Locking the barn door after the horse is gone is a feature, not a bug, of centrally planned systems. But back when interest rates were falling to zero, anyone in authority who squawked about potential problems with variable rate mortgages would have been promptly told to shut their pie hole.
Peter Routledge, the head of the Office of the Superintendent of Financial Institutions (OSFI), said that borrowers with mortgages in which payments are not high enough to cover the interest portion of the loan could experience a “shock” in significantly higher payments in the years ahead.
He added that coming measures to tighten the country’s residential mortgage underwriting rules will aim to curb the tendency to lean on those types of loans in tough times.
Seems the horses are just ‘loosed’ sometimes. as an example this headline – “11 Million Low- or Modest-Income Canadians to Receive One-Time Grocery Rebate on July 5.” (Epoch Times)
If I am lucky enough to be “given” this gift by my concerned government it is going to the CPC!
I will get 75% percent of it back next spring to spend as I choose. Maybe beer?…
William White, the Canadian finance minister who brought in the tax on incomes, said this in 1917: “a year or two after the war is over, the [income tax] measure should be reviewed by the minister of finance of the day, with a view of judging whether it is suitable to the conditions which then prevail.” Governments lie about everything, whether they “need” to or not — it’s a matter of principle with them…
“…coming measures to tighten the country’s residential mortgage underwriting rules…”
So the government wants you to never have a home of your own, making it harder for you to get a mortgage in the first place, after they repeatedly inflated the money supply because of a “crisis” that they created.
but don’t work “King Justin” will work to make it “more affordable” for Canadians, by raising taxes, and have the government flail about ineffectually to build “affordable” housing.
“King Justin”
I think Turdeauland is an empire, not a kingdom. The Turdeau Empire is run out of Ottawa for the benefit of the axis of imperial evil: Toronto and Montreal and area in between. The axis plunders and despoils lands, peoples, and resources westward. There are some in this colonial hinterland who collaborate with their imperial overlords.
Fun fact, Turdeau Sr. named “his” three boys after Byzantine Emperors: Justin, Michael, and Alexander. Coincidence?
Michel & Alexandre
Somehow, the smart one died. Snow did it apparently.
he sleeps with the fishes.
cost us millions in avalanche warnings . yet the death rate accelerates from avalanches
Not only from avalanches, as many idiots are recovered from BC woods/mountains. North Shore Rescue is way too busy. And our immigrants and tourists do not get it.
Many young people in late teens/early 20’s like to take physical risks, and, increasingly completely ignore any and all warnings, as few had limits growing up from intact, enduring parent families.
This is part of a shift in Canada towards devaluing parenting, enabling drugs, encouraging divorces and career moms, limiting discipline at home, and in schools and communities, if we really have any. Social media/cells also enable stupid behaviour and celebrate very high risk activities and edgy stuff.
What do we get: more kids/young adults who are high on natural puberty hormones, and maybe street drugs as well. They take insane risks in our beautiful environment in BC.
Michel Trudeau deliberately skied out-of-bounds, and would likely have ignored any and all of posted yesterday’s and today’s government warnings to instead go for fresh powder.
Note to young Canadians: your cells do not work in our extensive wilderness. There are hungry grizzly bears too.
Stupid people doing stupid things.
All true, but it still isn’t a good idea to let mortgages accumulate interest debt. It will lead to foreclosures in the long run. We need a reset on prices for land and houses.
Junior named his future PM Brats Hadrien (emperor) and Xavier(saint).
Luckily, Canada won’t make it to that next horror show.
Variable mortgages are mostly for uneducated (bad school curricula), possibly very desperate, customers (now maybe over 85% of Canadians).
The only strategic time to arrange a variable rate debt would be for a short term, when it is very clear that interest rates are way too high for the market, assuming that various governments will not entirely prevent capital markets and their cycles, which billionaires actually like.
Clearly, interest rates are now headed up, decided in Davos or elsewhere.
Economics 101 (or basics) is never taught in public schools any more, and neither is math. Beyond that, no one “gets” the news, if they even read it, about how supposedly independent global regulators and banks (becoming loan sharks), with “friends”, have been colluding to manipulate financial markets forever.
Most cars on the road have cheap leases for people who could never buy the car. If you are a keen environmentalist, ban leasing. Ha
The only strategic time to arrange a variable rate debt would be for a short term
I agree wholeheartedly with the general sentiments of your excellent post, but I will quibble with one specific point. The Fed-set effective rate in the US was either falling or zero from July 2000 through to January 2016. 15 years is not exactly “short term”.
My real point is that we’ve been trapped in a centrally planned, financial cartel-driven, government-abetted, anti-market, inflationary nightmare for decades. Gosh, who could have foreseen all these “unintended” consequences way back when?
It was orchestrated by the powers that be failing to report actual inflation for YEARS!
Consumers noticed, paying increases of 6% or more on everything, when official rates were 2% or less.
Consumers noticed, paying increases of 6% or more on everything, when official rates were 2% or less
That 4% differential is THEFT. It is deliberate, and it’s deliberately made out to be so mysterious.
There’s nothing mysterious about it. That 4% stolen purchasing power from SAVERS is precisely the way governments service their monstrous mountain of debt without ever having to pay down one penny.
Exactly …. People moved from safe bond investments with artificially low interest rates to stocks, which have been artificially elevated.
Variable mortgages are mostly for uneducated (bad school curricula), possibly very desperate, customers (now maybe over 85% of Canadians).
We saved 10’s of thousands of $$$ on variable rate mortgages over locked in interest rates. You just can’t be stupid about it.
As “Not a Real Name” noted hours early, variable rate was, in hindsight, the way to go from 2000 to 2016. Unprecedented ZIRP by the central banks. But that was then, and this is now.
I bought and sold nine houses over the years and never took a variable mtg ever, no matter what it was always a five year term.
Sure would be nice to get some high interest on the money I have invested. I probably should have bought mortgages over the years.
Superintendent of Financial Institutions (OSFI), said that borrowers with mortgages “in which” payments are not high enough to cover the interest portion …
Send this poor, deprived man a copy of grammarly or something.
This office that Peter Routledge holds reports to none other than the esteemed Chrystia Freeland. His MBA from our notable lefty Simon Fraser university must come in handy to make up for the Minister, who lacks training in finance/economics and has poor advice for legislation.
Just as Harper said, correctly, in 2008, when times are not great, buy! The only time to negotiate a short-term variable loan is when there is “a troubled times” low point, when inflation is going DOWN, not up, as it is now, but AFTER the coming recession.
Remember our esteemed finance minister had to have her parents co sign for her own mortgage but 10 years ago. No wonder we are in the mess we are in now.
A Simon Fraser U MBA is about equivalent to 1980 high school diploma. Were I hiring, I would take the high school diploma every time.
“Renewals are expected to peak in 2025 when rates are likely to still be high.”
5 or 7 percent is not ‘high interest’. The comment highlights the real issue: educated people identify debt problems as interest issues.
10000 souls have died due to relaxed drug enforcement since Potato came about.
But then the nations ARs and pistols are evil.
Dint even get us started on what the lasting effects of the cough shots are.
When will the canaduh banks be required to report underperforming loans AND mortgages? And when will their balance sheets mark the “assets” backing these mortgages to market valuations.
Most canaduh banks are insolvent if assets are marked to market, and it is only getting worse.
Mortgages insured by CMHC (the taxpayer) will also be a problem for turdeaus economist-deficient cabinet.