have you parked your saving in cash to ride..

[ayseven]

We COULDN'T do what the banks do. They literally print money in amounts they see fit. The problem is that they're not governments. Governments can print money and it is not a problem, because they are backed up by the ability to generate tax revenues. Everyone always has to pay their taxes. Not everyone can pay the bank back as we see from time to time. BIG difference between personal debt and government debt. Banks are into personal debt.

[rookiepilot]

Mortgage rates are dropping and the nearest thing to free money now.

I'm not trying to be a jerk, as I feel terrible for the job pain in the aviation sector. I take no pleasure in what I've been writing about the risks from the debt issues over the last couple of years, and for folks to get settled, cut their debts, and be prepared.

Your post displays a common, profound misunderstanding of how mortgage rates are set.

Yes, banks MAY follow and lower variable rates. MAY. Or may not.

Fixed rates are NOT set by the bank of Canada, but move in line with 10 year government bond yields.

Check what they are doing the last few days. There is no "free lunch, free money".

Educate yourself.

Adding a load of debt is the last thing I would do. But that's me.

[Mach1]

Best to just stay in the market unless you have a reason to exit such as retiring or needing the cash. As an example...



In cases like this, Time is your friend.

https://www.nerdwallet.com/blog/investi ... eraging-2/

Stay calm, if you believe in your plan then stick with your plan.

[ayseven]

Personal debt: bad.

[Pilotdaddy]

Yes, banks MAY follow and lower variable rates. MAY. Or may not.

Fixed rates are NOT set by the bank of Canada, but move in line with 10 year government bond yields.

Correct (somewhat, it's actually based on the bond market as a whole... not just govt) on fixed rates.

However, I challenge that statement on the variable... Can you give me one instance when banks did not lower rates when the BoC lowered? If you mean, sometimes they don't pass on the entire cut, then I agree... but that's not the same as your statement... Yes, banks MAY follow and lower variable rates. MAY. Or may not.

[Big Pistons Forever]

Everyone has to have a plan to manage the downside. I am in the position that I could lose the entire 100K I borrowed at what will probably be a 1.5 % interest rate, and pay back the loan and still be OK

But, It would be unprecedented in the history of world markets dating back to the 1700’s for the market downturn, which IMHO still has lots more room to drop, to not eventually recover.

Markets know only fear and greed. Eventually stocks will drop far enough that greed overtakes fear. My personal market entry point is an approximate 50 % drop from the February highs which based on the history of past bear markets will probably happen late this summer. At that point I will load up on blue chip equities with a long history of stable dividends.

My expectation is that in 3 years or so I will have the loan paid off and a nice chunk of unanticipated extra fun money.

Disclaimer. I spend my money on my women, good red wine, airplanes, and boats, the rest is wasted

[RRJetPilot]

Yes, banks MAY follow and lower variable rates. MAY. Or may not.

Fixed rates are NOT set by the bank of Canada, but move in line with 10 year government bond yields.

Correct (somewhat, it's actually based on the bond market as a whole... not just govt) on fixed rates.

However, I challenge that statement on the variable... Can you give me one instance when banks did not lower rates when the BoC lowered? If you mean, sometimes they don't pass on the entire cut, then I agree... but that's not the same as your statement... Yes, banks MAY follow and lower variable rates. MAY. Or may not.

Right now.
https://twitter.com/ronmortgageguy/stat ... 4116992006
https://twitter.com/SteveSaretsky/statu ... 5809185792

[Pilotdaddy]

Yes, banks MAY follow and lower variable rates. MAY. Or may not.

Fixed rates are NOT set by the bank of Canada, but move in line with 10 year government bond yields.

Correct (somewhat, it's actually based on the bond market as a whole... not just govt) on fixed rates.

However, I challenge that statement on the variable... Can you give me one instance when banks did not lower rates when the BoC lowered? If you mean, sometimes they don't pass on the entire cut, then I agree... but that's not the same as your statement... Yes, banks MAY follow and lower variable rates. MAY. Or may not.

Right now.
https://twitter.com/ronmortgageguy/stat ... 4116992006
https://twitter.com/SteveSaretsky/statu ... 5809185792

Yes, as mentioned already, the spread between the overnight drop versus what is being passed on to the consumer can vary - I agree. Looking at the attachment, I can't spot a point where the lines diverged.

Additionally, variable mortgages are locked at a 'prime minus' clause typically. So yes, they can offer you a measly discount prime minus 0.5 now, but that doesn't invalidate those individuals that signed up on a prime minus 1.25 ~2 years ago...

[Pilotdaddy]

This one goes further back... Spreads do change yes, but generally speaking, the BoC rate directly impacts the prime rate.

[BigQ]

I am now 90% in cash. Sold on Peak day + 2. Pretty happy about that move.

Futures down again, looking at what the Fed's QE is going to do to the markets this week.

It's all about risk. Right now the risk of lower equity prices is higher than the chance of higher equity prices.

[7ECA]

US Federal Reserve to announce immediate rate cut and massive stimulus package, in concert with other Nations. Interest rate cut to between 0% and 0.25%, and upwards of $700BN USD for Quantitative Easing.

In other news, futures are down 4% with the announcement.

[trey kule]

Two words to riches ...Toilet Paper!