Quote:
Originally Posted by macker
You can take up to two years to realize that you should lock in to a 5,7,10 year fixed rate mortgage as we won't see rates like this again for a long time. Interesting article linked below where The Bank of Canada is hinting that rates likley won't be going anywhere in the next couple of years. Of course no one knows for sure but on this issue I would listen to the Bank of Canada.
http://business.theglobeandmail.com/.../Business/home
The Bank of Canada is mandated by law to keep inflation advancing at a rate of about 2 per cent a year. That target won't be reached until the third quarter of 2011, the central bank said. |
Some of it has to do with the sub prime mortgages in the US coming to a close. It's the last of the wave that helped to create this s* storm the world is currently in.
For some not aware a quick break down (while I am not an expert I have heard this story more than once from men and women in the field)
During the Bill Clinton era a bill was passed basically saying that everyone should have the write to own a home. Because of this the USA Govt announced to banks they would insure the mortgages.
Because of this the banks soon realized that they can offer 6% mortgage rates at 2% for the first few years then charge 9% after. Not 2 percent on a million dollar house isn't much and many people over extended instead of living in their means. What this did was allow people who DID NOT have jobs (Proof of income) to buy houses. EVERYONE means EVERYONE can buy a house if they wish. After the 2 years were up the home owners then refinanced the home. This has been going on for the last 10 years. Because the Govt insured the mortgages the funds in the country or the WELL ran dry causing the real estate bubble to burst and housing to drop to crap.
Mark Herman even met a teacher from California who bought 4 houses on $50 000 a year salary and the teacher explained the whole process to him in detail of how the houses were purchased.
Canada is different as you need proof of income and unlike the states who invest up to 90% of each dollar they have, Canada invests about 70%. This keeps Canada in a much better position to recover. Our banks are actually buying US banks (TD is one of them).
IMO this is why the American dollar is artificially high. That way other countries like Canada don't buy up the property and Corporations on USA soil.
This is not verbatim but a gist.
Don't go by USA economy as China and India will be looking to buy and become our biggest traders. This is all ready starting to happen. Our recovery will be much swifter than the States and Canada is the richest country in the world because of our resources and exports. So we could start pulling out of the recession whole in a little as 6 months possibly. More likely a year. But again this is speculation.