So.....recession time!? | GTAMotorcycle.com

So.....recession time!?

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mimico_polak

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Or more boom time? All I keep hearing about is rising rates, and while I understand that inflation is running rampant, and recently realized how easy it is to get 150k on a variable second mortgage...I'd like to think that some people are pooping their pants about any rise in interest rates as a 'fun' life costs money. Toys cost money. Renovations cost money. And I'm 100% sure that not everyone that's been living the high life can actually afford it without a nice line of credit footing the bill.

I just signed a variable, and my first payment is the day after the announcement lol. At least I'll enjoy 1 payment of $150 less than my normal payment.
 
Buy more houses :)

JT plan is to pump the country full of imigrants refugees etc so you can rent them out ...

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Dear Minister Fraser: Thank you for agreeing to serve Canadians as Minister of Immigration, Refugees and Citizenship. From the beginning of this pandemic, Canadians have faced a once-in-a-century challenge. And through it all, from coast to coast to coast, people have met the moment. When it...
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george__ said:
Buy more houses :)
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You joke...but I've lost out on massive gains in the market while holding cash. "Paralysis by analysis" is what they call it I think. I know I know. Am an idiot.

But I'm ready to drop a small down payment on a second property if it happens. It won't...because the large boys will snap up everything available in an instant.
 
I lost money gambling on stocks :).

Very depressing out there
 
mimico_polak said:
I just signed a variable, and my first payment is the day after the announcement lol. At least I'll enjoy 1 payment of $150 less than my normal payment.
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Why are you in a variable rate mortgage when rates are going to increase? Lock them in as low as you can now for as long as you can.
 
LBV said:
Why are you in a variable rate mortgage when rates are going to increase? Lock them in as low as you can now for as long as you can.
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Because, personally, I don't expect the rates to go up to 4.15% prime as I'm currently able to get 2.85% fixed for 5 years with MCAP.

I had 2.79% for the last 2.5 years, and still don't think there will be enough raises over the near term to get to that stage. Currently getting Prime - 1.3% (my current rate is 1.15%) and I think the economy is too fragile to raise too much, and that the BoC won't be raising it too quickly.

@george__ how's that possible? REDDIT army led you wrong?
 
When I bought my first house in Canada (seems like not so long time ago haha) - the prime was 5.7% and 5year closed was 7.5%...
 
mimico_polak said:
Because, personally, I don't expect the rates to go up to 4.15% prime as I'm currently able to get 2.85% fixed for 5 years with MCAP.
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Careful, some of MCAP's mortgages have a sale-only clause meaning you can't cancel the mortgage except by selling the house. It can screw you over in certain circumstances, eg if rates go up you can't shop around.
 
danp said:
Careful, some of MCAP's mortgages have a sale-only clause meaning you can't cancel the mortgage except by selling the house. It can screw you over in certain circumstances, eg if rates go up you can't shop around.
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Interesting. I never asked about that. I just know that I can port it to the new house, and we're not considering selling.

They indicated that I can't port the second mortgage, if I had gotten it.

You guys are making me worried now!
 
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Sochi said:
When I bought my first house in Canada (seems like not so long time ago haha) - the prime was 5.7% and 5year closed was 7.5%...
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Your buying power was worth more back then.
 
mimico_polak said:
Because, personally, I don't expect the rates to go up to 4.15% prime as I'm currently able to get 2.85% fixed for 5 years with MCAP.

I had 2.79% for the last 2.5 years, and still don't think there will be enough raises over the near term to get to that stage. Currently getting Prime - 1.3% (my current rate is 1.15%) and I think the economy is too fragile to raise too much, and that the BoC won't be raising it too quickly.

@george__ how's that possible? REDDIT army led you wrong?
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I agree with this logic. It's actually even further in your favour as the first bunch of payments you make will be at a lower rate and assuming you are doing equal payments, therefore more principal paid off. When rate crosses 4.15 you are breaking even on rate but you have less principal so your carrying cost is still lower. Depending on your chosen monthly payment and distribution of increases, the line is where variable rate exceeds fixed rate somewhere between 1/3 and 1/2 your term (it can move outside of those bounds if rate increases are non-linear during the term eg a 1% jump on day one would screw you but that is exceedingly unlikely as it would unleash an economic &^%$%storm).
 
sburns said:
Were regular homes 1 million or even half a million back then?
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Your point is what?

I didnt have the money back then to buy a regular home. I bought a townhome hours away from work.

Had 1 car.
Didnt vacation.
Used 40 year old hand me down furniture.
Didnt save or invest
Threw every penny at the mortgage to lower the amount going to interest

I had friends who lost homes when market values corrected because the banks wouldn't renew mortgages.

Given what I made I lived within my means.

Assets can be over valued.

Because a house today is a higher % of income the system should ensure low interest rates?

My income back then wouldn't be minimum wage in today's world. So?
 
GreyGhost said:
I agree with this logic. It's actually even further in your favour as the first bunch of payments you make will be at a lower rate and assuming you are doing equal payments, therefore more principal paid off. When rate crosses 4.15 you are breaking even on rate but you have less principal so your carrying cost is still lower. Depending on your chosen monthly payment and distribution of increases, the line is where variable rate exceeds fixed rate somewhere between 1/3 and 1/2 your term (it can move outside of those bounds if rate increases are non-linear during the term eg a 1% jump on day one would screw you but that is exceedingly unlikely as it would unleash an economic &^%$%storm).
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This is my currently logic.

I understand there are 8 announcements in a year. So if the rate drives up 8 times in a year...I'm effed. IIRC typically it's 0.5% / announcement.

However, if it doesn't...I can still be good.

My mistake, 4.09% prime is where my variable rate mortgage payment goes up to my previous 2.79% fixed term rate.

Prime needs to go up 1.6% to equalize the payments.....very possible. Likely? I think BoC, Gov't, and everyone will be treading likely as we know what would happen if rates rise too fast.
 
11% on 150k home is a lot less than 2% on a 1.5 million home. So you had it way easier in the 80s.
 
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