Flaherty influcencing financial lenders/markets.

[Argus]

There's no evidence the prime rate will go up any time this year.

Governments around the world, heavy with debt, have no interest in seeing the prime rates rise any time soon.

[Argus]

What if the mortgage is a reasonable one? Why should an individual be punished for their good fiscal sense in getting a reasonable mortgage at the lowest rate possible?

What individuals do with lenders is not our business. What they do when we, the taxpayer are guaranteeing the loan is quite another thing. If their finances seem good and the rate is reasonable then I have no issue. I do have issue with us guaranteeing people loans at unrealistically low rates which they would not be able to pay if rates rose even a little. Since we guarantee the loans, however, the banks and other lenders have no particular care about that. That is something which has to stop.

[Argus]

Economists criticized the move but not for the reasons you state. Economists do not like income taxes and think a stable tax system needs to derive a large chunk of revenue from value add consumption taxes. If there was room to reduce taxes it should have come off income tax instead of the GST.

While I agree with all the complaints about reducing the GST, and agreed at the time, this is not really relevant to the topic of this discussion.

[Argus]

It depends on the rental situation. Some places utilities are extra. When I rented I had to pay property taxes too! Obviously all of these costs need to be taken into account but even if one does there are situations where renting is the same cost as owning.

The thing about renting is that your costs are predictable. The same can't really be said about owning your own house because anything that goes wrong creates a sudden added cost, possibly a large one. If you have limited disposable/discretionary funds and the hot water tank goes, or the furnace needs replacing, or you have to reshingle the roof, well, what do you do then?

[Argus]

From the budget, it seems Flaherty is taking a slap at the banks and their misuse of CMHC mortgage insurance. It seems evident this will cost the banks money, and I'm wondering if this is the start of crackdowns on CMHC mortages or just closing a loophole the banks were exploiting.

http://www.theglobeandmail.com/report-on-business/economy/ottawa-moves-to-curtail-housing-risks/article10111029/

[GostHacked]

The thing about renting is that your costs are predictable. The same can't really be said about owning your own house because anything that goes wrong creates a sudden added cost, possibly a large one. If you have limited disposable/discretionary funds and the hot water tank goes, or the furnace needs replacing, or you have to reshingle the roof, well, what do you do then?

That is the major difference between renting and owning a house. And you are right, any bump in the road and it becomes stressful of how to pay for that emergency repair. Shingles on a roof can be easily be a few thousand dollars and depending on roof size and complexity, it will get more expensive. IF you are handy with tools, you can pull it off for less than a couple grand for materials and save the labour costs when you do it yourself. But not everyone is a roofer and will do a good job. I've helped my dad out a couple times to save money.

Not to mention that when people buy a new home they may want to do some renovations right away to make the home their own. But with a zero down payment, one may not have the cash flow in order to accomplish that.

I do think people need to be realistic and live within their own means and adjust their lifestyles in order to accumulate some savings.

[Topaz]

Because only a certifiable idiot keeps a balance on their Credit Card.

Normally, I would agree with you, but when the down turn came in 2008-9, many lost their jobs and now with making half as much as they were, its very hard to pay them off, besides paying for a mortgage and other monthly bills. I think some people don't realize how hard some people have it.

[Smallc]

I can borrow money from my credit cards at less than 2% for a limited time...I just move the balance back and forth, and slowly pay it down. It's less expensive than the loan I had.

[shortlived]

Exactly. The provinces had a choice, they could easily have said no, but in Ontario McGuinty chose to accept it. McGuinty also had the option to ensure that we did not pay more on essentials services, e.g. electricity and residential heating -but he made another choice not to give consumers a break in that area.

There were options like investing in your own electricity and engaging in microfit which would pay back, true a middle class and upper class initiative but a way of making money off your own electricity generation none the less.

[TimG]

That is the major difference between renting and owning a house. And you are right, any bump in the road and it becomes stressful of how to pay for that emergency repair.

Yet if you are renting you can be kicked to the curb at any time. Forced moves are expensive - especially if you can't find suitable accommodation at the same price level. If you own the home you will usually have equity you can borrow against if repairs are needed - as a renter you have nothing.

[ReeferMadness]

It depends on where you live but in the more expensive cities, it's cheaper over time to rent. The problem is that most people don't have the financial discipline to save the difference. So, over time, renters will usually wind up poorer, all other things being equal.

[hitops]

looks like you found each other.

We will let you do puzzles soon, just calm down. You don't want the hockey helmet again do you?

[RNG]

It depends on where you live but in the more expensive cities, it's cheaper over time to rent. The problem is that most people don't have the financial discipline to save the difference. So, over time, renters will usually wind up poorer, all other things being equal.

After getting the first home, and getting to the point of having equity in it, I think, baring some short-term real estate slumps, home equity wins.

[shortlived]

Homes have upkeep too though. I think that really if you want equity go with products you will need, like prepper supplies.

I'm itching for an old RV as a cheap investment. They seem almost always resellable for a k or 2 even if they are decades old.

Things like food stores, you will need to eat eventually and the cost of food is going up.

There are of course cheap homes, but they are a massive risk, then you need insurance and other costs, its a bit like buying a car for its resale value, unless you are doing vintage you will get less than you put in.

If you arn't getting a truck to haul goods then you are probably wasting your money on a truck.

People are buying stuff just to coax their image, most of the crap they don't need. There are $25,000 and cheaper homes out there.

Why get stuck in a 30 year mortgage if you don't need one.

Sure you can flip real estate quickly but add in insurance costs and upkeep and utilitty bills like heat.

if you want money go with things like gold the price is always going up.. although there has got to be a cieling there are better investments than real estate, but real estate can be a winner if you can buy low, and not get locked into high interest rates

Things like solar sure has a 10 year turn around. or animals... getting yourself self reliant... growing food those are things that have return.

Edited March 23, 2013 by shortlived

[Argus]

After getting the first home, and getting to the point of having equity in it, I think, baring some short-term real estate slumps, home equity wins.

Home ownership is not just about economics. You know, when I bought my first home, it took a bit of time before I realized that every room didn't have to be painted a uniform off-white. I'd never had the thought before, that I could pain walls blue or green or yellow or whatever the hell I wanted. I hadn't had the thought I could change things, tear down walls, build a pond and plant cedars, remodel bathrooms. My whole life before that was about taking the box you rented and living with it as is. It wasn't mine. This is mine. I can do whatever I damn well please in it. And I've probably spent $100k redoing things in the last six or seven years.

Edited March 23, 2013 by Argus

[GostHacked]

Here is something interesting to add to this ....

http://www.cbc.ca/news/business/story/2013/03/26/osfi-banks-capital.html

The Office of the Superintendent of Financial Institutions has
identified Canada's six largest banks as systemically important to the
country.

The regulator says that as a result the banks will subject to
enhanced disclosure and a one per cent risk-weighted capital surcharge
—meaning they hold more assets in reserve to protect against a sudden
run on deposits— by Jan. 1, 2016.

Telling the banks they need to actually hold money is a step in the right direction. Rainy Days are on their way !!!