Who, besides my MP can I complain to in the federal government?
June 6, 2022 12:30 PM Subscribe
The Bank of Canada keeps raising interest rates to try to stop inflation. My mortgage payments have gone up $400 a month. So when I got the latest increase today I thought "I'll call me MP and demand they do something...who's my MP again?...oh right. That guy who's useless because he doesn't even have a party." OK so who else can I call?
And yes I know Bank of Canada is arms length and not controlled by the government. But they need to do SOMETHING because I'm pretty darn privileged with a smaller mortgage than most and this is straining me to the limit. I imagine for many others it is much worse.
And yes I know Bank of Canada is arms length and not controlled by the government. But they need to do SOMETHING because I'm pretty darn privileged with a smaller mortgage than most and this is straining me to the limit. I imagine for many others it is much worse.
I suspect that there's nothing that can be done and that the Canadian government is aware that there's going to be a wave of bankruptcies and recession in the next five years as we try to curb inflation.
posted by DetriusXii at 1:27 PM on June 6, 2022
posted by DetriusXii at 1:27 PM on June 6, 2022
The Bank of Canada does not control your mortgage rate, your mortgage lender (probably a bank) does. The reason your mortgage payments are going up is because you have a variable-rate mortgage, which your bank is increasing because the prime lending rate is going up. Contact your bank instead and find out what the terms of your mortgage are, and whether you can refinance with a fixed rate and/or a longer amortization period (warning: a longer amortization period will mean you pay more interest in the long run).
posted by heatherlogan at 1:36 PM on June 6, 2022 [27 favorites]
posted by heatherlogan at 1:36 PM on June 6, 2022 [27 favorites]
Best answer: If you do reach out to the ministers jacquilynne mentions, you might also want to CC the relevant critics in the NDP caucus, given the leverage they have in the current minority government. Both Daniel Blaikie (Finance) and Jenny Kwan (Housing) have been very vocal about housing affordability issues lately.
posted by quizzical at 1:49 PM on June 6, 2022 [3 favorites]
posted by quizzical at 1:49 PM on June 6, 2022 [3 favorites]
I'm also a Canadian with a variable rate mortgage. Over the last two years, I've saved ~$10,000 since the rates dropped in spring 2020 compared to what I would have paid with a fixed rate mortgage. You saved money too. Now the rates are just coming back to pre-pandemic levels. They might still go higher, in which case I'll start losing money compared to a fixed rate mortgage. Over the long run, the variable rate mortgage is generally cheaper but you need to be able to weather the higher rates when they come.
You can of course refinance to a fixed rate but then your rate would go even higher -- you would essentially be paying the bank to take on the risk of higher rates (and the bank would also reap the benefits if rates drop again). This might still be a good option for you if you prefer stability in your mortgage payments.
As to who you should be complaining to, I would suggest the person who sold you a variable rate mortgage without explaining the downsides to you. My mortgage broker convinced us that variable rate would likely save us money in the long term but also showed us scenarios of what our payments would look like if rates went up. If yours didn't do the same you need a new broker!
posted by no regrets, coyote at 3:47 PM on June 6, 2022 [11 favorites]
You can of course refinance to a fixed rate but then your rate would go even higher -- you would essentially be paying the bank to take on the risk of higher rates (and the bank would also reap the benefits if rates drop again). This might still be a good option for you if you prefer stability in your mortgage payments.
As to who you should be complaining to, I would suggest the person who sold you a variable rate mortgage without explaining the downsides to you. My mortgage broker convinced us that variable rate would likely save us money in the long term but also showed us scenarios of what our payments would look like if rates went up. If yours didn't do the same you need a new broker!
posted by no regrets, coyote at 3:47 PM on June 6, 2022 [11 favorites]
If you want to sound credible when writing to any of the relevant Ministers, you may want to bear in mind that mortgage rates are still much lower than they have been on average historically. The extremely low interest rate during the first two years of the pandemic was only matched after the 2008 financial crisis. Interest rates in decades prior have been much higher. The current interest rate is still lower than it was in the year before the pandemic started. So a complaint about high interest rates may not be well received, as interest rates are in fact still quite low by any reasonable measure.
You may want to reframe your request in terms of other housing measures that the government could take. Frankly, homeowners in Canada generally are subsidized already by renters due to the various preferential tax treatments that homeowners receive and renters do not. This subsidy hurts lower income Canadians, those without family wealth, people with disabilities, etc. It would be good for our country to focus on housing measures that would benefit all Canadians, not just those who own homes.
posted by ssg at 3:53 PM on June 6, 2022 [3 favorites]
You may want to reframe your request in terms of other housing measures that the government could take. Frankly, homeowners in Canada generally are subsidized already by renters due to the various preferential tax treatments that homeowners receive and renters do not. This subsidy hurts lower income Canadians, those without family wealth, people with disabilities, etc. It would be good for our country to focus on housing measures that would benefit all Canadians, not just those who own homes.
posted by ssg at 3:53 PM on June 6, 2022 [3 favorites]
Response by poster: Yeah, I know how variable rate mortgages work and I know that though the Bank of Canada does not SET my mortgage rate, they most definitely do de facto raise it. I know that they are arms length and that government doesn't set interest levels. Nobody sold me a variable rate mortgage without explaining to me how they work. I knew how they work and I know that I've saved money over a fixed rate and I know that a fixed rate would be a much higher rate. I have a mortgage. I know how mortgages work. And I also know and have spoken to my mortgage broker about refinancing options, which of course would result in in my spending tens of thousands of dollars in fees and additional interest.
And yeah, I know that I'm not going to call and they're going to say "What? This is causing hardship??" and immediately (or maybe ever) propose a solution. But I still want to make my voice heard. That's my job in a democracy. And I don't plan to write. I plan to call.
I am sensitive to the problems of requesting relief for people who are already privileged (relative to renters in this case). I'm not sure how that would be worked out -- certainly any program put in place should be only for homes people actually live in and if higher interest rates result in landlords with mortgages raising rents, relief there should go directly to the tenants rather than flowing through landlords. I have no particular policy solution in mind as monetary policy and housing policy are definitely not my areas. My message is more "My cost of living is skyrocketing and I'm not the only one and I'm not even the worst off, so you all need to do something." I've had my place since 2010 and this is the highest my mortgage payments have ever been.
(But yeah, my parents bought their first house in 1976 , paid 18% interest and had the house paid off by 1986. I venture to say interest rates were not the only economic difference between then and now, though).
posted by If only I had a penguin... at 4:01 PM on June 6, 2022 [1 favorite]
And yeah, I know that I'm not going to call and they're going to say "What? This is causing hardship??" and immediately (or maybe ever) propose a solution. But I still want to make my voice heard. That's my job in a democracy. And I don't plan to write. I plan to call.
I am sensitive to the problems of requesting relief for people who are already privileged (relative to renters in this case). I'm not sure how that would be worked out -- certainly any program put in place should be only for homes people actually live in and if higher interest rates result in landlords with mortgages raising rents, relief there should go directly to the tenants rather than flowing through landlords. I have no particular policy solution in mind as monetary policy and housing policy are definitely not my areas. My message is more "My cost of living is skyrocketing and I'm not the only one and I'm not even the worst off, so you all need to do something." I've had my place since 2010 and this is the highest my mortgage payments have ever been.
(But yeah, my parents bought their first house in 1976 , paid 18% interest and had the house paid off by 1986. I venture to say interest rates were not the only economic difference between then and now, though).
posted by If only I had a penguin... at 4:01 PM on June 6, 2022 [1 favorite]
Ahmed Hussen is Canada's Minister of Housing, Diversity & Inclusion. His mandate includes working on an action plan to "respond to housing price fluctuations and to help ensure a more stable Canadian housing market." Maybe worth giving his office a call along with the other ministers?
posted by Gerald Bostock at 4:16 PM on June 6, 2022 [1 favorite]
posted by Gerald Bostock at 4:16 PM on June 6, 2022 [1 favorite]
I’m not sure if this is helpful information, but: this is one of the reasons that curbing inflation is really hard to do (you may have heard the term “soft landing:” slow inflation without going into a recession).
One of the few tools that central banks like the Bank of Canada have to slow inflation is raising interest rates, but that compounds the pain consumers feel from rising prices (eg inflation) by raising costs for borrowers (eg mortgage holders). So in a sense, increasing interest rates and mortgage payments *are* the government and central bank trying to do something to address skyrocketing cost of living. Programs to ease the pain of these increases are in the much more political realm of fiscal policy, so something you can absolutely communicate to your government about. Unfortunately they’re also an example of fiscal policy that would arguably work against the efforts to control inflation.
posted by MadamM at 4:20 PM on June 6, 2022 [3 favorites]
One of the few tools that central banks like the Bank of Canada have to slow inflation is raising interest rates, but that compounds the pain consumers feel from rising prices (eg inflation) by raising costs for borrowers (eg mortgage holders). So in a sense, increasing interest rates and mortgage payments *are* the government and central bank trying to do something to address skyrocketing cost of living. Programs to ease the pain of these increases are in the much more political realm of fiscal policy, so something you can absolutely communicate to your government about. Unfortunately they’re also an example of fiscal policy that would arguably work against the efforts to control inflation.
posted by MadamM at 4:20 PM on June 6, 2022 [3 favorites]
Just a note that rent control is provincial, not federal.
posted by warriorqueen at 4:54 PM on June 6, 2022 [1 favorite]
posted by warriorqueen at 4:54 PM on June 6, 2022 [1 favorite]
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posted by jacquilynne at 12:48 PM on June 6, 2022 [18 favorites]