01-21-2015, 08:50 AM
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#1
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Scoring Winger
Join Date: Sep 2014
Location: Calgary, AB
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Bank of Canada cuts key rate by 0.25%
The Bank of Canada unexpectedly cut its main interest rate by 0.25% from 1.00% to 0.75%.
This is great news for Variable Mortgage rate holders, students loans and lines of credits as Prime should follow... and drop from 3.00% to 2.75%.
NOTE that Prime is adjusted by the lenders. Typically they follow suit but not always... will post once we get word from at least one lender.
For anyone with variable loans/ mortgages... keep payments the same or higher and take advantage of paying down the debt quickly.
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The Following 2 Users Say Thank You to Mortgage Made Easy For This Useful Post:
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01-21-2015, 08:53 AM
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#2
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Franchise Player
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LOL, 80 cent CDN dollar. Damn.
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01-21-2015, 08:56 AM
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#3
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Franchise Player
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Party time?
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01-21-2015, 09:22 AM
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#4
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My face is a bum!
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Why???
How does this help anything?
Do they actually think consumers borrowing even more is going to help? How will they ever get it back up when things like this encourage debt levels to increase? Aren't they just shooting us in the foot when inflation gets out of hand and rates NEED to react in the future?
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The Following User Says Thank You to Bill Bumface For This Useful Post:
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01-21-2015, 09:24 AM
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#5
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Scoring Winger
Join Date: Sep 2014
Location: Calgary, AB
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Wow... the 5 Year Bond Yield fell below 1.00% and is currently sitting at 0.799%.
Dollar is down to $0.8121.
Get ready for a roller coaster ride.
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01-21-2015, 09:26 AM
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#6
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Franchise Player
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Quote:
Originally Posted by hulkrogan
Do they actually think consumers borrowing even more is going to help? How will they ever get it back up when things like this encourage debt levels to increase? Aren't they just shooting us in the foot when inflation gets out of hand and rates NEED to react in the future?
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You know they don't really do it for consumer rates, its more-so on the commercial end to spur investments(spending).
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01-21-2015, 09:30 AM
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#7
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Franchise Player
Join Date: Aug 2012
Location: Seattle, WA
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Is this a good time to increase the amount paid against my mortgage? I am on a 5 year variable.
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The Following User Says Thank You to DoubleK For This Useful Post:
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01-21-2015, 09:32 AM
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#8
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Franchise Player
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Quote:
Originally Posted by DoubleK
Is this a good time to increase the amount paid against my mortgage? I am on a 5 year variable.
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Do you mean increase the payments or lock in at a low rate and leave the payments the same?
At these rates you're going to beat your mortgage interest rate pretty easily by investing the extra money in the market.
__________________
Quote:
Originally Posted by MisterJoji
Johnny eats garbage and isn’t 100% committed.
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01-21-2015, 09:34 AM
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#9
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Franchise Player
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Quote:
Originally Posted by DoubleK
Is this a good time to increase the amount paid against my mortgage? I am on a 5 year variable.
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What Nik said. Now keeping cash on hand is cheaper, so you're better off paying less (if you can). Pay off more when interest rates are higher.
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01-21-2015, 09:36 AM
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#10
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My face is a bum!
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Quote:
Originally Posted by Ducay
You know they don't really do it for consumer rates, its more-so on the commercial end to spur investments(spending).
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It seems there should be a way to decouple commercial and personal lending rates, as people just get dumb with low interest. Mind you so do governments. It all just seems like a pretty bad sign of things.
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01-21-2015, 09:40 AM
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#11
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Franchise Player
Join Date: Aug 2012
Location: Seattle, WA
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I didn't mean to lock it, I meant to raise the payment amount so I'm paying more of the principle down because the rates are low.
How does one figure that out vs increasing RRSP contributions.
Currently, I increase RRSP contributions at the same rate as my salary increases.
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01-21-2015, 09:42 AM
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#12
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Franchise Player
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Quote:
Originally Posted by DoubleK
I didn't mean to lock it, I meant to raise the payment amount so I'm paying more of the principle down because the rates are low.
How does one figure that out vs increasing RRSP contributions.
Currently, I increase RRSP contributions at the same rate as my salary increases.
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Take the extra money and invest in a stable blue chip that pays a decent dividend. A Bell for example ... or something else.
__________________
Quote:
Originally Posted by MisterJoji
Johnny eats garbage and isn’t 100% committed.
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01-21-2015, 09:55 AM
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#13
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First Line Centre
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Seems like a good time to pick up some undervalued, dividend paying energy stocks on margin.
Last edited by Zarley; 01-21-2015 at 09:57 AM.
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01-21-2015, 09:56 AM
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#14
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Franchise Player
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Quote:
Originally Posted by DoubleK
I didn't mean to lock it, I meant to raise the payment amount so I'm paying more of the principle down because the rates are low.
How does one figure that out vs increasing RRSP contributions.
Currently, I increase RRSP contributions at the same rate as my salary increases.
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I think the standard answer for that is to max your rrsp contributions and use the resulting tax savings to pay down debt...your most expensive debt first (credit card or unsecured loans) then your mortgage.
Things are a bit different now with a tfsa. If you can, make sure that's up and running with some dividend or interest baring holdings. Any US dividend paying stocks should be held in your tfsa. Simply holding cash isn't the end of the world now either.
If you're wondering if your return in your rrsp will be better than the 3-4% you're paying on your mortgage, that's anyone's guess.
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01-21-2015, 10:05 AM
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#15
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First Line Centre
Join Date: Jun 2011
Location: Edmonton
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I think you are crazy to put money in an RRSP if you have credit card debt. At 18-25% interest on the cc debt you will never make that inside your RRSP.
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01-21-2015, 10:15 AM
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#16
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Powerplay Quarterback
Join Date: Jan 2008
Location: Calgary
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Quote:
Originally Posted by OMG!WTF!
Things are a bit different now with a tfsa. If you can, make sure that's up and running with some dividend or interest baring holdings. Any US dividend paying stocks should be held in your tfsa. Simply holding cash isn't the end of the world now either.
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Just an FYI on holding US Dividend paying holdings in your TFSA. The dividends are taxed before you receive your dividend.
However, holding US dividend paying holdings in your RSP account will give you dividend payouts tax free.
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01-21-2015, 10:16 AM
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#17
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Scoring Winger
Join Date: Sep 2014
Location: Calgary, AB
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Quote:
Originally Posted by DoubleK
Is this a good time to increase the amount paid against my mortgage? I am on a 5 year variable.
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There is definitely a balance to what to do with extra / discretionary money.
I would definitely keep your mortgage payments where they are or higher depending on your overall financial plan and current debts (paying of high interest debt is also good to get our of the way first).
One of the strategies we suggest to clients on variable, is to set payments as if they took a fixed rate. The difference goes to principal and you take advantage of the low rates. This also sets a budget and then do some investing, savings, etc.
If Bank of Canada raises the rate, then you can allow the payment to absorb the interest increase or better yet, increase your payment to maintain the spread. Again this suggests that your budget and financial situation is still good.
Everyones situation is different and understanding your overall financial will help you determine your best options.
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01-21-2015, 10:23 AM
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#18
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Franchise Player
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Quote:
Originally Posted by GP_Matt
I think you are crazy to put money in an RRSP if you have credit card debt. At 18-25% interest on the cc debt you will never make that inside your RRSP.
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From the numbers I've seen, roughly a quarter or a third of half of Canadians carry a credit card balance. Seems like a freaking crazy high percentage to me but then again, we do carry a crap ton more debt than Americans or even the Greeks.
Borrow more baby, keep borrowing! It's free!
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01-21-2015, 10:29 AM
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#19
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Franchise Player
Join Date: Nov 2009
Location: Section 203
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Quote:
Originally Posted by Mortgage Made Easy
For anyone with variable loans/ mortgages... keep payments the same or higher and take advantage of paying down the debt quickly.
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So mortgage money is the cheapest it's been in 4 years, and you want people to keep the payment the same? I don't get it. Why not lower your payments and use this money to invest? For those that have credit card or other debt, wouldn't it make sense for them to pay down those? I understand want to get out of debt, but there are many valid reasons why you drop your payments now with the interest rate drop, especially when mortgage interest is not calculated in advance.
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Jesus this site these days
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He just seemed like a very nice person. I loved Squiggy.
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I should probably stop posting at this point
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01-21-2015, 10:33 AM
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#20
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Franchise Player
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Quote:
Originally Posted by bomber317
Just an FYI on holding US Dividend paying holdings in your TFSA. The dividends are taxed before you receive your dividend.
However, holding US dividend paying holdings in your RSP account will give you dividend payouts tax free.
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Oh damn. I meant to type RSP not tfsa for your US dividends. My bad. Defeats the purpose of tax free.
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