REVscene - Vancouver Automotive Forum

Hondaracer · 01-25-2023, 11:34 AM

Based my decision on the bank of Canada literally coming out and saying no rate hikes in the foreseeable future.

donk. · 01-25-2023, 11:48 AM

Anyone else triggered by hondaracers profile pic? Or is it just me.....

hud 91gt · 01-25-2023, 11:59 AM

Quote:

Originally Posted by Gerbs

80% of friends from a non finance background took variable too. Their ecision was 1.29% variable or 1.49 - 1.59% fixed.

I can't fathom the idea of why anyone would go variable for 30 basis points of savings lol.

Ended costing them $30 - 45K over 5 years, while not life changing for those buying I guess but still enough to pay for a used Model 3!

I did it, not for the savings but for the flexibility of selling. I’ve paid my fair share of fixed rate fee’s. likely wasn’t the best choice this time around, but life is long. Lol.

MarkyMark · 01-25-2023, 12:05 PM

Yeah we went variable this time around as well and naturally everything went to shit shortly after lol. Definitely taking it on the chin at the moment but hopefully rates don't stay high the whole 5 years

supafamous · 01-25-2023, 12:47 PM

Quote:

Originally Posted by Gerbs

80% of friends from a non finance background took variable too. Their ecision was 1.29% variable or 1.49 - 1.59% fixed.

I can't fathom the idea of why anyone would go variable for 30 basis points of savings lol.

Ended costing them $30 - 45K over 5 years, while not life changing for those buying I guess but still enough to pay for a used Model 3!

I was stupid. I don't recall what my fixed option was at the time but I'm sure it was pretty low but I've always been on variable and didn't give it a second thought at the time.

That said, I didn't expect interest rates to go up THIS much - my rate is now over 3x my original - even in a low interest environment I expected it to stay pretty low for a while.

Hondaracer · 01-25-2023, 12:52 PM

Quote:

Originally Posted by donk.

Anyone else triggered by hondaracers profile pic? Or is it just me.....

She’ll do that to ya

Great68 · 01-25-2023, 12:55 PM

Its just fancy gambling. You can't beat yourself up too bad.

In hindsight I wish I went variable for my second term when I had to renew in 2018. Rates were just starting to rise a bit (I think they went up 2 steps), and I was thinking that was the start of more increase to the more historical ~4-5% range. No one could have forecast a global pandemic bottoming rates out again.

But hindsight is always 20/20, am I'm very much not a gambler.

JDMDreams · 01-25-2023, 12:56 PM

Inflation is transitory they said, maybe high rates are transitory too.

But yea I won't blame the boc, as it's not their job. Their only job is to manage inflation, by messing with the rates. You should blame the gov, who blew money on cerb, arrive can, Ukraine party, don't worry bro we still got millions to give to the Americans to buy weapons for Ukraine. That will fix inflation

maybe if we sanction Russia harder or start sanctioning China inflation will come back down.

quasi · 01-25-2023, 12:56 PM

I've been on the losing end of it every single time until now, I've been locked in fixed the last 21 years including 5.7% on my first mortgage. I've always taken the security of the fixed, obviously not the best financial decision most of the time hah.

Great68 · 01-25-2023, 01:06 PM

Quote:

Originally Posted by JDMDreams

, maybe high rates are transitory too.

If you look at it historically over the last half century, we're not really at "high rate" territory...:

Badhobz · 01-25-2023, 01:08 PM

Quote:

Originally Posted by donk.

Anyone else triggered by hondaracers profile pic? Or is it just me.....

I kinda wanna shove a zucchini in JTs mouth too.

Great68 · 01-25-2023, 01:13 PM

Is that some sort of metaphor?

sonick · 01-25-2023, 01:31 PM

Quote:

Originally Posted by Great68

Its just fancy gambling. You can't beat yourself up too bad.

In hindsight I wish I went variable for my second term when I had to renew in 2018. Rates were just starting to rise a bit (I think they went up 2 steps), and I was thinking that was the start of more increase to the more historical ~4-5% range. No one could have forecast a global pandemic bottoming rates out again.

But hindsight is always 20/20, am I'm very much not a gambler.

Yup just coz it didn't turn out in this instance, the choice at the time was still the correct one given the information available at the time.

It's like the scene in Swingers when he doubled down on 11. You ALWAYS double down on 11. Sure he lost that hand but doesn't mean he shouldn't have doubled down.

donk. · 01-25-2023, 01:41 PM

Quote:

Originally Posted by Great68

Is that some sort of metaphor?

Look at my signature and it will all add up

carsncars · 01-25-2023, 02:08 PM

Quote:

Originally Posted by Gerbs

80% of friends from a non finance background took variable too. Their ecision was 1.29% variable or 1.49 - 1.59% fixed.

When I took my mortgage (Feb 2021) the spread was 0.99% variable or 1.49% fixed.

I regretted taking fixed for a while as between Dec 2020 (offer accepted) and late 2021 home prices went completely insane, if I was variable it would have been real tempting to flip it rather than invest effort in renovations. The penalty would've been $40-50K.

Obviously happy with fixed now, but yeah it's basically a cointoss - I am lucky. Couldn't have predicted this and I could just as easily have been unhappy. A lot of advice at the time was to go variable and with 50 points spread and lower penalty (and a hot hot real estate market) I could see that making sense then too.

westopher · 01-25-2023, 06:58 PM

Quote:

Originally Posted by JDMDreams

Inflation is transitory they said, maybe high rates are transitory too.

But yea I won't blame the boc, as it's not their job. Their only job is to manage inflation, by messing with the rates. You should blame the gov, who blew money on cerb, arrive can, Ukraine party, don't worry bro we still got millions to give to the Americans to buy weapons for Ukraine. That will fix inflation

maybe if we sanction Russia harder or start sanctioning China inflation will come back down.

You literally have no idea what's happening on the planet if you think inflation is a product of the Canadian governments spending.

JDMDreams · 01-25-2023, 07:38 PM

So what has the Canadian government done to fix inflation besides raising rates?

EvoFire · 01-25-2023, 07:46 PM

Canadian govt doesn't raise rates.

But the feds have done nothing. Realistically there's not much they can do other than say raise taxes. To fight inflation they have to contract the money supply. The Canadian govt doesn't control the supply chain, nor do they have much control over oil prices. You can argue that they should allowed the pipeline to go through but really that may only lower west coast oil prices a tiny bit.

westopher · 01-25-2023, 08:53 PM

Quote:

Originally Posted by JDMDreams

So what has the Canadian government done to fix inflation besides raising rates?

Thanks for clarifying.

unit · 01-26-2023, 08:21 AM

Quote:

Originally Posted by JDMDreams

So what has the Canadian government done to fix inflation besides raising rates?

the bank of canada is in control of the rates not the federal government. trudeau has nothing to do with interest rate decisions.

Gerbs · 01-26-2023, 11:07 AM

Quote:

Originally Posted by Spoon

Nobody imagined that rates would rise that fast, so I feel for those who went variable. IMO, the BoC deserves some backlash in how it misguided the markets regarding long term low interest rates, so I'm surprised they're not trying to do a little more to relieve the pain for property owners.
.

But at 1.29% vs $1.59%, that's 1 hike of a difference before you break even

Historically it moves pretty quick too, over 1 - 1.5 years. But I guess majority of us hasn't lived through any recessions with a mortgage yet.

Gerbs · 01-26-2023, 11:14 AM

Quote:

Originally Posted by carsncars

When I took my mortgage (Feb 2021) the spread was 0.99% variable or 1.49% fixed.

I regretted taking fixed for a while as between Dec 2020 (offer accepted) and late 2021 home prices went completely insane, if I was variable it would have been real tempting to flip it rather than invest effort in renovations. The penalty would've been $40-50K.

https://www.ratehub.ca/penalty-calculator
^
Are you able to recreate the $40-50K penalty scenario? I calculated mine in mind before signing in Dec 2020 as well. My penalty is like $1.8K for $380K mortgage remaining.

x 4 for a house and that's still sub $7.5K?

Quote:

Originally Posted by JDMDreams

So what has the Canadian government done to fix inflation besides raising rates?

What would you do to fix inflation?

roastpuff · 01-26-2023, 11:32 AM

When I did my mortgage it was 1.15% var vs 2.05% fixed.

I went variable because it looked like the rate hikes would be slower.

whitev70r · 01-26-2023, 11:40 AM

What are your thoughts of picking up a $500-550K 1 bedroom condo in an older building (say around 2010)? Maintenance hopefully less than $300/mth, rent ~$2000/mth. So cashflow ~$20K per year on a $500K investment .. works out to be about 4% which I can get on a GIC nowadays but with this, there is any increase in property value. Worth the headache of being a landlord?

sonick · 01-26-2023, 11:54 AM

Quote:

Originally Posted by whitev70r

What are your thoughts of picking up a $500-550K 1 bedroom condo in an older building (say around 2010)? Maintenance hopefully less than $300/mth, rent ~$2000/mth. So cashflow ~$20K per year on a $500K investment .. works out to be about 4% which I can get on a GIC nowadays but with this, there is any increase in property value. Worth the headache of being a landlord?

How long would you plan on keeping it for? Personally, I don't anticipate big increases in the market over the next 2 years or so.

At this age it could be coming up to some special levies for maintenance like elevators in a few years. Make sure strata is functional and well-run.

Personally I would not want to bother being a landlord banking on 4% return.

Perhaps consider what the cost of property management would be and add that to your calculations, so that worst case you get a property management company to deal with it. Best case, that's the value of your time spent as landlord.