You have to look anywhere but the mainstream financial media for accounts like this. There’s a tsunami coming in the Canadian mortgage market, but almost no one will recognize it until it hits.
Twitter thread here.
You have to look anywhere but the mainstream financial media for accounts like this. There’s a tsunami coming in the Canadian mortgage market, but almost no one will recognize it until it hits.
Twitter thread here.
And that’s why once Trudeau was re-elected I locked in the mortgage at 2.18% and jumped at the 0% financing on the new car. The apple doesn’t fall far from the tree. Wait until you see the double-digit mortgage rates we had under Trudeau 1.0. How did people handle that? Easy: just walk away from your home and hand it back to the bank. Sunny ways — growing the economy from the heart out. Stupid is as stupid does.
It won’t just be ppl with variable rates. It will those with fixed rates whose terms come due. Could be a significant speed bump. Like driving in Mexico. Tope!
I bought a revenue property with a fixed rate mortgage at 18% in the early 80’s. I could make a profit at that rate and was afraid rates could go higher. Needless to say I paid it off as fast as possible. Private mortgage with no penalty for prepayment.
My, maybe misguided, approach to zero interest car loans is to avoid them. The ones I’ve looked into charged more for the car with “zero interest” than for cash or third party loan. The implication is that the interest is front loaded. If you pay off early they already have their interest.
Cur
I always pay cash for cars, never go payment, unless I can write it off, as when I had my own business .
I bought a new car with zero percent interest in March of this year.
I look forward to seeing what prices are in 2027. We’ll see if you’re right.
Was the cash price the same as the zero interest price? If so might make sense if you’re into borrowing for vehicles.
Rep
Same here.
Was mostly pointing out the usual illusion of the dealers’ “zero interest”. Always best to do the arithmetic. Especially when dealing with car dealers.
Rule of thumb is to never take on any debt which is not self cancelling i.e. debt that pays for itself. Exception might be when first starting out or when starting over and you need vehicle to get to a job and there is no public transit. In that case you borrow to buy the cheapest, reliable car that will get you to work and back.
That said in 1971 I borrowed to buy a new compact car one month into my first long-term job (lasted 17 years) because the payments were way less than the regular repairs on my old junker. Most cars since then have been purchased new and most for cash. I keep them a long time.
After the new car I had my dental cavities filled. Then bought a good pair of shoes (Nunn Bush) without holes in the soles.
Priorities! 🙂
Curmudgeon
“..Most cars since then have been purchased new and most for cash. I keep them a long time…”
Yep, keep fixing them – treat em right and you will eventually get your moneys worth. Case in point. 2006 GMC 2500HD SLE Duramax-Allison: 618,370 on the clock. Pd $38,995 in Feb 07 – 51k kliks on the clock (new is over 100K)
Just replaced Power Steering pump & the Steering box, next up Drivers side Cognito Bolt in Ball joint along with the lower… yea, near a grand in parts and a small bit for labour. But it runs like a top – good fer another 1/2 million I figure and LEAGUES Cheaper than a new or even semi decent used truck…
it’ll likely outlast me.
My parents survived the depression & WWII on their doorstep…some of that frugalness and willingness to learn how to do things on my own I owe to them. My mom was the mechanic of the house…lol, she was a master of Carburateurs..!!
I remember 1980-1986 CLEARLY. No Jobs No Money and 18-22% interest. But houses were 45k.
Sitting here in my condo with fixed rate of 1.45%
2 Years 3 months to go.
Tis why I am re-entering the Pipeline Welding Inspection sphere.
Money is awesome & I’m a thinking it would be lovely to pay this shit off…without penalty….just give em what’s owing the day it comes due. After of course, taking advantage of prepayments in the meantime.
1k a week should help..?
Pipelining is not for the faint of heart…But inspecting on them is awesome.
Ramen..?? WTF is that.??
pah…I married an Italian – for good reason.
Steakman
I tend to chicken out around 300k Kms but that’s just getting started with a good diesel. I was sitting in BD Engineering waiting room while they did the annual service on the transmission I replaced the biodegradable Ram original with. A guy came in and asked their advice on various trucks he was looking at purchasing. One diesel had 400k Kms. “It should be fine. Maybe getting where you’ll need new injectors. That will cost you $x, “
You just described reality of 1982!!! My parents “just walk away from your home and hand it back to the bank” put what they could into a moving truck and left the keys for their house and their trucking business on the kitchen counter. They had the long version of bankruptcy back then and were not able to start over until 10 years later, no money for further education meant taking lots of retail and sales jobs that rotated often. We grew up poor but my parents were good at hiding that from the 2 of us, until we went to a classmates birthday or when having “flood pants” was not accepted by high school kids. I couldn’t afford to go to college and my parents couldn’t help me. Done ok as an adult without post secondary, but now dreading that I too will be repeating my parents past thanks to a mortgage (though MUCH lower than many) that comes due next fall. Of course interest rates will follow Truedont like it did his father and I might also have to put the keys on the counter and walk away.
A $900K mortgage suggests he should have bought a more modest home. Just sayin’.
In TO $900K probably WAS a modest home if it was purchased just in the last 1-3 years.
I.M.
My young freind just bought a modest home in TO, 1million smakers. Not bad for a 23 year old!
I would think of relocating to a smaller City with lower housing costs??
Canada’s very own Mark Carney’s “green” interests run into a little trouble. But of course, I’m sure we all understood Mark’s real green interests.
https://wattsupwiththat.com/2022/09/26/bank-of-england-governors-net-zero-asset-alliance-crumbling/
You have a $900K mortgage when you looked at everything through rose colored glasses.
I remember the 12% interest rates(and higher) of the 70’s. People lost their homes.
Thanks Trudope you screwed us over like your father.
Teaks
12%…??
Try 22..!!
Back in the day…
Glad my mortgage is paid off. Glad we didn’t max out our gross debt service ratio. Glad I always paid cash when buying a new vehicle. Glad we never financed essentials, lived within our means and instilled this in our son. Should be some good deals on real estate and recreational toys next year.
Damn straight.
Well done! That is our MO as well. And for that I thank Mom who grew up during the Great Depression and imparted a great deal of wisdom. One saying of hers was,” make sure your home is paid for when you retire”.
I did without the fancy vacations and expensive cars,and owe no one anything.
Eskimo
Yup, and I’m keeping my assets liquid!
Totally agree………We moved from BC( bring cash) after selling our over priced home for 1M and bought a brand new home in AB for $600,000.00……cash in the jeans and feels good
American here. Why do Canadians use so damned many variable rate mortgages? and for such short terms too?
I can see some people using them. I did. The first mortgage I had was a 7 year variable. I moved in year 4 anyway.
We only have so many options. Damn lucky to find a bank that locks in fixed at more than 5 years. Wasn’t a thing 4 years ago when I got mine. People were playing the variable rate gamble when that rate was a good 2-4% lower than a 5 year fixed. Was more rare to find amortization over 25 years but 30 could be found if you tried hard enough. In order to keep the house priced rising there were a few banks that ventured into the 10 year fixed term but again rare and most people wouldn’t qualify at those higher rates.
I don’t get why so many Americans sign for a 25-year term. Shorter terms are far more flexible, allowing you to radically adjust the conditions of your mortgage as your life changes.
Because the out to break the mortgage is usually only about 3 months? Doesn’t matter if it’s a 1 year or 5 year or 25 year.
the difference being is that no bank here is allowed to do anything beyond 10 years, and it’s very hard to qualify for those.
So he’s paying $4981 and if he locks in at 5.36% it will be $5421, he might want to consider that extra ~$500 as insurance since the Turd has 3 more years to fugg things up – and he will. Not sure what equity he has in the house but it is rapidly eroding as the rates go up. It was inevitable once they started printing money and giving out the CERB as well as all the freebees to foreign countries. Hope this guy collected the CERB at least.
The ultimate mug’s game: interest rate predictions. When deciding on a mortgage you should assess the payment should interest rates increase by several points; this had never been more important than during this unprecedented period of severe rate repression in place since 2008.
I haven’t had a mortgage balance this century but I ALWAYS rejected the variable rate option in favour of a 5 year term. During the great disinflation I was usually above the variable rate but it mattered not one whit to me. I considered the differential an insurance premium. I had my contracted payment and it would not change for 5 years.
Not for nothing did my oldest daughter dub me a “belt and suspenders” man. My conservativatism extends way beyond politics.
UGH, conservativatism. You know what it should be.
That’s what you get doing an edit in the final 5 seconds.
X, I dunno, “conservativatism” has a nice ring to it. I also like the “belt and suspenders man” bit as well.
I got real lucky, I always stuck to fixed rate five year modes, and got my mortgage paid off before I retired. I bought my house in 1984 for $36,000. Struggled a bunch in the early years but kept my nose to the grinder. Last valuation was about $400,000 but I’m expecting house values to drop off dramatically ( like 25 – 30 % ) in the next while. So, same house, and I now have no clue what I’ve paid in interest and upgrades over the years, but when the collapse comes, I’ll still have a paid for roof over my head, no matter what the newly assessed lower value becomes. I’ve also been a moderate Prepper the last ten or fifteen years, plus I have an extensive gun collection, and some liquid assets, so I’m not in bad shape. Some small debt that I can cover if I really need to, thus I have everything I need except more land to grow food and livestock, but I have other options to cover that.
Having a nine hundred grand….”VARIABLE!!!! mortgage, mixed with the current financial situation would scare the pants off me! The guy did not think it through about interest rate possibilities, as a lot of others also did not do, what a shyte show they will all now all go through!
All of it deliberately caused, tar and feather time can’t come soon enough! Plus trials after the firing squads as well, Our revenge will be enjoyable!
We have piss poor leadership. It is a global malaise. Trudeau, Johnson, Rutte, Jacinda, Morrison, Macron and the biggest loser of them all….BIDEN. These idiots and their policies have gotten us all into this mess. They do not have the brainpower to get us out of it. In Canada, think of it: a journalist is our finance minister; a valley girl is our foreign affairs minister’ a TV host – and a bad one at that – is our industry leader and a Drama Teacher is our effin PM. What can one expect?
Heaven help us.
And the requirements for a driver’s licence are more exacting.
Technically, infinitely more exacting as there are none for pols.
What makes you think any of this is “happenstance” resulting from “incompetence”?
jaymo
It is ENTIRELY on Purpose.
Plandemic – Shut the entire planet down – then print Trillions & Give away to show “they care”
…and here we are.
Historically those aren’t high rates. In 2001 our rate was 6.5 fixed and we locked for 5 years because locked means it can’t go up. The next 5 years we locked again at 5.5%.
Then we were owners.
Small house, small mortgage, small stress.
You can blame government policies all you want…but Thats What Governments Do!
And there is still something to be said about living within your means and not buying a HGTV perfect home.
It’s the combo of higher rates with outrageous amounts. I once had a mortgage for $58,000 and interest rates over 11%. When I sold my house, I doubled my money. Those days are gone. So many people have mortgages of $580,000.
One of the happiest days of my life is when I paid off my mortgage. Bank managers can kiss my furry butt.
Regrettably, the joys of being debt free are not widely espoused these days.
Not eating bugs, but I do have
recipesplans for my neighbors.Do you plan on feeding bugs to your neighbors or are you contemplating the Dalmer Diet? English is a funny language sometimes.
Meh…I’m paid off. My 22 year old son bought into the market three years ago and just cashed in his chips. He’s going out east to pay cash for a home on acreage and put the rest into lead. Don’t really give a shit about other people’s poor financial decisions.
I’m not sure why you would want to “lock in” a 5 yr variable closed.
If you do variable, always go open.
If you can’t afford the swings in the variable, go closed.
If you can’t afford closed, borrow less.
It might be that the term of the mortgage is 5 years, the amortization period is 25 years, and the interest rate is variable. All different things.
Journalists. Always the last to know.
It’s so sad. (sniffle, cough)
Remember you cant build back better unless you destroy what was already here.
Think any journalists will remind Trudeau that he borrowed half a trillion “because money was cheap” and interest rates were low?
The Great Cloward and Pivening continues apace
If the guy is looking for advice on the Internet …
It looks as though higher rates are not here to stay. I predict 5-6% mortgage peak within the next 10-14 months and then a slow decline probably never to go below 3% again. Over the longer term you can expect a slow rate rise as boomers retire and the need for borrowing declines (a little).
You should have locked into fixed rates 2-3 years ago for a 5-year term. Now you might as well ride it out. That is from some random guy on the Internet.
If you get into a cash-flow problem, check with your bank to see if you can lengthen the amortization period. This could lower your monthly payment. You will pay more interest yet keep your head above water.
But, the damage will be done, when renewal comes along, and valuations have dropped 30%, the owner is underwater, and would pay less to rent, vs their financial mess.
I have neighbours across the street, that this happened to in 2008. They still haven’t recovered, and the house still isn’t finished.
But, it’s their DREAM home. More like a nightmare.
The couple is better off coming to terms with reality, and handing the keys over and renting. Better to take the hit now, than starve the next few years, gambling that rates will magically fall back to where they wish.
This will be a brutal repeat of 1981, for those in variables, and for those who bought the past 2 years.
BRUTAL.
The 5 year mortgage rate in Canada in 1981 was 18%
It literally wiped my parents out.
Got my 1st car loan back in 82 or so. Life long bank of Montreal customer, wouldn’t give me the time of day. A truck driver told me to try royal bank..first time through the door got my loan. Banks are weird.
*
Things start to crash, there’ll be plenty of opportunities for people
who have some measure of liquidity. People will start walking
away from houses and even vehicles. The banks will just try to
break even.
*
Yep…love me that supply and demand shit.
Random
I wish I was as gullible and naive as you are. TurD’Oh isn’t smart enough to fix this mess, and his handlers don’t want him to fix it. Easiest way to destroy “normal” , is cause family’s to loose their home. It cause stress, breaks up marriages, destroys small businesses, and generally wreck society. See great depression for example . TurD’Oh’s handlers, Klaus Schwab, G SoreASS, Aga Kan, and Bronfman Brothers, installed him in 2015 , just for this reason.
A number of years back my son was starting a decent job and was looking to buy a house. The bank approved him for 400 thousand plus. He said, Dad I can’t afford that large mortgage. He tried to by something modest, usually something that needed work. Was not prepared to overpay and didn’t purchase. Listened for years now how houses always appreciate, and he is missing out from people at work. Now some of the mortgages are 75 years instead of 25 – if rates don’t continue higher. Of course , the banks were promoting variable rates as historically it’s cheaper . That only works in a falling rate environment. Advice now? Well people are screwed – the house is going down in value and the payments going up. Last time (the 80s) it took at least 10 years to be even close to sanity.