Be Officially Warned: We Have An Inverted Yield Curve

It was spring of 1989 and I was working as a mortgage representative at Montreal trust. For Robert Floris, things were great. My job was challenging, I was 26 and I still have my hair LOL. The mortgage market was booming and real estate was healthy. However, senior officials were letting us know that an inverted yield curve was beginning and to keep an eye on the future.

What is an inverted yield curve?

When longer-term mortgage rates [i.e. 5 year] are cheaper than a one year mortgage.

What it is supposed to mean?

That a recession may be coming. I’m thinking: what do they know that I don’t?

It turned out that Robert Floris did not know much. Within the next year, many mortgage defaults, restructuring and job losses occurred.

It was a hard lesson to learn. Many families handed me their keys to their house personally. The mortgage and real estate market completely did a 180° turn. The arrears rate at Montreal Trust was 6%! They were hard lessons that made quite an impression on a 27-year-old.

Could it happen again? Well, of course it can. Will it? I am not that smart. However given my past experience I am getting my own financial position in order. I strongly suggest you do the same. If a recession comes, you will be glad you planned. If it does not, then your family will still be in a more positive financial position. You have been warned!

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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