The Future Canadian Economy

[80watts]

The biggest item on anyones budget is housing. Either rent or mortgage.
Due to the rising interest rates (which will only go higher for the next 5-8 years) due to inflation caused by 1. First Covid, 2. Interruption of the supply stream (from China) 3. Law of supply and demand, 4. War in Ukraine. Prices for everything have gone up.

Mortgages are run on compound interest. For years the borrowing rate was at 1% or lower for a long time. Bank did not make much profit on this, they need interest rates above 3-5% to make a decent profit from mortgages. Now with rising interest rates mortgage rates are at 5 to 7% and will rise in the future.

The big thing in the Cdn economy is the power of the 5 major banks in Canada. Its a monopoly. To break it, the Cdn government should get into mortgages.

Charging only simple interest. People pay less over the life of the mortgage, making payments lower, giving more money back into the hand of the home owner. Limit to 1 simple interest mortgage per household (couple-man/wife). Not allowed for second mortgage will have to go to bank. People pay off their mortgage faster. The interest would be 5-7% simple interest for a mortgage. Lines of credit would be at bank at less than 3% compound interest, based on down payment for mortgage (2-3 time down payment). Banks would have to put more effort into business loans and car loan etc....

Trillions will go into these mortgages. The government does not have to pay interest on it (they are actually making mortgages the gold standard), they print the money and it goes into the mortgages. The properties maintain their value. Banks make a payout on current compound mortgages, and will have more capital to invest into other opportunities. The current profit banks make will go into the mortgage owners pocket and help pay off their household debt (not part of mortgage) or the extra money could go into money market funds (go fund me ), for mega projects.

At 5%.
Compound interest: For every 100,000.00 mortgage you pay 5000.00 per year on every 100,000.00. That is 416.00 interest a month/100,00.00. Over a 20 year mortgage that is 100,000.00 in interest over 20 years on every 100,000.00 of mortgage.

Simple interest: For every 100,000.00 mortgage, you only pay 5000.00/100.000.00 total over life of mortgage (till its paid off). For a 20 year mortgage that is 21.00/100,000.00 of mortgage.

The government takes a deep hit with initial output, but generate tons of money down the years by having 1. people put more money into the economy, 2. People can pay off their debt sooner, 3. future generations will also contribute to the fund, 4. Profits from this can be invested into other Cdn technologies, 5. Canadians would be investing in the long term in their country, 6. If the real estate market fails, owner can still afford the mortgage/house, 7. rising interest rates will not effect your housing mortgage payment.

After years of the banks fucking people, the people can fuck the banks.... ain't life great... Their just has to be political will to do this, which can only be stagnated by lobby groups or the banks themselves.

So the key here is to remortgage at a simple interest (through the government), any money you save in payments go towards your household debt (pay off all debt that is not the mortgage, eg. car, lines of credit etc) or invest.

 

[appleomac]

The big thing in the Cdn economy is the power of the 5 major banks in Canada. Its a monopoly. To break it, the Cdn government should get into mortgages.

Charging only simple interest. People pay less over the life of the mortgage, making payments lower, giving more money back into the hand of the home owner. Limit to 1 simple interest mortgage per household (couple-man/wife). Not allowed for second mortgage will have to go to bank. People pay off their mortgage faster. The interest would be 5-7% simple interest for a mortgage. Lines of credit would be at bank at less than 3% compound interest, based on down payment for mortgage (2-3 time down payment). Banks would have to put more effort into business loans and car loan etc....

Trillions will go into these mortgages. The government does not have to pay interest on it (they are actually making mortgages the gold standard), they print the money and it goes into the mortgages. The properties maintain their value. Banks make a payout on current compound mortgages, and will have more capital to invest into other opportunities. The current profit banks make will go into the mortgage owners pocket and help pay off their household debt (not part of mortgage) or the extra money could go into money market funds (go fund me ), for mega projects.

At 5%.
Compound interest: For every 100,000.00 mortgage you pay 5000.00 per year on every 100,000.00. That is 416.00 interest a month/100,00.00. Over a 20 year mortgage that is 100,000.00 in interest over 20 years on every 100,000.00 of mortgage.

Simple interest: For every 100,000.00 mortgage, you only pay 5000.00/100.000.00 total over life of mortgage (till its paid off). For a 20 year mortgage that is 21.00/100,000.00 of mortgage.

And I thought Jagmeet Singh's proposal to subsidize mortgages like Portugal was a laughable idea. Congrats, if the silliest/most non-sensical idea is what it takes to become leader of the federal NDP, I think you just found your new job. The Government of Canada would (at today's rate) borrow money at anywhere between 3.25 - 4.5% (depending on if was short or long term money). In your scenario, you would see the Gov't of Canada become a lender, provide loans (using your math) that yields $5k on every $100k lent out to borrowers AND that would be $5k in interest earned over 20 years. Simplistically, that is the taxpayer "earning" $250 per year on every $100k lent out over 20 years, which is about 0.25% annual interest rate while paying out anywhere between 3.25% - 4.5% to borrow the money to lend out in the first place. In other words, LOSE 3 to 4.25% each and every year on each and every single dollar lent out by the Gov't of Canada to this new mortgage scheme. Total residential mortgages outstanding in this country in the beginning of this year was (according to CMHC) over $2 TRILLION. Now, not all of that is mortgages for primary residences, some are investment houses/condos, secondary residences, vacation properties, etc.,etc., etc. That said, it is not inconceivable that mortgage outstanding on primary residences are in the $100's of billions of dollars. And for some reason, you think it's a "good" idea for the taxpayers to foot the bill on losing 3 - 4% on that potential 100's of billions of dollars, each and every year. What's potentially even more laughable is that you somehow think that "people would save on their mortgage interest and that's more money they can spend" as a solution to anything - Canada's issues right now (rent prices, housing prices, inflation) will NOT be solved by spending more or giving people cheap/damn near interest free mortgages. Cheap money, spending and constrained supply is what got us into those problems in the first place. I'm not one of those people that whine about "Canada is a dying country" or "Canada has failed" types - but mate, the more I read your posts, the more I'm starting to believe (assuming you are a by-product of our publicly funded education system) that (at the very least) our publicly funded education system has failed. But I'm the eternal optimist - our education system is fine, it hasn't failed, it has only failed you (hopefully). LOL!

 

[80watts]

And I thought Jagmeet Singh's proposal to subsidize mortgages like Portugal was a laughable idea. Congrats, if the silliest/most non-sensical idea is what it takes to become leader of the federal NDP, I think you just found your new job. The Government of Canada would (at today's rate) borrow money at anywhere between 3.25 - 4.5% (depending on if was short or long term money). In your scenario, you would see the Gov't of Canada become a lender, provide loans (using your math) that yields $5k on every $100k lent out to borrowers AND that would be $5k in interest earned over 20 years. Total residential mortgages outstanding in this country in the beginning of this year was (according to CMHC) over $2 TRILLION. Now, not all of that is mortgages for primary residences, some are investment houses/condos, secondary residences, vacation properties, etc.,etc., etc. That said, it is not inconceivable that mortgage outstanding on primary residences are in the $100's of billions of dollars. And for some reason, you think it's a "good" idea for the taxpayers to foot the bill on losing 3 - 4% on that potential 100's of billions of dollars, each and every year. What's potentially even more laughable is that you somehow think that "people would save on their mortgage interest and that's more money they can spend" as a solution to anything - Canada's issues right now (rent prices, housing prices, inflation) will NOT be solved by spending more or giving people cheap/damn near interest free mortgages. Cheap money, spending and constrained supply is what got us into those problems in the first place. I'm not one of those people that whine about "Canada is a dying country" or "Canada has failed" types - but mate, the more I read your posts, the more I'm starting to believe (assuming you are a by-product of our publicly funded education system) that (at the very least) our publicly funded education system has failed. But I'm the eternal optimist - our education system is fine, it hasn't failed, it has only failed you (hopefully). LOL!

Germany after WW1 printed money off the presses, in order to pay off war debt to the victorious Allies of WW1. This caused an unheard of increase in inflation for the German people.

Simplistically, that is the taxpayer "earning" $250 per year on every $100k lent out over 20 years, which is about 0.25% annual interest rate while paying out anywhere between 3.25% - 4.5% to borrow the money to lend out in the first place. In other words, LOSE 3 to 4.25% each and every year on each and every single dollar lent out by the Gov't of Canada to this new mortgage scheme.
Let me explain why you are wrong! Is that 3-4% compound or simple interest? You do know that the Bank of Canada can make up its own money. It lends to the Banks, and the banks add on a surcharge and call it their prime rates....usually 1% higher then the Bank of Canada. The banks then lend the money to you through car loan, mortgages etc.

Having the federal government be the bank, using simple interest, saves all Canadians on their mortgage (1 per household). Yes I said it will cost Trillions. But Canada will be paying out trillions for land claims for the Aboriginals. The trillions spent on mortgages, would have the houses as assets. The trillions come from nothing, its made up capital (You do know countries can do that didn't you?). The government does not have to borrow the money. Its assets are the mortgaged houses. The government mortgage department, makes money (by interest on mortgage) that can be reinvested (not put into general revenue). It doesn't seem like much but over time (100-300 years) it will be a worth billion/trillions. In the long term house prices still will go up.

Now for the banks, who make much of their money from mortgages using compound interest (Yes over half the money you paid on your mortgage was interest). They won't lose money, why because they can still use compound interest loans for cars, businesses etc. Also because most Canadian Banks are headquartered in Countries that don't have tax treaties with Canada. Canadian Banks don't pay their fair share of taxes to the government; so fucking them over is OK. https://piggybank.ca/banking/biggest-bank-in-canada

The money people save should be used to paying off other debt like lines of credit, car loans, business loans. Always pay your self first. RRSP or tax free accounts.

Investment opportunities that the Cdn government could have: (shit Canadians will need in the future)
1. High speed rail between all major Cdn cities. Run off solar or wind power.
2. Creation of a across Canada electrical grid. Not just each province to that US states.
3. Creation of water pipe line from the coast to the interiors for farming.
4. Canadian megaprojects (space exploration or mining for rare earth metals), clean water, better infrastructure (subways for all major cities), hiking trails, summer camps for kids, hands on skills training for high school kids etc.
5. Creation of a across Canada cheap wifi so you don;t have to pay outrageous sums to shaw, rogers, telus, bell etc....
6. Go fund me for building winter hothouses to supply fresh produce for typical cdn winters.

As for education system, I went to public school and even college. I found that the systems you are in only teach toward what is needed in those areas of study. The reality is that you do not get a all round education, because every system is flawed. So the education system is very flawed, it depends on money. When school boards cut money, its cuts extracurricular courses, like art, music, trades training or sports activities. At the college level you get core courses for whatever program you are in, not general life activities, to help you cope with life (budgeting, financing, life skills, investing). Unless you attend a university in you home town and live with your parents, you most likely have to take out student loans for living in another city. And to pay tution. You start paying compound interest on that after your schooling stops.

The problem I see is that every body is greedy for this thing called money.

If you have it, you lend it out (at compound interest), if you don't have money you borrow it.

Most people in Canada have to borrow their money at compound interest. Over half the debt of a mortgage is interest payments (over years of the mortgage). You are selling your soul to get a mortgage, in order to pay off your house. Compound interest is set up to make economic slaves of people holding the mortgages. At one point in history the Catholic church condemned using compound interest. Why? Well mostly because people back then people would of paid more attention to paying off the debt, then tp worship in a church... How times have changed.... Now all we do is worship the money, to pay our debts... so ironic....

The Government of Canada is in my opinion, is to help all Canadians. Which they rarely do. The government of Canada is run by the big banks, the privy council, and the senior civil servants in each department. These people are run by the lobbyist fractions and other groups with interests outside of the Canadian citizens who voted. The government is not run by your voting in a MP. Your vote only elects an MP (from whatever party), but parliament is run by a 2 or 3 system party system who is influences by these lobbyists. The magic of smoke and mirrors....

So Applemac do you own bank stocks, is that your objection to having simple interest on mortgage? If you can't see the whole government system is rigged against its citizens, you are very fucken blind. If you are thinking "thats the way it is", think outside the box. Maybe you should ask "of all the mortgages, what is the % paid off on every mortgage"; I think that most mortgages outstanding owe less than 50% on their mortgage.

As for CMHC: basicly protects the lender (the banks)/ If you don't have enough down payment (20% of house price) you have to pay it. (and cmhc is not available for houses over 1,000,000.00)


What is CMHC? And what does it have to do with my mortgage?
April 4, 2015
The Canadian Mortgage and Housing Corporation, better known as CMHC, plays an important role in helping Canadians buy a home.

CMHC has been around since 1944, when it was created by Parliament to provide low-cost housing and affordable mortgages to World War II veterans returning after the war. Today, among other things, it provides mortgage insurance for buyers who otherwise might not be able to buy a home.

People sometimes get mortgage insurance confused with life insurance that covers your mortgage in the event of death. While this sort of life insurance protects your family by paying off the mortgage, the mortgage insurance provided by CMHC protects the lender and thereby allows you to provide a lower down payment when you buy a home.

But first, let’s step back and explain what a mortgage entails. Basically, a mortgage is a loan that you use to buy a home. When you sign a mortgage contract, you are signing a legal agreement to repay the loan, plus interest. Your home acts as security on that loan, and if you stop making payments, the mortgage lender can take possession of the property and eventually sell it.

That can lead to a loss for the lender if the sale price of the home doesn’t cover the balance of the mortgage. And a lower down payment increases the risk of such a loss.

That’s why mortgage insurance is mandatory in Canada when your down payment is less than 20 per cent of the value of the mortgage. CMHC provides mortgage insurance to protect the lender against the risk of a default, and as a result, lenders are willing to provide mortgages to buyers that otherwise might not qualify.

In addition to CMHC, there are two private mortgage insurers providers: Genworth Financial and Canada Guaranty Mortgage Insurance.

The premium for mortgage insurance is the same for all three providers. It ranges from 1.80% to 3.15% of the mortgage amount, depending on the amount of your down payment. Although the premiums are the same, the three insurance providers sometimes have different approval criteria.

The insurance premium is typically added to the amount of your mortgage. For some buyers, there are alternatives available to reduce or even eliminate the need for mortgage insurance, but that is a discussion you should have with your advisor, such as a mortgage broker.

Your real estate professional may refer you to mortgage brokers who can do all the legwork and find the best rate for your mortgage. Your mortgage broker can also help arrange for the purchase of mortgage insurance from one of the three providers if you don’t have a 20 per cent down payment. You can also work directly with the lender of your choice.

 

[appleomac]

...most Canadian Banks are headquartered in Countries that don't have tax treaties with Canada.

I was going to write out everything about your response that demonstrates that you clearly don't understand banking, how the BoC works, etc. But the above quote right there. That's all anyone would need to see how delusional and out of touch you are.

 

[Uncled]

I was going to write out everything about your response that demonstrates that you clearly don't understand banking, how the BoC works, etc. But the above quote right there. That's all anyone would need to see how delusional and out of touch you are.

 

[licks2nite]

Canadian economy in the rest of the world. FBI and DOJ not working properly deserves more thought. Clown shows meant to distract in the same manner as controversy meant to distract from allegations of CIA hatred for President John F Kennedy clamping down on mafia doing hits for CIA, and plans to end the US Federal Reserve Bank, the vehicle by which moneyed interests control the US economy and hence much of the world with its reserve currency. JFK's nephew currently assaulting the Deep State. Draining the swamp to expose the creatures of the Deep State. A demonic evil. Apartheid Israel. Imposters occupying the Holy Land. Obama's Nuland and her husband ousting and bringing obnoxious regime change in Ukraine provoking war with Russia. 16,000 murdered by crass, smutty, coke-snorting Zelensky in eastern Ukraine prior to Putin's Special Military Operation. Canadians don't need to be doing favours for the neferous aims of Empire. Dragged into World War ll after Britain and France signed Munich Accord committing themselves to war. Dragged into attacking Serbia to provide homeland for Muslim allies from Afghanistan. Dragged into attacking Libya unleashing waves of migrants inconveniencing European economies and day-to-day living throughout Europe for billionaire George Soros' future plans of a larger work force. Canadians need to attend to their own affairs and the goings on in Canada. US trade unions active in Canada goaded Canadian trade unions into pricing Canadians out of manufacturing jobs in the '70s that sent good Canadians and careers away. Canadian aircraft industry collapsed when US industry convinced Canadian PM John Diefenbaker that ballistic missile technology made aircraft obsolete in 1958. Diefenbaker cancelled the Avro Arrow sending skilled Canadian engineers to the US space program that didn't even exist yet. Obscure taxes stifled Canadian manufacturing ability to compete both at home and abroad.