Category Archives: opinion

Bank offers you should not accept

Many Franks pointed out this article in the Financial Post, which offers a flipside view to yesterdays “do whatever it takes to scrape up 5%” article.

It has a real simple message: Banks exist to make money.  That includes making offers that sound good but may not be in your best interest.

While many people want to blame the banks or the government for Canadas alarming consumer debt problem, theres only one person who is truly to blame: the consumer.  Sign yourself up for a suckers deal and you have only yourself to blame.

While some bank chief executives have put it on themselves to tighten their own lending rules, others continue to look to Ottawa to take the lead.

In the interim, all you have to do is walk into a branch, grab some pamphlets and you will see an array of offers that could get you into even more debt trouble.

One of my favourites is the cash-back mortgage. It is offered to a varying degree by most of the major banks, so there is no point in picking on any one institution.

Here’s the offer: Take out a mortgage for more than five years and get 5% of the value of the mortgage up front to a maximum of $25,000. In other words, get a $500,000 loan and immediately get $25,000 back. “It’s great for first-time buyers,” we’re told.

Really? If the loan is at the posted rate of 5.44%, which it usually is for these types of mortgages, you could easily land into more debt trouble long term.

Another deal tries to lure me over to a new bank with an offer of 2% cash up front, or up to $4,000 on $200,000 if I switch to the financial institution. But what about the costs to break my existing mortgage, and is there really any point in switching products to get that cash right away if I’m going to end up with a higher rate and a less-flexible mortgage?

“Somebody is going to pay for it,” says Kelvin Mangaroo, president of RateSupermarket.ca, about the cost of the promises. “Sometimes there is more fine print than the actual offer.”

Check out full article here.

What do you think, do we need more consumer protection to protect consumers from themselves?

Ye’ olde rent vs. buy argument

Donald pointed out this discussion over at the SeattleBubble blog about 10 reasons NOT to buy a home:

  1. Renters don’t have to fix leaky plumbing, pay for a new roof, or buy major appliances.
  2. The moment you sign the closing papers, you lose ~10% of your home’s value.
  3. Better job offer in another city? Hope you can afford to sell…
  4. Lousy neighbors move in next door? Too bad, you’re basically stuck!
  5. Your down payment and equity are anything but liquid.

Read the rest of the list at SeattleBubble.com.  One interesting thing to consider is this list is based on a theoretical situation where home prices are at reasonable levels and supported by local economic fundamentals.  In a hot housing market where prices only go up and people fight for the right to overbid on a teardown in a bad neighborhood it’s always a good idea to buy instead of rent.  Always.

A great time to buy or sell a home

For most people a home is the largest purchase they will make in their life.  And it’s so complicated!

Now you could do a bunch of research or you could relax and let an expert tell you what to do.

Fortunately there’s a whole bunch of people that specialize in the finer points of buying and selling real estate and they form organizations to help you, the potential buyer/seller.

In the USA there’s the National Association of Realtors or NAR and they put out this great ad in 2006:

LOL on bad timing.  In 2006 in the US only one of those options was a good move.  And yes, that’s a real ad.  Found it over at Burbed with thanks to gordholio.

Sold Out!

Hey! A opening day presales condo in Vancouver SOLD OUT!

Marine Gateway, and the 415 pre-sale units that sold, is big news because at a time when listings are soaring and sales have been falling off a cliff, the pre-sales at this development have bucked the negative trend.
In fact it has completely turned that trend on it’s head.
Hmmm.

Let’s put that into perspective.

A sell-out of pre-sale condo unit offerings hasn’t happened in Vancouver in over six years.  As Global TV noted in this story, you have to go back to the Woodward’s presale in 2006 – before the collapse of the world financial markets – to match an opening day pre-sale sellout of a condo development.

Either the market is on the upswing again or Rennie is back with his marketing magic…  Although he does seem to have lost the ‘be bold or move to the suburbs’ thing.

Check out Whispers from the Edge of the Rainforest for an examination of this sell-out.