Moody's downgrades Manitoba's debt ratings to negative | Page 2 | GIC discussions | Discussion forum

Loonie, this is so true that using a house or primary residence to fund one's retirement is a bad retirement strategy.

A primary residence or house is an asset but many mistake this with it being an investment that will be worth so much by retirement.

The problem is the market value at retirement and houses, real estate in general are illiquid assets that are more difficult to sell and convert to cash and other investments.

Another problem that many don't take into account is the total expenses from lawyer fees, H.S.T, real estate commission, other closing costs etc. that can easily add up to 7% to 9% of the market value of your house, condo etc.

NothernRaven, the points about Freddie Mac, Fannie Mae is a valid one. I don't know if this is true but I heard and read from 2 or 3 news sources that Fannie Mae and Freddie had the perception by investors of an implicit guarantee from the U.S. treasury but not a direct guarantee.

Also from these news sources, China owns a lot of Freddie Mac and Fannie Mae bonds. The U.S. government did not want to cause a crisis of confidence for major foreign investors from the governments of China, Japan, Europe and pension funds, mutual funds, hedge funds etc.

Fannie Mae and Freddie Mac shares did crash 85% to 90% in market value. Another important point is Ginnie Mae bonds are direct obligations of the U.S. government, treasury like U.S.t-bills, notes, bonds etc. They, GNMA (Government National Mortgage Association) bonds do have a direct guarantee by the U.S. government, treasury.

I agree with you, Jon. If the government was not backing most of the mortgages with its guarantee, then mortgage rates would be higher to compensate for higher risk of borrowers with small down payments.

Much more people could not afford to buy houses, condos etc. and this should keep housing prices lower and keep down speculation.

This would mean more affordability as people would need lower mortgage balances compared to today even if mortgage rates were 1% to 1.50% point higher.

Those that truly could buy a house, condo would be the borrowers that qualified and would raise the quality of loans, mortgages held by banks, credit unions, trust companies, mortgage companies etc.