Low Interest Rates are hammering the poor

It is a bad move to buy a house right now, but nearly every other point the OP suggests is far off.

a reply to: Nyiah

Other great things about rural properties are they often have harvestable lumber and us country folks are known to need hunting leases for that time of year, in addition to the available space to do some family style farming to put some extra food on the table.

I think low interest rates while having some benefits have some seriously damaging long term macroeconomic consequenses. Risky investments get more mainstream, all sorts of malinvestment, destruction of savers, empowering spendthrift politician, and much more. I don't know when it's going to happen or what is going to be the impetus, but the next economic crisis is going to make 2008 look like nothing, and one of the main tools of controlling shocks, lowering interest rates is not available.

originally posted by: MenWIthHugeApplause
Ludicrous bunk. It has NOTHING to do with mismanagement of finances.

A low paid worker who is suddenly not paid for SEVEN MONTHS by the Canadian Government or a single mother who has a kid who is sick or a person in a road accident might suddenly need to borrow and with the banks refusing at these level of interest rates, where do they go?

VISA, MasterCard. Banks are still happily handing those out to whoever's credit is still good. The interest rates on them, is not down.

For those of us with no savings, and nothing but mortgages, this low interest rate is great. Renewed for 5 year term at under 3% 👍🏻

originally posted by: Nyiah

originally posted by: MenWIthHugeApplause

originally posted by: Nyiah

originally posted by: MenWIthHugeApplause

originally posted by: Bluntone22

originally posted by: MenWIthHugeApplause
a reply to: schuyler

BULLSH1T! Low interest rates are a NIGHTMARE form anyone buying a house. Everything is now super-expensive, but if you do buy, you can expect your monthly interest bill to skyrocket to 20 TIMES THE CURRENT in a few months when the economy cracks.

Why would your interest change after you buy?

DUH!!! 99% of all mortgages are VARIABLE RATE.

The long run AVERAGE interest rate is 9% base rate. So, if base rates begin to move, your bank will begin to raise your interest payments - simply going to the long run average will raise the monthly mortgage bill by some 20 TIMES.

My husband and I are looking to buy in the next year or two. ARMs are not an option.
r.

Buying a house at the top of the property bubble? You need serious psychiatric help!

Compared to the state we used to live in, the state we live in now is dirt cheap. $50k for a house with 5 or 10 acres of land in the boondocks isn't overpriced by any means. What planet are YOU on?

Wow. Where do you live?

Northern Alaska?

a reply to: LifeMode

exactly, it`s better to just go and buy something with that money because the thing you buy will hold it`s value better than the money will.

a reply to: snowspirit

Actually I have a very good credit rating so I pay about 2% above base rate on my VIsa.

a reply to: jefwane

Actually I am a British citizen, living in QUebec

a reply to: jefwane

Sadly no. In Quebec, you can only chop down 6 trees a year of you face HUGE fines... no matter how big your property is. Furthermore, trees that fall down count against your total. You need a costly permit to chop any more down.

Today's cut in the UK INterest Rate is yet more gas being poured on the blazing inferno.

originally posted by: MenWIthHugeApplause
DUH!!! 99% of all mortgages are VARIABLE RATE.

The long run AVERAGE interest rate is 9% base rate. So, if base rates begin to move, your bank will begin to raise your interest payments - simply going to the long run average will raise the monthly mortgage bill by some 20 TIMES.

If you can't afford to fully pay off the house you bought within 2 years of buying it, you didn't have enough money to pay for it in the first place. A change in interest rates in that case is just the stupid tax in action.

originally posted by: Atsbhct
Absolutely no one is forced to borrow money from places like CashMoney.

That's why there's one of these places literally built into my towns only grocery store, right? To a lot of poor people (and my town is among the poorest in the US) when you get hungry you either starve, or you go to one of these places.

originally posted by: MenWIthHugeApplause
Ludicrous bunk. It has NOTHING to do with mismanagement of finances.

A low paid worker who is suddenly not paid for SEVEN MONTHS by the Canadian Government or a single mother who has a kid who is sick or a person in a road accident might suddenly need to borrow and with the banks refusing at these level of interest rates, where do they go?

If you go by what the experts say, you should have a minimum of 6 months worth of expenses in cash reserves (in a bank, not under your mattress). You should have another 18 months worth in things like CD's that are accessible on medium notice.

If you can't fully fund your life for the next 2 years, you're living well above your means. Start cutting back until you can.

If you can't cut back further, perhaps you have to face the reality that you're just not financially secure, and prepare yourself for the eventuality of living on the street, because your country isn't as prosperous as claimed.

originally posted by: Aazadan

If you can't afford to fully pay off the house you bought within 2 years of buying it, you didn't have enough money to pay for it in the first place. A change in interest rates in that case is just the stupid tax in action.

That's one I haven't heard before. I extend many things into the realm of "stupid tax", but not getting a house loan you can't pay off in full within two years.

Personally I refuse to get a loan for a house and will outright buy one when I build the pot high enough, but I don't think people getting a 15-30 year fixed rate home loan are stupid. They just have a different approach.

originally posted by: pl3bscheese
That's one I haven't heard before. I extend many things into the realm of "stupid tax", but not getting a house loan you can't pay off in full within two years.

Personally I refuse to get a loan for a house and will outright buy one when I build the pot high enough, but I don't think people getting a 15-30 year fixed rate home loan are stupid. They just have a different approach.

Standard advice is paying it off in 5 years, 2 years is much better though. Some places like Dave Ramsey will tell you not to buy unless you can pay for the whole thing in cash.

Part of the American Dream is owning a home though, so people are sold on making poor financial decisions in order to accomplish that dream. The fact of the matter is that due to stagnant wages the vast majority of people don't make enough money to ever own a home. I know I've certainly come to grips with that, my wage will never be high enough to purchase a home within 2 years.

I wasn't really calling them stupid either, society tells them to do so. They're simply being obedient. However, it's a tax on taking the less intelligent route, hence a stupid tax.

a reply to: Aazadan

I think you need to own it. If you think it's a stupid tax you're in effect calling them stupid. If someone does something that falls into my view of "stupid tax" category, I'm most certainly calling that action of theirs stupid. I don't excuse the individual for social conditioning.

a reply to: pl3bscheese

An action being stupid and an individual being stupid are different things. I'm referring to the action.

But, I'm not going to argue over the phrasing I used anymore. The point is that society conditions people to make poor financial decisions, buying a house is near the top of the list. Our current financial climate is one where most people are not affluent enough to purchase homes, but that doesn't stop the banks from financing them.

The fact is, most people don't make enough for most things. Going by the percentages you should be spending on various aspects of your life, to the person making $20,000/year the groceries needed to live are classified as a catastrophic expense. But they get a pass because... it's food.

I originate mortgages for a living. There is so much misinformation in this thread regarding home financing that I don't even know where to begin.

Do remember that there are people who have CASHMONEY debts even though they never set foot in the place thanks to legislation.

UNder Canadian Law, a husband can be held responsible for Cash Advance loans. Unfortunately, a couple of provinces, such as Manitoba passed a law which stated that if you were living with someone for over 18 months, you were automatically married to them and BACK DATED IT, IN SOME CASES UP TO FIVE YEARS EARLIER.

Hence, there are guys who had a long term girlfriend who would not stop spending, dumped them, married someone else, then a few years later, were INSTANTLY married to someone else and found themselves liable for their CASHMONEY debts of thousands of dollars and piling up at 10% a week.

Sorry... It's a zero sum game.
Zero interest rates?
Try zero saving rate.

Savings account are nothing but a pure joke. Most banks only pay half of percent. I can get a better return by just buying gold in the beginning of the year, and selling it at the end (probably) . It makes alot more sense to put it into a portfolio that you can self direct while learning and researching the market for your best returns.

Otherwise, I keep the cash and the metal at home. Capital controls have been steadily and stealthily making their way in to our banking sector.

a reply to: MenWIthHugeApplause

thats just disgusting. What the heck is going on up there in Canada lately? Been passing some seriously questionable legislation.

originally posted by: AmericanRealist
Savings account are nothing but a pure joke. Most banks only pay half of percent. I can get a better return by just buying gold in the beginning of the year, and selling it at the end (probably) . It makes alot more sense to put it into a portfolio that you can self direct while learning and researching the market for your best returns.

Otherwise, I keep the cash and the metal at home. Capital controls have been steadily and stealthily making their way in to our banking sector.

Savings accounts have their place. They're safer than just keeping cash in your home for one. For two, they represent liquid assets. You might be making 0% on your cash right now, but if an emergency comes up and you have to pay for something, it sure beats paying 15% on a credit card or as high as 41% on a personal loan.