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> They're not rich. There's no fixed 30 year mortgage in Canada, only 5 year fixed. And yet the home ownership rates are basically the same in the two countrie

> They're not rich. There's no fixed 30 year mortgage in Canada, only 5 year fixed. And yet the home ownership rates are basically the same in the two countries (~65%), and the median net worth of Canadians is higher than that of Americans: * https://www.nytimes.com/2019/04/26/world/canada/middle-class-income-wealth.html https://www.nytimes.com/2019/04/26/world/canada/middle-class... * https://www.investopedia.com/financial-edge/1012/u.s.-or-canada-which-country-is-best-to-call-home.aspx https://www.investopedia.com/financial-edge/1012/u.s.-or-can... And outside the last 2-3 years, short-term, variable-rate mortgages have been a better deal the majority (90%) of the time (especially since the 1980s with mostly-falling rates): > Many fans of variable mortgages quote research by Moshe Milevsky, a professor of finance at York University. He found that, between 1950 and 2000, Canadian homeowners would have been better off with a variable mortgage almost 90% of the time. More recently, between 2007 and 2022, the five-year variable interest rate has mostly been lower than the five-year fixed rate, sometimes considerably so. * https://www.ig.ca/en/insights/fixed-vs-variable-mortgage https://www.ig.ca/en/insights/fixed-vs-variable-mortgage

thsksbd 3y ago
1. I hardly think the US is a paragon of economic hope. But I find it amusing that a (presumably) Canadian goes straight to compare the country to the US. Nothing ever gets done in Canada until the ritual comparison is done. Very provincial mindset, inherited from Canada's past status as colony. 2. The US has always had much large underclass which Canada, to its (partial [1]) credit does not. The bottom 10% in the US are much worse off than the bottom 10% in Canada. 3. At least 10% of the US population are illegal immigrants. The US syste can hardly be blamed for having the poorest people in the world pouring in. (Though the system could be blamed for turning a blind eye to it, but that's another convo.) 4 The net wealth in Canada is a mirage. For most people its tied to unproductive, inflated assets - people's homes. Thats a very scary place to be as a society. To its credit, Canada has a (lackluster to poor) public health care system, and caps university tuition. The US has (financially) the worst medical and education system in the world. Both countries' health care systems will not be fixed until they collapse. But overall, Canada is only as secure and as stable as the US (which is not stable or secure right now). Paired with unique Canadian challenges, Im scared for Canada. Actually, Im only scared for my siblings. I really don't care for Canada more than I do any other country. [1] most of the credit goes to the UK for banning slavery much earlier than the US and not having a climate suitable for it. Also, Canada gets no credit for having tundra and the richest country in the world as neighbors.
thsksbd 3y ago
Obviously variable interest rates are lower over time - fixed term mortgages have a premium over variable and in stably changing conditions thats baked into the rate. The danger of variable rates is not that you might end up paying an extra 50 grand by the end of the mortgage. That's almost impossible. The danger is that you won't get to reach the end of the mortgage because at some point an interest rate spike makes you insolvent. A short, but sharp spike, that wipes out your savings.

thsksbd 3y ago

1. I hardly think the US is a paragon of economic hope. But I find it amusing that a (presumably) Canadian goes straight to compare the country to the US. Nothing ever gets done in Canada until the ritual comparison is done. Very provincial mindset, inherited from Canada's past status as colony. 2. The US has always had much large underclass which Canada, to its (partial [1]) credit does not. The bottom 10% in the US are much worse off than the bottom 10% in Canada. 3. At least 10% of the US population are illegal immigrants. The US syste can hardly be blamed for having the poorest people in the world pouring in. (Though the system could be blamed for turning a blind eye to it, but that's another convo.) 4 The net wealth in Canada is a mirage. For most people its tied to unproductive, inflated assets - people's homes. Thats a very scary place to be as a society. To its credit, Canada has a (lackluster to poor) public health care system, and caps university tuition. The US has (financially) the worst medical and education system in the world. Both countries' health care systems will not be fixed until they collapse. But overall, Canada is only as secure and as stable as the US (which is not stable or secure right now). Paired with unique Canadian challenges, Im scared for Canada. Actually, Im only scared for my siblings. I really don't care for Canada more than I do any other country. [1] most of the credit goes to the UK for banning slavery much earlier than the US and not having a climate suitable for it. Also, Canada gets no credit for having tundra and the richest country in the world as neighbors.

thsksbd 3y ago

Obviously variable interest rates are lower over time - fixed term mortgages have a premium over variable and in stably changing conditions thats baked into the rate. The danger of variable rates is not that you might end up paying an extra 50 grand by the end of the mortgage. That's almost impossible. The danger is that you won't get to reach the end of the mortgage because at some point an interest rate spike makes you insolvent. A short, but sharp spike, that wipes out your savings.