Long (really long) term fixed rates - Page 2 - The Combine Forum
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post #11 of 62 (permalink) Old 06-28-2019, 01:59 AM
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It doesn't matter what you do because it will be wrong.
It is a gamble.
There's only one thing as bad as not locking in and seeing a sharp rise in interest rates and that is locking in for 20 years before a major recession.
Hedge your bets. e.g. 1/3 floating, 1/3 locked in for 10 years, and 1/3 locked in for 20 years.

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post #12 of 62 (permalink) Old 06-28-2019, 02:10 AM
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It doesn't matter what you do because it will be wrong.
It is a gamble.
There's only one thing as bad as not locking in and seeing a sharp rise in interest rates and that is locking in for 20 years before a major recession.
Hedge your bets. e.g. 1/3 floating, 1/3 locked in for 10 years, and 1/3 locked in for 20 years.
This is the best option in my opinion.

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post #13 of 62 (permalink) Old 06-28-2019, 03:24 AM
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Just had a similar conversation with the bank yesterday. 1, 2,3,4, and 5 year fixed were all 3.49, whereas floating is 3.95. At this point, while I acknowledge that the potential magnitude of the upside is many multiples of the down side, I still think it is more likely to go down than up within the 5 years. Was tempted to just lock it in for a year at a time and wait for a better opportunity, but in the end took the 5 year. Have other mortgages needing renewed in the interim, so if rates, drop, can always average down.

Just the fact that there is no( or little) premium on the longer term fixed rates, and that they are less than prime or floating, should tell us all we need to know about how comfortable the market is with long term rates not going up. And I have never yet met a banker who thinks rates are going down and recommended floating.

How viable is splitting up the mortgage into 2 or 3 different terms as suggested? I actually asked the very same thing yesterday, but it would require a separate mortgage for each term, including the application fee, and registering each with land titles, which adds up.

Had one locked in at 2.64 until recently, so 3.49 is a substantial difference, even if it is still a very good rate historically.

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post #14 of 62 (permalink) Old 06-28-2019, 08:48 AM
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This gives some info on what the Fed is saying. It's all BS anyway and those charts don't mean much because the Fed simply engages "in policy errors" regardless of what any data of any kind says. Such as statements like "we don't see any asset bubbles" after their last 10 years of blowing asset bubbles with ultra low rates. Couple that with the major central banks saying for 2 years now that every thing is awesome and rates are going up, to the last two months of now saying rate cuts are imminent (ECB already cutting) and you have proof that the people who run our economies and lives are truly clueless, or malicious.



https://www.zerohedge.com/news/2019-...y-behind-curve


So, given that a rate increase will blow up an economy already on the rocks from massive debt expansion, I would hope a rate cut is more likely. Keep in mind Trump is beating on the Fed to not raise rates and making them look like idiots for claiming rates must go higher and was the only one demanding lower rates a few months back. In Canada we don't have anyone to call the BS of the central bankers. But I would be inclined to bet on a small rate cut as that makes sense in the big picture. That's assuming we have fair and honest central planners of our lives. The concern is if they go full retard with the rate cuts to blow the bubbles bigger.



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post #15 of 62 (permalink) Old 06-28-2019, 09:03 AM
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Another question, should a person be paying these land prices today and even taking a loan? Or do you see a fairly significant correction coming.
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post #16 of 62 (permalink) Old 06-28-2019, 09:22 AM
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Another question, should a person be paying these land prices today and even taking a loan? Or do you see a fairly significant correction coming.
Not at these crop prices. Canola seemed to be the big driver around here. That's cooled off now with a smaller crop and smaller market.

But on interest rates, there is consensus that a rate cut is still in the cards this yr, maybe two. Those five yrs loans could get cheaper.

I locked some down 3 yrs ago for 2.84% to 3.2%. Amazing rates offered by BNS back then trying to grab ag business. Probably relock everything again this fall.
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post #17 of 62 (permalink) Old 06-28-2019, 09:53 AM
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It's usually not a good idea to throw all your eggs in one basket. I would hedge bets. Lock in some and leave the rest floating.
"The concerns which fail are those which have scattered their capital, which means that they have scattered their brains also. They have investments in this, or that, or the other, here, there and everywhere. “Don’t put all your eggs in one basket” is all wrong. I tell you “put all your eggs in one basket, and then watch that basket.” Look round you and take notice; men who do that do not often fail. It is easy to watch and carry the one basket. It is trying to carry too many baskets that breaks most eggs in this country. He who carries three baskets must put one on his head, which is apt to tumble and trip him up. One fault of the American business man is lack of concentration." Andrew Carnegie 1885.
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post #18 of 62 (permalink) Old 06-28-2019, 10:07 AM
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Another question, should a person be paying these land prices today and even taking a loan? Or do you see a fairly significant correction coming.
That's the real consideration. FAR more important than a point of interest one way or another. Right up until the fall of 1929, EVERYONE thought that the stock market can only go up. It had only gone up for a decade or more and people where buying stocks on margin en-mass. It was inconceivable that the market could go down much less crash but.......then came October and the rest is history. IMO, If you are buying land because you can make money farming it then fill your boots ( and I would go with the 20 year fixed. I'm not much of a gambler). However, if you are buying land and you are counting on the price to go up for it to make any economic sense.........., a LOT can happen in 20 years. Like i said, I'm not much of a gambler. Probably why I'm not a farmer. You HAVE to be a gambler to SOME degree to be a farmer IMO.
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post #19 of 62 (permalink) Old 06-28-2019, 10:56 AM
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You HAVE to be a gambler to SOME degree to be a farmer IMO.
Gambler? **** I feel like I am playing Russian roulette every day.

There is lots of land around here for sale at 3750-4000 and its sitting for a while now. Seems the big players are big enough. Some people actually sold some land and bought cheaper stuff an hour south.
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post #20 of 62 (permalink) Old 06-28-2019, 01:24 PM
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You HAVE to be a gambler to SOME degree to be a farmer IMO.

And being a little bit crazy helps too.


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