Given the current state of the monetary system, buying a house on these terms is like walking into a minefield.
Canadians flocked to variable-rate mortgages in the months before the Bank of Canada began rapidly hiking interest rates this year, driving their share of the market above 50 per cent, a report by the Canada Mortgage and Housing Corporation showed on Wednesday.
“These households will see the largest rate increase because they took out a mortgage when rates were at or near record lows. This is particularly true of the historically large number of households that opted for variable-rate mortgages,” it said.
Stupid money must be purged from the economy. Overpriced housing, crypto and nft’s, dumb investments in dumb startups to remove excess money and bring inflation inline.
This is the process. If you make stupid decisions and lose then you have my thanks for helping solve the problem.
Oh I agree with you! I don’t care about stupid people and their problems. As a character on Coronation Street said, “We all have a sad story. My sad story is that I have to listen to you!”
Various financial news outlets were beating the drum at least 3 months (if not 6 months) ago about interest rates rising. If you choose a variable rate, then clearly you are “too stupid to feed yourself”.
People weren’t around for the early 1980s when interest rates were +20%.
Will we have a repeat?
I had several 5:1 ARM mortgages early in my home ownership life … which started during Jimmy Carter’s 20% mortgage rate era. But I’m not stupid and got out of them before they adjusted. Yes, it’s risky … but manageable … unless … the housing market utterly collapses. I don’t see that happening … but … the market has so grotesquely over- inflated … that maybe THIS TIME is different. We shall see.
But home ownership … the #1 way for average earners to accumulate wealth in North America … must be made more accessible. It’s still primarily supply and demand … and the supply has lagged. It’s also location, location, location … and there are only so many “safe” suburban enclaves to go around. Safe from the multi-culti malignancy.
Which is why it is reported that the Trudeau “government” is looking at taxing the “gains” from the sale of principal residences. Slow motion Marxist theft.
All “wealth taxes” are insanely immoral. And when the IRS comes for mine … I’d like to stab the agent in the neck … like the Bodega clerk in NYC … justifiable. Defending against theft and assault on my livelihood.
When borrowing in the early 1980’s I paid it back very quickly.
Two people to blame: Trudough and Freeland. Their names kinda fit what is going on don’t ya think? Government policy is to blame for all of this…no one else…no matter how Freeland tries to spin this. He and his minions have to go…and soon.
With all the talk of interest rates going up you’d think they would have switched to a fixed rate mortgage before TSHTF.
I’m on a 30 yr fixed at 2.5% … anyone who didn’t pick THAT low hanging fruit has got a screw loose.
Once the gubmint started spending like drunken sailors I locked into the longest term, lowest rate loans that I could. So now my car’s at zero percent for 72 months and my mortgage at 2.2% for five years. One of the advantages of being conservative is the ability to predict the future, especially when you’ve seen it all before i.e. Trudeau 1.0.
So what will you do when you go to renew that mortgage, and now your home equity is 25% lower and the new rates are current rate + 6.5% …
You have to cough up additional downpayment, and your new monthly payments are double what they were before.
That is where Canada will get smashed – you can’t lock in for more than 5 years, typically. In other countries you can.
I’ve long wondered about that (“You can’t lock in for more than 5 years, typically”). Why not?
When I first moved to Canada back in1975 I was shocked at how mortgages operated. (Moved back to the U.S. in 1990.)
I talked to 2 young guys in the past month who were renewing their mortgages. In both cases the bank was pushing variable- rate.
It’s flimflam promoted by the bank.
Canadians are illiterates when it comes to finances. They believe the bank bullshit.
Both guys I talked to locked in at a fixed rate. Big increases are coming in Canada starting next week. Might be a full percentage point.
Looks like I sold my house at a good time……
Yes you did … I sure wish mine was ready to sell in 2021 … 🙁
I always took a fixed rate, sometimes up to ten years at over 12%.
Look at these historical rates: https://www.superbrokers.ca/tools/mortgage-rate-history
Wasn’t CMHC set up to provide descent mortgage rates ? I thought is was their claim to fame that they stuck with 6 or 6 + per cent.
And , just as a note on contemporary times, do they really need a Pride signifier on the web page ?
https://www.cmhc-schl.gc.ca/en/about-us/cmhcs-story
I remember those days… We decided to NOT take an adjustable rate mortgage, and then watched the horror of our friends and neighbors suffering the escalating interest rates… some of them survived, a lot did not.