I have always subscribed to the mindset of ‘The 1% Difference‘. The theory being that whatever challenge, if approached with just 1% more effort than the average person, then (thanks to the magical beauty of compounding) there will be success. If not immediately, then almost certainly over the longer term.
For years whenever returning home from the gym I have always thrown in a few extra push-ups prior to showering. While at the gym I would do sets of 11 reps rather than sets of 10. (Yes I realise this is greater than a 1% difference: 1% is the baseline.)
Speaking of push-ups – Click Here – if you like a modest challenge. Join us in some very simple and very low pressure fun. (there was no official start date)
So has this extra rep at the gym resulted in an amazing physique? Not exactly, but it has perhaps allowed me to get away with consuming 1% extra at the dinner table.
And so it goes with your mortgage. Increasing your payment as little as 1% each year, or ideally 1% each quarter, will allow you to leverage ‘compounding’ in your favour.
For many Canadians, paying off their home is truly their only form of savings. Why not kick it up a notch? Save more. Save faster. Save now.
If you have received past New Year’s Eve emails from me then you have heard this all before, here is a link to specifics on the topic from a few years ago. Or just send me an email with any questions.
If you have acted on this advice in years gone by, then you are starting to see the rewards. Kudos to you!
Aside from paying down the balance faster you are also building in a buffer against the potential of rising interest rates… which leads to the annual crystal ball portion of this post.
Predictions for 2017
Property Values: Detached homes, the ones that under 1.5M at least, will see stable pricing. Likley with a modest increase in value year over year. A direct reflection of continued limitations on supply and a steady inflow of 40,000 plus new residents into BC each year.
Multi-family (Apartments, condos, townhomes) property values will also remain stable, the further west the property is, the more stable it will be. With increases year over year focused on townhomes more so than apartments, and units west of Pitt Meadows and Langley primarily. There is no sign of overbuilding or oversupply, which leads to little softening of values.
During 2017, variable-rate mortgage holders will continue to rejoice. The Bank of Canada is more likely to decrease Prime by 0.25% than to increase Prime by 0.25%. And 0.25% is likely to be the range of movement – if there is any movement at all. Steady as she goes is the most likely outcome.
Fixed rates, which track the bond market, have proven more of a wildcard, this said ‘wild’ has been defined as a ~0.25%-.50% range of motion. As with prediction’s of previous years, I believe we will end 2017 with fixed rates below 4%.
The lending landscape has significantly tightened with the Federal Government entering what can only be described as full nanny mode. Expect (still) less application of common sense around mortgage approvals, as bigger picture thinking by lenders takes a back seat to increasingly rigid underwriting practices imposed by the Federal Government.
The biggest shocker in 2017? Will be that those with the biggest down payments will actually pay higher interest rates than those with as little as 2.5% down. It will be upside down world to many a mortgage applicant in 2017.
Beware of letting ‘fast-news’ do to your brain what ‘fast-food’ does to your body. i.e. spiked blood pressure for no good reason.
Just like eating vegetables, reading (non-fiction) books can be difficult to get used to, but is so very worthwhile. Here is a stellar source for quality content that will expand your outlook, and assist with finding calm in a world of short attention spans and anecdotal hyperbolic tales.
If you are an avid reader please connect with me on www.goodreads.com and we can compare reads and reviews.
Thank you to all of you that found a few dollars to support www.beatstreetfeet.com in 2016. Hitting our target of 12,000 new pairs of socks was pretty cool!
Thank you for playing a part in a remarkable 2016, may 2017 be your best year yet!