The steep rise in interest rates over the past year should be triggering a wave of foreclosures and price declines in the real estate industry by now, but if anything, the opposite is occurring. House prices are rising again in many cities. The reason is fairly straightforward: banks are simply extending mortgage terms to accommodate whatever monthly payment cash-strapped borrowers can afford. Belatedly, one of the other central planning authorities professes to be worried about this.
Canada’s financial regulator is urging lenders to tackle risks from mortgage extensions at the “earliest opportunity” as many borrowers try to navigate higher mortgage costs after the Bank of Canada’s surprise rate hike last week.
But judging by the content of the article, don’t expect any action anytime soon. The zero percent interest debacle is something that none of these folks want to actually tackle.
What % of mortgages are variable rate?
How much is CHMC’s exposure to mortgages that are underwater and subject to foreclosure?
Will the “banking regulator” do anything about it?
This schitt’screekhow will go on for as long as Singh supports Trudeau spendathon
Then Poilievre gets to wear the fixup and the fallout, kinda like Martin did.
Never a Trudeau again. The west remembers.
Well, this doesn’t quite explain it, but, here’s some explanation:
“ Today 60.7% of homeowners in Canada have a mortgage – a total of 8.86 million families. Of new borrowers, over 50% took out variable-rate mortgages in the last four years, and three-quarters of them (says Desjardins economists) have hit their trigger point – where interest consumes 100%, or more, of monthly payments with the additional, unpaid, sum being added to the overall debt.”
https://www.greaterfool.ca/2023/05/
Our non-financial finance minister is responsible for this, she allowed the mortgage rules to change in the last budget. Clearly, they knew this time bomb was about to blow, so, once again, government intervened in the “private sector” to skew the market.
No one really wants to see a massive waive of foreclosures, however, a correction in the housing is long overdue, and, would squelch inflation as well here. Instead, the Liberals keep interfering in the economy, sucking and blowing at the same time. They are incompetent, putting their politics above the well being of this country
I suspect we will see the foreclosures but not the correction. People talk of a bust of the bubble but historically speaking it never drops below by any significance. More like they take a cat nap then hit the cat nip hard again. It creates more of a dip but not a significant decline of price. Having survived 1980 to today not once did any home I lived in decline in value… rents never really went down for any extended period either. Aside from an all out full scale war with a nuke drop… I do not see any correction take place.
The government on all sides will do what it always has done by making more government jobs that do nothing but pay more than the average joe. Companies have made a significant change in the past year to shy away from full time employees. I see plenty of part time jobs that require full time availability. So corporations are switching to more minimum wage workers with less hours and no benefits.
Don’t worry though because you will own nothing and apparently be happy… depending on how many medications you take.
So many people are missing the details here.
#1 Canada is letting in more people than we can handle, creating a huge housing demand we otherwise wouldn’t have and ultimately a bidding battle just to obtain a home.
#2 Every other article is about “affordable” housing but there is nothing even remotely affordable about creating any housing and I dare anyone here to find anything affordable.
#3 Immigrants have our system figured out better than we do (I say this as someone surrounded by them in a town that once had none). They know exactly how much money they will receive coming here, how many family members they can wedge in to collect more, how long to stay before they leave to turn around and repeat the process. Their undeclared finances go into buying up not one but many houses to either sell or rent at a premium.
#4 There is a substantial amount of mortgage debt that has been either co-signed or obtained through fraudulent means. This will continue so any % increase is only going to impact those who are not willing to sink to criminal levels.
Example is a small group of immigrant family owns the vast majority of the area I reside. They own the plazas, the stores operating in those plazas, large volumes of homes for rent etc. They operate the businesses that employ family members (keeping in mind they do not hire outside their family and race) those “employees” then obtain mortgages based on these so called “jobs” that are then rented out at a premium likely under another corporate name. How does the pizza delivery guy drive an Audi and own 2 houses he has partitioned off into 2-3 units each renting out at prices the average 40 year old full time, lifelong, hard worker can hardly scrape together? Clearly this is some sort of scheme they have brought with them here and all our government sees is more $$$ in taxes they will pay and votes they will obtain. How much tax evasion do you think is happening because I know for a fact these businesses are not operating above board.
I know small landlords that are in the red so deep it isn’t funny. They are doing everything they can to keep their homes for both their long term investment and the people they rent out to. Then there are immigrants who can’t hardly speak a word of english with multiple homes sitting empty on our streets not rented out because they want an astronomical price per month. How can they afford these units sit empty for 8-10 months at a time? Most long time landlords I know can’t afford their units to be empty for a few days.
The mortgage rates won’t do much when the money driving up prices is either imported or obtained by fraudulent means.
Don’t ever forget that fire is the poor man’s explosive.
Lets see.
Buying a home you cannot afford at zero interest rate..Check.
Now can’t afford to make mortgage payments at risen interest rate,,check.
Bank recommends you keep adding further amounts to the sum (Capital) that you already can’t pay the interest on..check.
Sounds like totally responsible financial behaviour to me…Oh yeah.
So the bank gets to vacuum up every penny the debtor has and then foreclose ..
I guess a whole bunch of “graduates of the Public Education System”are about to enter The School of Hard Knocks.
Where they will finally learn some arithmetic.
Slavery, a thing of the future?
500 and change away from 40,000,000 population. Should be there by this afternoon I reckon. The customer who trips the clock at 40M gets a free home.
https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2018005-eng.htm
Does anyone believe those numbers are any more accurate than any other government number?
It will stop eventually. People are not earning anywhere enough money to continue the average lifestyle. The veneer will soon start to come off.
My town went from white and black to brown in three short years. None of the natives can afford (or are willing to make the sacrifices to have children) so all growth is immigration. And it is a lot.
My town has had the same change. The kids we did have can’t get summer jobs because of their skin colour… likely have the same issue when it comes to any post secondary education. The announcements over the mall PA system are in a language we don’t understand. The Mexican takeout smell like curry. I can’t understand the pharmacist. Strange enough all the homeless people are white and that homeless population increases every single day with the increase in vacant homes owned by those of a different colour.
I listen to a lot of different Bitcoin podcasts which mostly describe how money and the economy works. When this unravels, its going to be fu#king SPECTACULAR!!!!!
When something is unsustainable, no matter how many crutches you use to support it, eventually the unsustainable part wins. (3 dressed up as a 4) above is correct, although I think spectacular is slightly incorrect, might I suggest spectacularly devastating. About a year back on SDA I predicted housing values would decline by as much as 25 to 30%. I may be out to lunch date wise, but if anything, the longer they keep propping things up, the worse it will be when reality steps up. Once there are enough folks hungry and homeless, the feral side of humanity will take over. That too, will be spectacularly devastating, and perhaps civilization ending as well. I’ve also said this a time or two as well, I’m not even slightly religious, but it sure seems like the end times are approaching!
let me introduce you to a friend of mine, Jesus. Pick up or download the Book of Revelation and brush up on current events.
People treating their houses like ATMs and their equity like cash withdrawls. And banks that fail told them it was okay to do this, to do it to get ahead. Now they owe more on their mortgage than their houses are worth. Idiots.
Extending the term makes everyone a renter which is part of the plan.