BoC cuts rates by another .50% | Page 2 | General financial discussion | Discussion forum

Vatox, the lost jobs part you refer to is the reason for the help referred to in Alexandre's post #9, until the virus is under control. I agree that the other step of lowering interest rates might not be that helpful. But you shouldn't have to wait long, I think this virus will blow over pretty quickly, as far as I know one Canadian in his 80s with underlying health conditions is the total death toll in Canada as of now. Bunch of media hysteria, also driven by a lot of folks happy to have yet another reason for some paid (that's key) time off work, but that's just my own cynical opinion. Time may prove me the fool.

Once again, seniors with short horizons are being punished and ignored; and higher risk behaviours encouraged and rewarded. It sounds like the last cry of the desperate. The Deputy PM said the other day that they have a whole bag of tricks to deal with the situation, but it's the same old bag that all gov'ts trot out on such occasions.
It reminds me of what happens when one's car won't start. You keep putting your foot on the gas and eventually the engine floods and you can't do anything at all.

Thinking ahead, some seniors' incomes will now dip to the point where they will qualify for GIS or more GIS or will no longer have OAS clawed back or Age Credit reduced as much. This will trickle down to other income-tested benefits and tax credits as well, All of this costs the government more money.

I read an interesting book recently and must admit I didn't understand all of it, but it seemed important. If anyone else has read it and would like to discuss, please say. Many libraries are now closed but you can still get eBooks and eAudiobooks from them.
The book is
Collu$ion : how central bankers rigged the world, by Prins, Nomi.

Thankfully policy makers get that this pandemic or this economy is not about seniors, important to focus on entire society's needs. If anything we need to assist those who are in their productive working years and those raising kids, they're doing all the work.

And if more people qualifying for gov't benefits costs too much, no problem, the gov't can always reduce or even eliminate them if it gets to that. If you need GIS and other help when you're 65 maybe you should have made better choices in the five decades or so you had time to prepare for seniorhood.

FWIW, I took Loonie's reference to be that the policy makers who are ignoring/punishing seniors and who are encouraging/rewarding "higher risk behaviours" (? - I'm presuming it's a reference to all investments that don't contain the word "guaranteed") are the "desperate", i.e. are using desperate measures.

It is easy to say stopping the spread of the virus is a better solution than cutting interest rate. The only problem is while central bank / policy maker can control interest rate, stopping the spread of the virus involves every body. Just look at how many people out there who still downplay the virus and joke about it. And even if every body takes it seriously, its NOT possible to have a totally effective / sure win solution other than total lockdown / isolation similar to China.
Even then , it took China 2 months to bring it under control. With the virus started going viral in Europe and rest of world last few weeks, it will be May/June before we can see the fruit of the government's policy of closing down schools, community center, etc etc
For the time being, government can not sit as a lame duck. Cutting interest rate and fiscal stimulus is what can indeed be done and proper. The virus can only be beat with time and people making sense of themselves.
It sucks to have low interest rate especially for net savers, but thats the reality. For those that have a mortgage, still have a job, a rate reduction is welcome and thats the majority.
And for those who budget based on a "reasonable" return of 5-6% in the past, sorry but 5-6% is optimistic and aggregsive in my mind. Yes banks and advisors used to tout 8% average return 10/15 years ago and I never believed in it. When I got my insurance policy in the 90s, advisor was showing me 8% return as illustration. I told him to run 2 more scenarios, 1 at 3%, 1 at 4%.

Shawguy said
In all of your opinions....what do you think the odds of the rate being cut further on April 15th now?

Reason I am asking is because my mortgage is up for renewal near the end of May and my bank (RBC) is currently offering me 2.54% on a 5 year fixed - only held until April 1 at the moment. Should I take it or should I wait in your opinion....

Thank you in advance. I appreciate it 🙂  

With April 1 as a deadline, wait till Monday March 30th. It is quite possible that mortgage rates will drop even more before that, when banks process BoC moves and who knows, perhaps BoC will drop rates again out of the blue this month. Also, shop around for better rates, this March should be great time for that.

As for choosing variable vs. fixed, it depends on you and your preferences. For example, when I had my mortgage and it were up for renewal, I went with 5 year fixed rate because for me it was more important to have stable mortgage payments than to gamble on rates going down even further and risking they suddenly go up. It is 5 years horizon, after all.
To feel better with my choice, I told myself "it is like an apartment rent I sign for 5 years."

In 2009 when this happened interest was nothing and I bought BMO 10,000 dollars at 20 bucks a share and it went to over a hundred 5 x my money and pays 1.06 a share every 3 months . If I had only bought 100,000 I would be retired right now.
I will pull 100,000 this time and hopefully not make the same mistake twice .All these banks pay a good dividend of at least 5%, whether CIBC ,Royal ,BNS they are all down and I don't think we have seen the bottom of this mess yet. A good way to make some money and get paid too . I can't wait to see what the rates will be next week. These banks make billions a year and have no where to go but up

savemoresaveoften said
And for those who budget based on a "reasonable" return of 5-6% in the past, sorry but 5-6% is optimistic and aggregsive in my mind. Yes banks and advisors used to tout 8% average return 10/15 years ago and I never believed in it. When I got my insurance policy in the 90s, advisor was showing me 8% return as illustration. I told him to run 2 more scenarios, 1 at 3%, 1 at 4%.  

When I was in my 20's back in the 80's, trying to plan for retirement, and mortgage rates were around 21%, 5 or 6% seemed a rather conservative estimate for a rate of return. Who could have predicted that a consecutive series of governments would dig a debt hole so deep, and young families forced to take on so much debt, that we can no longer afford to pay 5% interest rates without causing a collapse in the housing market from all the foreclosures that would happen if we did. Not to mention the government debt would explode to even more ridiculous levels. Good luck to anybody in their 20's trying to plan for a comfortable retirement forty years from now. Could be 1 to 3% will be "optimistic and aggressive" by then.

Shawguy said
In all of your opinions....what do you think the odds of the rate being cut further on April 15th now?

Reason I am asking is because my mortgage is up for renewal near the end of May and my bank (RBC) is currently offering me 2.54% on a 5 year fixed - only held until April 1 at the moment. Should I take it or should I wait in your opinion....

I agree with Alexandre...take the sure thing for 5 years. I always preferred to know for sure what my payments would be. No surprises until it's up for renewal. I would have killed for a 3% mortgage back in the day.