Quote:
Originally Posted by Monahammer
I don't disagree- personally I am an always lock in type, so locked in a rate prior to the fall and still have 1.5 years left to look at another term. I think it's likely to end up very near my current rate.
I'm not saying this for the people who are now in jeopardy necessarily- what I think is important here is the responsibility of people leading important public institutions. These people in jeopardy IMO are not very different than people who are convinced to throw money in a ponzi scheme.
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These regulator-types are always in a tough spot, though.
I remember when Canada 3000 (an airline in the early 2000s) went belly up. Regulators took a lot of flack for not warning then-stranded travellers that this was going to happen; however, if they had warned travellers they would have just been accelerating the problems for Canada 3000 as literally everyone would have demanded a refund and the airline would have gone tits up even faster.
I don't think the lesson here is the BoC did anything wrong. It's that people should lock in so they have predictable and manageable payments. Variable-rate mortgages have
always carried a risk. The risk is clearly explained in the documentation and
should be reiterated by the mortgage specialist, although it wouldn't surprise me if that didn't always happen.
If this rate hike has ruined people's finances then they were already taking a risk they couldn't afford to take. And honestly, in their shoes, I'd strongly be considering locking in now. These current rates are
still low. If you don't have the stomach or financial ability to withstand another rate increase you have to at least accept that you are still - today - gambling. Hindsight is 20/20...you should have locked in before, but we can't go back in time. If you can handle the new payments at the new rates, I'd consider locking in.
I have a low risk tolerance, though, so that's just me. Variable rates never interested me and I never lost a wink of sleep when rates went down because I was fine with my payments at the rate at which I signed.