![My local small town bank manager told me this morning that there has been a massive shift in the number of accounts on thin ice, people kiting checks, people seeking short term loans, and accounts overdrawn. She said in 22 years she has never seen it like this. [1024x984 - 128KB]](https://pic8.co/sh/mmay6Z.jpg){kind=link}
We're in a pretty good neighbourhood (average house prices $2 million plus... not ours - I wish - but others) and I remember talking to my postman a few years back. He was saying it was amazing that if you looked through many of the windows of the houses on his route, they were basically empty. They couldn't afford furniture. Also, always a pile of pizza boxes out every garbage day.
Two new leased BWMs in the driveway, two million dollar mortgaged house, but just scraping by. Barely.
Those people are fucked if this lasts very long. It could get very, very ugly. This isn't the sub-prime crowd of 2008. These are over-leveraged professionals who were just making it before Biden and Trudeau. (I'm in Canada.) What happens when they go under water?
We're in a pretty good neighbourhood (average house prices $2 million plus... not ours - I wish - but others) and I remember talking to my postman a few years back. He was saying it was amazing that if you looked through many of the windows of the houses on his route, they were basically empty. They couldn't afford furniture. Also, always a pile of pizza boxes out every garbage day.
Two new leased BWMs in the driveway, two million dollar mortgaged house, but just scraping by. Barely.
This is why house prices go so high. Banks give loans that people can't afford then pass the loans to gov't orgs so they don't care if it never gets paid, the got paid. I've seen people tie up all their money in loans all the damned time. Boo hoo when interest rates go up and they owe more than they make.
Boo hoo when interest rates go up and they owe more than they make.
I don't understand anyone who takes a variable rate loan of any sort. The interest rate for my mortgage is 2.6% and is fixed for the life of the loan. Doesn't matter if the Fed jacks rates to 20%, I'm paying 2.6%. My mortgage is also only about 1/8th of my monthly income after taxes.
> I don't understand anyone who takes a variable rate loan of any sort.
The short of it is that, in some cases, it's MUCH cheaper. My last home mortgage was a 10:1 ARM (fixed for 10 years, then adjustable for the last 5 years) and I compared it against a fixed rate 30 year. The 10:1 would be paid off in 15 years with roughly 1/3rd the interest penalty if paid on schedule. The monthly cost was roughly the same (I think it was less than 1% different), but the Total out of pocket was significantly different.
The part that you must understand is that after 10 years of paying on the mortgage, when it adjusts, it does so on the remaining balance and there is a Maximum it can adjust in both a 1 year and a 3 year timeframe. In my case, the resulting (maximum) change in payment was something like $12/month. I didn't make it to 10 years before the loan was paid off.
Not all variable rate loans are the same though, you have to know what the fuck you're dealing with, but I've yet to meet a loan officer who wouldn't explain the differences. Mine was an "in-house" loan product of a small local bank (6 branches?)
I think the more important thing is the mortgage as a percentage of your disposable income. 12% is Amazingly low, we aimed for 20~25%, every lender in the country will allow 33% and we've been told we could get as much as 45% (800+ credit scores). Actually, our real goal has been to keep total expenditures under 50% our income.
This is what I have to remind myself when I see people out there "making it"
Reminds me of this anon: https://files.catbox.moe/kgao7e.png
(post is archived)