06-05-2022, 09:05 AM
(06-04-2022, 09:40 PM)dtkvictim Wrote:(06-04-2022, 08:05 PM)clasher Wrote: Interest rates are also going up so the cheaper house will cost more on the payback... I dunno if it'll make up for the price drop or not.
I see a lot of boomer comments on housing related news articles (don't ask why I read the comments...) stating no sympathy for younger generations, because they have it so easy with 2% interest rates. Back in their day they had an uphill both ways 12% rate! They seem to ignore the fact that, especially with housing, people are only concerned with the carrying cost (mortgage payments) leading to proportional asset inflation.
You might consider this breaking even, but from my perspective, why shouldn't I favour a higher interest rate? Genuine question.
Higher interest rate means lower asset price, now it's much easier for my income (which never inflates) to save for a down payment. It generally also means higher GIC returns and higher savings account rates, making saving far more stable and risk free. At lower rates I'm pissing away my savings to inflation, or putting them into far less predictable index funds.
An interesting perspective! Yes, the monthly payments may end up being similar, but the down payments are more manageable, and the overall debt load significantly smaller.
Full disclosure: my first mortage was at about 14%, back in 1988.