How can you manage crippling mortgage rates?
Some have said that increasing mortgage rates are a "slippery slope." More apt, they are an avalanche waiting to happen.
What's happening?
Any of us with a mortgage has had it pretty good. Low interest rates meant lower monthly payments, but now, the avalanche is getting ready to come. Below is a graph of historic interest rates, and I am old enough to remember the high-rate period of the late 70's. At that time, though, one did not need $1 million to get into just a basic home.
The avalanche; Mortgage rates have risen approximately 5.5% since February, 2022. The avalanche is all the homeowners who are in line for a mortgage renewal.
If you are one of those folks with a $1 million home and an $800 thousand mortgage, ready to renew, your payments are going to go up about $2,000 per month. A word of caution here; Do not take my word for it; there are lots of resources to do mortgage calculations on the Internet. Here is one for you to use to determine your situation.
Get on track to save your home.
There are things that you can do to get back on track and right now, time is money. Please do not ignore the problem. Deal with the truth and consequence. At Sustainable Circular Economy we see issues every day where people do not lie, but they do not tell the truth. We are mostly talking about politicians - and;
We seldom have discussions about the consequence. Your home is your castle; please sit down and have a discussion about the consequence. I know this is scary stuff facing that avalanche, but better to face it than burring your head in the sand.
It is not only Interest Rates
Have you gone shopping lately? A rhetorical question, I know. Government tells us that inflation is at 7%. That does not tell the true story - there we go again, not lying, but not telling us the truth.
A couple of days ago, we went to one of those large box stores for groceries. Eggs up 66%. Cheese, 47%. Chicken, 100%. Vegetables up 40%. A typical basked that previously cost $150 was $236. That is not 7%, that is a 57% increase.
And, I do not have to tell you about gas prices, home heating, and the list goes on, all while our illustrious leader takes a respite in London at a $6,000 per night hotel room for 5 nights. Then they have the audacity to justify that by saying they are giving low-income renters a $500 break and, oh yea, it is in line with what the Conservatives spent years ago. I guess that means if your neighbour committed a crime 10 years ago, that is justification enough for you to do the same thing now?
No truth and consequence; only lips moving - personally I am getting really tired of the BS. What about you? This is our lives they are continually playing with and the avalanche is just starting to roll.
So what options are available for homeowners feeling the financial squeeze?
Increasing Mortgage Payments?
Are you facing burdening mortgage payments? I feel so sorry for you. All I can suggest is, please talk about your situation and especially early with your lender. See what plan you can come up with to keep your home.
Discretionary Spending
Discretionary spending is spending that is not absolutely essential, such as going out for a meal, going to a concert or some other expense that you could do without.
How to Curb the Desire
Tough question when you can close your eyes and "feel the excitement of going out, and smell that great big Tomahawk steak. I know because I went through those emotions last night. My wife's birthday is coming up and I said let's go to - what is the name of the place that Batman lives? - I looked at their menu and did a calculation. Quickly, I said, "how about we celebrate at home?"
How did I curb the desire? I looked at what it was going to cost and we made a decision to use the money for something else - like pay our bills.
Don't we wish that politicians would do the same thing with our money too? Trudeau just gave $750 million away with no thought and at 5% interest, that is going to cost us $1.4 billion. So, he did not give $750 million away, he gave $1.4 billion of our money away - which we do not have by the way.
And every day there seems to be a new announcement of money going to "friends" offshore. Boy, if I was a government leader in a foreign country, I would be wining and dining Trudeau to get some of that free money. Lots of it seems to be being handed out and no matter what anyone says, spend money you do not have, means printing more money, which means more inflation hitting us.
What to do?
I call it "separation." No, not the separation you are probably thinking I mean; Separate your funds. Open a new bank account, one to hold the funds required for your non-discretionary spending. Putting your non-discretionary funds in that account every two weeks forces you to face the problem on a regular basis, and that in itself can be stress-relieving.
Talk to Your Lender
There are things that can be done to help you keep your home. But, each situation is different and you need to turn to where you can get the best advice - from your lender, and remember, they do not want to take your home back, they will want to figure out how you can keep paying. A lender having a large inventory of stressed homes does not do them any good
Conclusion
What do we want? At Sustainable Circular Economy, we are passionate about doing the world a world a good and evaluating options towards environmental and social sustainability within the context of a circular economy' what is good for the people, the planet and sustainability.
We support discussions based upon truth and consequence, and that is all we want.
Best wishes from all of us.
