Self-inflicted assault, perhaps. When interest rates were falling to zero, there were very few complaints. When the cycle inverts, the wealth effect turns into a wealth siphon.
6.1%!!
My mtg rate that started at 2.1% in Feb 2021 is now 6.1%
My mtg pmt which started at $2694 is now $4254
A whopping 59% or $1560 monthly increase in < a year!
Who can sustain this type of assault?
Especially the majority of investors who started with 2-3% cap rates pic.twitter.com/9ZI9CNHND4
— ac_eco (@ac_eco) December 20, 2022
A mortgage for the same house can be $2700 / month at 6.1% again.
The asking price for the house just has to fall about 50%.
Thankfully we have the option of 30 year fixed rate mortgages here in the US.
The Fed giveth … The Fed taketh away.
Perhaps this is why Christ cautioned us “Do not store up for yourselves treasures on earth, where moths and vermin destroy, and where thieves break in and steal.” ? Well the World’s Reserve Banks are the moths and the vermin … and they’re swarming and destroying.
So the gambler lost this bet. Oh well live to bet again.
We locked in at a small margin higher then floating on our 5 year mortgage 2 years ago thinking that we were near the end of low rates Seems we won this bet.
We can now invest in a term deposit at an interest rate higher then our mortgage rate, so the next 3 years we should be making money with the money we are not spending by gambling on an illicit – usury – system.
Still a sin by the way – https://zippycatholic.wordpress.com/2014/11/10/usury-faq-or-money-on-the-pill/
Had some TFSA room available. So rather than doing prepays our <3% mortgage, putting it in GICs at 5% to maturity before mortgage renews. If you've arranged your affairs to deduct the 3%, all the better.
Take a look at the poster’s Twitter profile:
@ac_eco
Private Investor. Real Estate & Equities.
So, presumably this guy is doing this professionally. And he missed what’s coming? That’s reassuring.
Self identifying stupid, who didn’t bother to lock in his mortgage rate at 3 percent for 5 years, and eat the 3 month interest penalty
Hey stupid! You see that Ukraine flag in your bio? This is how you’re paying for it.
So, Islam is not only biologically more viable than the west, but economically more viable as well.
I see he supports Zelinsky. So go ask Zelinsky for a kick back like Biden and Trudeau.
Historically speaking, rates are still low. Unfortunately there’s a whole generation of borrowers who’ve only experienced free to cheap money.
Welcome to reality.
The international symbol for “you’re dealing with an idiot”…
…a yellow and blue flag next to your handle in Twitter
A Ukraine virtue signaller? Too bad, so sad.
Smart money LOCKS THE RATE. You earn the trouble with a floating rate. Oh well, no sympathy.
Today’s generation lacks money smarts, or frankly lacks any smarts at all for that matter. Narcissism has a cost, and it’s Billing Day.
For 30 years variable mortgages were the smart play. Only recently has the opposite been true.
Over all the years of paying for a house we always locked in, usually for 5 years. Every renewal we paid down what we could. Have been free and clear for 12 years. Except for the rent we have to pay the municipality ever summer.
We didn’t lock in, except for the first go-round. But when the bank refused to pay city taxes early so we could get a discount, we moved to the company credit union as soon as we could. They were much more flexible, so we were able to pay extra each month, which meant we could weather the storm as interest rates rose and then fell.
BTW, our first mortgage was at 9.5%; some eight or so years (and another house) later, it rose to 16.5%.
Yes and they are working as hard as they can to make energy as expensive as possible.. I’m not really sure what the plan is..
We paid 6.5% for our first 5 years locked in. The next 5 we paid 5.5%.
Then we were paid off because we bought a small house we could afford in a “lesser” hood.
I have zero sympathy for stupid greedy people.
And owning isn’t all its cracked up to be. Maintenance is a ball buster at times as well.
So FO.
As recently as 9 months ago I was hearing the often repeated mantra that historically you would save with a variable rate. I suggested to customers you should lock in rates contrary to the professional advice that it was going to cost you more. Yes , for 30 years it may have cost somewhat more,but that is a price for stability. You don’t have to be a rocket scientist to know that when rates are 2 to 3 percent the potential to go down is low while the potential to go higher is astronomical. Even with the locked in low rate the potential for disasters has only been moved down the timeline. And by the way, several did not lock in.
Had 9 houses and mortgages, the lowest interest rate was 8.25%. The highest 15.50%. The world did not come to an end.
They should never have kept interest rates artificially low in the first place and people should have known that it wouldn’t last.
Butler Mortgage
5 yr fixed
4.59%
The first place I purchased on my own after divorcing my wife I got after shopping around (the first bank wanted 9.5) what was a fantastic deal at the time of a mortgage rate of 7.25%, and as I had a over 25% down payment I did not have to give CHMC their cut.
Our first mortgage was at 8%, and we thought we were doing great. Of course 8% on a $70,000 home looks a lot better than 8% on a $500,000 one.
Interest rates and inflation don’t always stay low. Stocks and real estate don’t always appreciate.
It hurts, so be prepared.