to be pretty low risk — unless the dollar becomes defunct, of course.

I like the idea of having gold for inflation risk and long - term treasuries for deflation but I can envision a future where interest rates and inflation remain low for years which would be bad for returns on both.

Yet another critical factor is often overlooked in explanations of low interest rates: a structural rise in risk aversion and savings over the past two decades.

In the mad scramble for loan creation during the final phase of the Housing Bubble, the government created an environment of essentially free money by allowing the big agencies, Fannie Mae and Freddie Mac (or Phony and Fraudie, as I often affectionately refer to them), to securitize loans to the bottom of the barrel risks with crazy terms like no money down and incredibly low «teaser» interest rates.

But as long as the PBoC can continue to withstand pressure to lower interest rates — and it seems that the traditional poor relations between the PBoC and the CBRC have gotten worse in recent months, perhaps in part because the PBoC seems more determined to reduce financial risk and more willing to accept lower growth as the cost — China will move towards a system that uses capital much more efficiently and productively, and much of the tremendous waste that now occurs will gradually disappear.

In return for this lower rate, the borrower must accept the risk that the interest rate on the loan most likely will rise in the future, thereby increasing the number of monthly mortgage payments.

«The biggest challenge is delevering, but it presents the opportunity of borrowing at a lower rate of interest,» Gross said, noting that investors must be sure that the assets they're buying this year are creditworthy and present low risk exposure.

World growth will remain low on average but negative in the UK and Europe; price inflation will remain sufficiently subdued for a while longer so as to impose no constraint on monetary expansion; central banks will sustain a regime of negative real interest rates and rapid monetary expansion; the risk of a eurozone collapse is off the table for now; finally, stock markets should continue to perform better than expected, even though the four - year old cyclical bull market is long by historical standards.

That interest indicates investors» willingness to bet on the potential growth — and accept the potential risks — of a startup company in the context of a low - interest - rate environment.

All else equal, unless it possesses some sort of major offsetting advantage that makes the risk of non-payment low, a company with a low - interest coverage ratio will almost assuredly have bad bond ratings, increasing the cost of capital; e.g., its bonds will be classified as junk bonds rather than investment grade bonds.

: A classic point of contention for risk parity is that interest rates, in general, are too low, and that while the approach may have performed well in the past, it is only because of an historic bond rally, which is unlikely to happen again.

We focused on the two dominant macro factors — credit risk and interest rate risk — and how holding these factors together provided diversification benefits because of their historically low to negative correlation.

As savers, pension funds and insurance companies sought relief from the pain of low interest rates, the issue now is «whether they ended up taking up risks that were greater than they realized,» said Donald Kohn, the Fed's former vice chairman under Bernanke.

Put simply, even taking account of current interest rate levels, and even assuming that stocks should be priced to deliver commensurately lower long - term returns, we currently estimate that the S&P 500 is about 2.8 times the level at which equities would provide an appropriate risk premium relative to bonds.

This very low market volatility can lead investors to take on more risk, and in a period of still relatively low interest rates, to «reach for yield» — that is, buy riskier assets than one would otherwise, in order to achieve a desired profit or savings goal.

Interest rate risk Although high yield bonds have relatively low levels of interest rate risk for a given duration or maturity compared to other bond types, this risk can nevertheless be aInterest rate risk Although high yield bonds have relatively low levels of interest rate risk for a given duration or maturity compared to other bond types, this risk can nevertheless be ainterest rate risk for a given duration or maturity compared to other bond types, this risk can nevertheless be a factor.

Indeed, a combination of lower interest rates and more stringent macroprudential policy would likely work to reduce both financial stability risks and the risk of an undershoot of inflation at the same time.

In «The Dangers of an Extended Period of Low Interest Rates: Why the Bank of Canada Should Start Raising Them Now,» published by the C.D. Howe Institute, Masson argues there is urgency for the Bank to act in view of the economic distortions and financial risks low interest rates pose for CanaLow Interest Rates: Why the Bank of Canada Should Start Raising Them Now,» published by the C.D. Howe Institute, Masson argues there is urgency for the Bank to act in view of the economic distortions and financial risks low interest rates pose forInterest Rates: Why the Bank of Canada Should Start Raising Them Now,» published by the C.D. Howe Institute, Masson argues there is urgency for the Bank to act in view of the economic distortions and financial risks low interest rates pose for CaRates: Why the Bank of Canada Should Start Raising Them Now,» published by the C.D. Howe Institute, Masson argues there is urgency for the Bank to act in view of the economic distortions and financial risks low interest rates pose for Canalow interest rates pose forinterest rates pose for Carates pose for Canada.

The MOVE index suggested that US Treasury volatility was expected to be very low, while the flat swaption skew for the 10 - year Treasury note denoted a low demand to hedge higher interest rate risks, even on the eve of the inception of the Fed's balance sheet normalization (Graph 9, right - hand panel).

A recent fear for high yield investors has been the prospect of normalising interest rate policy in developed markets — historically low interest rates have made the high yield market more sensitive to interest rate moves and effectively managing this risk will be important.

While shortening duration can help mitigate interest rate risk, another approach to consider is one that balances exposure to the very front end of the curve with exposure to intermediate maturities for additional yield potential and lower volatility, given that rates are likely to rise slowly and stay historically low for the foreseeable future.

One popular bond investing strategy is called «laddering» and provides a trade - off between lower rates on short - term bonds and higher interest rate risk of long - term bonds.

This is evident in a number of developments, including: increased demand for higher - risk assets; the increase in «carry trades» — a form of gearing where funds are borrowed short - term at low interest rates and invested in higher - yielding assets, often in other countries; growth in alternative investment vehicles such as hedge funds; and growth in alternative investment strategies such as selling embedded options (see Box A).

Continuing Low Rates Risks Bigger Asset «Bubble» US Federal Reserve Bank of St. Louis President James Bullard, 54 anni, warns that keeping interest rates near Zero risks inflating asset - price bubbles, saying officials should raise borrowing costs this year as the economy imprRates Risks Bigger Asset «Bubble» US Federal Reserve Bank of St. Louis President James Bullard, 54 anni, warns that keeping interest rates near Zero risks inflating asset - price bubbles, saying officials should raise borrowing costs this year as the economy imprRisks Bigger Asset «Bubble» US Federal Reserve Bank of St. Louis President James Bullard, 54 anni, warns that keeping interest rates near Zero risks inflating asset - price bubbles, saying officials should raise borrowing costs this year as the economy imprrates near Zero risks inflating asset - price bubbles, saying officials should raise borrowing costs this year as the economy imprrisks inflating asset - price bubbles, saying officials should raise borrowing costs this year as the economy improves.

Speaking of Dodd - Frank, its restrictions on risk - taking greatly reinforce the effects of the Fed's low interest rate policies.

While it's true that interest rates are depressed, apparently setting a low «bar» for equities, an additional question one should ask is whether interest rates themselves are «fair» in the sense of being adequate compensation for long - horizon risks.

With interest rates still hovering near the lowest levels they've ever been in 5,000 + years of recorded human history, it's very difficult to achieve a significant investment return without taking on substantial risk.

This year Goldman is packaging hybrid FX derivatives that allow clients to hedge against a risk of dollar - denominated interest rates remaining low.

Seven years after the great financial crisis of 2008, the world economy remains at high risk of a new slump despite continued ultra low interest rates.

In my view, investors who view current valuations as «justified relative to interest rates» are really saying that a decade of zero total returns on stocks is perfectly adequate compensation for the risk of a 45 - 55 % market loss over the completion of the current market cycle - a decline that would historically be merely run - of - the - mill given current valuations, and that certainly can not be precluded by appealing to low interest rates.

What we're seeing here — make no mistake about it — is not a rational, justified, quantifiable response to lower interest rates, but rather a historic compression of risk premiums across every risky asset class, particularly equities, leveraged loans, and junk bonds.