Interest rates

[frustrated1]

So, at christmas we could lock in fixed rates for 4 years@ 3.9%. Good. But, I was busy, the bank was busy, the whole world saw interest rates going down, staying the same at least. BOC rates came down .5, bank prime came down .5 Time to knock some fixed loans down 3% from where they were. NOT! Instead of the 3.5 I'm thinking, the programs have changed and now to lock in 4 years is 4.8%. "Forced to pay more interest to attract savings", you're socks weren't blue the day you called, left handed monkey wrenches... You get the idea. Initial check would indicate other banks have increased fixed rates as well? Our floaters went down the other .5%. Im a big boy and can take the blame for waiting for the other .5% because I was greedy but going UP 1% wasn't foreseen. Anyone else out there been shopping for fixed? Finding the same results?

[Barleyman]

I was at a bantam hockey tournament on the 24th. A Winnipeg businessman who owns and rents out hundreds of apartment suites told me that he had just negotiated a fixed five year mortgage at 3.46%.

[Hopperbin]

I would like to holler bullshit on the 5 year 3.46%. I would have to say show me.
From my checking fixed rates are more over prime than floating and the longer you want to fix it the higher over prime it is. I stayed floating for that reason.
Guess it could be time to shop around.

[Barleyman]

Holler bullshit all you want. The man owns Dorchester Developements, owns and rents out more than 20,000 apts. and is worth around 125 million dollars. When he says he negotiated for 3.46%, it is because he did. He is a virtual no-risk loan for the banks. Farmers apparently are different. Google Dorchester Developements in Winnipeg.

[frustrated1]

Our bank prime is at 3%. 3.46 is easily doable. We get .5 over on our operating and floating. Fully covered by solid assets, why not? I've been told numbers even less but have no way to prove. I realize fixed is a different game but my question/concern is if the trend for fixed is going up? And also is our's the only bank where fixed goes UP 1% when prime dropped .5?

[bucket]

the problem as I see it is this.

Since the banks have government support now - they should be at 1.5% prime rates. I will give the .5% to pay their expenses and sharholders and thats it.

Interest rates to fully secured lines should be 1.75%. There is no risk and tremendous upside to getting the economy going again.

[Hopperbin]

Bucket can you understand this?
Banks are issuing preferred shares in the 6% dividend range.
Banks are paying upwards of 8 or more on common shares.
They lend us money at 3.5 % or less.

[bucket]

Explain that hopper.

Unless I misunderstand - it means they don't need government help.

And they have alot of good loans paying very well.

[Hopperbin]

http://www.scotiabank.com/images/en/filesaboutscotia/15479.pdf

Their prefered shares pay 4.25 percent(not guaranteed)

From Page 8:

Under the Bank Act, the Bank cannot redeem or purchase any of its shares, including the Preferred Shares
Series 15, unless the consent of the Superintendent has been obtained. In addition, the Bank Act prohibits the
Bank from purchasing or redeeming any shares or paying any dividends if there are reasonable grounds for
believing that the Bank is, or the payment would cause the Bank to be, in contravention of the Bank Act
requirement to maintain, in relation to the Bank’s operations, adequate capital and appropriate forms of
liquidity and to comply with any regulations or directions of the Superintendent in relation thereto. In addition,
under the Bank Act, the Bank is restricted from declaring and paying a dividend in any financial year without the
approval of the Superintendent if, on the day the dividend is declared, the total of all dividends paid by the Bank
in that year would exceed the aggregate of the Bank’s net income up to that day in the year and of its retained
net income for the preceding two financial years.

According to this act they must make money over the past 2 years in order to pay the dividends they are.
Banks are not making money these days they are being slaughtered. Gov't money I believe is going into pay these dividends to shareholders.

[RedRiverMB]

Our farm has done well with variable rates for the last ten years, but now I am starting to lock in fixed rates for 5 - 7 years at FCC for 4.8% as of two weeks ago. The average for varaible rates for the last ten years is higher than current fixed rates, math tells me to lock in for some security to weather unpredictable times ahead. My business will survive at 4% - 5%, if it hits 9% - ?% this will be very difficult. Yes variable is extremely attractive right now, but will you be able to get a good fixed rates when the jump hits going the other way. I am about half fixed now on my loans and will look at more as the spring progresses.