*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[GGG]

Originally Posted by Geraldsh

Global news had an bit on the housing / interest rate conundrum. Their anecdote was a senior who bought her house 34 years ago and still has a mortgage on which she can no longer afford the monthly payments due to recent interest hikes. Thirty-four years! And the problem is this month?

She only made 4x over The past 30 years and had a home to stay in. Boohoo.

[GullFoss]

How does this lady still have a mortgage 34 years later?

[GullFoss]

I wouldn't say I'm happy about higher rates, but I do think they were much needed. Canada hasn't seen growth in per-capita GDP in 10-years, but as country we have been able to paper over the problem with low interest rates and government "tax the rich to subsidize the middle class" fiscal policies.

I'm supportive of progressive taxation in a world with increasing income inequality. But if we want to live better lives through the cycle, we need higher incomes. Not higher leverage rates.

Hopefully this will be a wakeup call to have some much needed conversations at the national level.

[Locke]

Originally Posted by GullFoss

I wouldn't say I'm happy about higher rates, but I do think they were much needed. Canada hasn't seen growth in per-capita GDP in 10-years, but as country we have been able to paper over the problem with low interest rates and government "tax the rich to subsidize the middle class" fiscal policies.

I'm supportive of progressive taxation in a world with increasing income inequality. But if we want to live better lives through the cycle, we need higher incomes. Not higher leverage rates.

Hopefully this will be a wakeup call to have some much needed conversations at the national level.

Have you seen the clowns at the national level who would be involved in those conversations?

One thinks the budget will balance itself, another thinks the rich will pay for everything and the last guy...I dont know, something about trees and wood?

And people wonder why the general public abhor the concept of higher taxes? Because these are the people in charge of spending that money. You might as well just burn it.

[The Fisher Account]

Not sure if this was the same lady that was on CTV.. but yeah big head shaker there.

Really drives home the ‘don’t retire unless your mortgage is paid off’ rule.

I can’t imagine being in my late sixties and have to reup for another 30 years just to afford to live in my house. Bananas.

[albertGQ]

Originally Posted by The Fisher Account

Not sure if this was the same lady that was on CTV.. but yeah big head shaker there.

Really drives home the ‘don’t retire unless your mortgage is paid off’ rule.

I can’t imagine being in my late sixties and have to reup for another 30 years just to afford to live in my house. Bananas.

I initially wanted to be both mortgage free and retire at age 65.

I'm currently ahead of schedule as my mortgage would be paid off at 56 years old at the current pace. If thats the case, I would like to retire at 60.

Small chance I will be mortgage free at 50. That would be a dream. I'd travel to exotic places from 50-55 using my "mortgage payments"

[Geraldsh]

Originally Posted by albertGQ

I initially wanted to be both mortgage free and retire at age 65.

I'm currently ahead of schedule as my mortgage would be paid off at 56 years old at the current pace. If thats the case, I would like to retire at 60.

Small chance I will be mortgage free at 50. That would be a dream. I'd travel to exotic places from 50-55 using my "mortgage payments"

Mortgage freedom at 56 means you can travel from 56 til 66 and longer no need to stop just because you have officially retired. Disclaimer- you may drop dead at any moment.

[blankall]

Originally Posted by The Fisher Account

Not sure if this was the same lady that was on CTV.. but yeah big head shaker there.

Really drives home the ‘don’t retire unless your mortgage is paid off’ rule.

I can’t imagine being in my late sixties and have to reup for another 30 years just to afford to live in my house. Bananas.

Could also be a sign she should have sold the place and downgraded to a cheaper one and lived mortgage free.

That being said, she may not even be able to afford condo fees. I'm assuming that she brought her current home 30ish years ago, which means the cost couldn't have been not than $150k or so. Payments couldn't really be much more than $1500/month? Also how much is left on the mortgage? $40k? Rising payments due to increases interest rates on a mortgage like that wouldn't be that extreme.

Sounds like she must have added to the mortgage at some point or maybe wasn't paying down the principle for a long period of time. Either way it sounds like they haven't factored in a relatively small increase in payments due to inflation into their retirement and/or made some questionable calls with their home financing along the way.

[nik-]

She most assuredly HELOC'd herself

[T-Dog]

This sort of narrative by the media is really irksome actually. Trying to make it seem like the policy decision is having a devastating effect on a vulnerable senior, to the point that she may lose her home. Where’s the personal responsibility for the person to pay off her house and not leverage it up with debt as the value increases, especially as a retiree? Why is it society’s fault now?

[Johnny199r]

Originally Posted by T-Dog

This sort of narrative by the media is really irksome actually. Trying to make it seem like the policy decision is having a devastating effect on a vulnerable senior, to the point that she may lose her home. Where’s the personal responsibility for the person to pay off her house and not leverage it up with debt as the value increases, especially as a retiree? Why is it society’s fault now?

Everything is society's fault now. It's never the fault of the person for anything. Personal responsibility is a concept that no longer exists for most people. It's never-ending.

[Geraldsh]

Originally Posted by T-Dog

This sort of narrative by the media is really irksome actually. Trying to make it seem like the policy decision is having a devastating effect on a vulnerable senior, to the point that she may lose her home. Where’s the personal responsibility for the person to pay off her house and not leverage it up with debt as the value increases, especially as a retiree? Why is it society’s fault now?

They even videotaped her eating a can of soup off a tv table in front of an old couch. If I remember correctly the increased interest rate added $300 to her monthly obligation- she’s in deep.

[The Fisher Account]

She also mentioned that she had to finance a new water tank because she couldn't afford the financial hit.

So retired, in her 60's and doesn't have $1000 to her name. Absolutely terrifying stuff.

I think moreso than rate hikes, we have a very financially unsavvy person blaming economic policy on her situation.

Dave Ramsey would be signaling her out as someone who sadly may be eating Alpo in her 80's (or 70's!)

[cal_guy]

Originally Posted by GullFoss

I wouldn't say I'm happy about higher rates, but I do think they were much needed. Canada hasn't seen growth in per-capita GDP in 10-years, but as country we have been able to paper over the problem with low interest rates and government "tax the rich to subsidize the middle class" fiscal policies.

This is false. Under every constant measure Canada's GDP per capita is higher in 2021 compared to 2011.

https://data.worldbank.org/indicator...N?locations=CA

[blankall]

What kind of house is she in? Baby boomers refusing to downgrade is a major contributing factor to the current housing shortage.

The idea that there are young families who can't afford housing, but a baby boomers thinks society needs to subsidize her extra bedrooms is pretty offensive.

[nik-]

Other than Vancouver, is there really a housing shortage? Or is it just single family housing shortage? Every neighborhood I see has a ton of these new neo-Khrushchyovka condo buildings going up. Surely they can't all be selling.

[blankall]

Originally Posted by nik-

Other than Vancouver, is there really a housing shortage? Or is it just single family housing shortage? Every neighborhood I see has a ton of these new neo-Khrushchyovka condo buildings going up. Surely they can't all be selling.

There must certainly is a housing shortage across Canada. Just Google it.

I would also consider circumstances that involve cramming families into undersized spacesa shortage. Yes, we are continuing to build overpriced condos.

[The Fisher Account]

Originally Posted by blankall

What kind of house is she in? Baby boomers refusing to downgrade is a major contributing factor to the current housing shortage.

The idea that there are young families who can't afford housing, but a baby boomers thinks society needs to subsidize her extra bedrooms is pretty offensive.

She’s living in what looked like a single, detached home.

[Benched]

Isn’t the reality that not everyone gets to retire?

If you don’t have $1000 to your name, even if you’re 60 whatever, and it’s “about the time people retire” - you probably can’t retire and will be working until much later in life or never be able to retire at all depending on your other sources of income. At least that’s my understanding; that retiring is a (fairly new) privledge and not something we all get to do at the same time, or with some ‘standard lifestyle guaranteed’.

[Johnny199r]

Originally Posted by blankall

What kind of house is she in? Baby boomers refusing to downgrade is a major contributing factor to the current housing shortage.

The idea that there are young families who can't afford housing, but a baby boomers thinks society needs to subsidize her extra bedrooms is pretty offensive.

I wouldn't go that far, but seniors who cry poverty living in a single detached home is annoying when they could sell the home and rent an apartment (and invest, generating income for retirement) quite comfortably with the proceeds.

Obviously, some of them refuse to consider that.