I suspect we are on the verge of a cascade of forced sales in real estate which will result in a collapse of the Canadian market. The persistence of the collectivist version of “Canadian exceptionalism” will, however, prevent most from acknowledging the problem until it blows up completely.
Last year Payment was $10,546 per month at a 3.29% 1 – Yr Fixed Rate
This year's Payment is $16,778 per month at a 7.65% Rate 1 – Yr Fixed Rate
That's $201K in Mortgage Interest
I don't really know how the clients will afford this
They never previously missed a payment
3/
— Ron Butler (@ronmortgageguy) December 29, 2022
Co-signer is also on the HOOOOOOOOOK….
Mom?
A….Dad?
Your already committed?
The aim is to get everyone out of their house, everyone.
Raising interest rates just starts the ball rolling, gets the big houses which can be converted to aparments and rented to 10 families. It’s just the market after all, not the gov’ts problem.
Once everyone who has a mortgage they can’t pay is out of their house, then the target will be those living in a house to big for them but don’t have a mortgage. Look for increased property tax, carbon tax, etc. It’s not the gov’t fault, you are just living beyond your means.
Then the target shifts to those who own outright smaller homes and apartments.
And so on, and so on.
by 2030, you’ll own nothing and be happy. That also means your house, you’ll be happy if you can rent a 2 bed apartment at that point.
Who owns the homes you ask? Easy, just look at all the big investment firms with liberals on their boards and who are already buying up homes across Canada and the US. That’s who!
Your crisis is their opportunity. So what if they caused the crisis.
Like.
Hard for the average Canadian to feel sorry for someone with a $2.37million mortgage.
Already hard enough for those needing to renew in 2023 on a $250,000 mortgage coming up for renewal off a 5 year fixed of 3.59% that was under the stress test at 5.59%. No idea what this will mean come renewal time when the “stress test” was below what the actual rate will be. In these situations it is really hard to know what the best course of action will be if you lock in for 5 years at the new rate being high or if your better off with a shorter term thinking maybe things will improve before the next 5 years are up. So many what if just to keep a house over ones head. I feel nothing for people with a $2.37M mortgage as they made that bed themselves and have to be half stupid to think that kind of money came with any sort of value that wasn’t a substancial risk.
you got that right………must be a politician?? hahahaha
Agreed.
It’s like 10 working slobs with $237,000 mortgages. Math isn’t that hard.
Sucks to be you Butler Mortgage.
From the looks of your pic you have been living off the fat of the salad days.
Time to tighten your belt like everyone else and lose some dead weight, in the end it will be healthier for you and your company.
Perhaps if they just dropped Disney+…
Signed for 1 year only, on a massive mortgage? This, when the rumblings of inflation were clearly all around us, but didn’t go longer cuz the rate at the time was marginally higher than 3.29?
Well, the silver lining is they can/must sell without buying out a 5 year mortgage as well, as the devaluation of going underwater forces that outcome, before the losses get even larger.
So many people have leveraged themselves to the max, let’s face it, that’s the real estate game, and it’s been a successful play for all these years, to buy, max out, hold and flip after a year. However, all the signs were there a year ago that inflation was raging, and rates eventually had to rise.
The game of Musical Chairs always ends abruptly, and painfully.
Just look at it this way:
Its just like a landlord raising the rent for his tenants. If they can’t pay, they’re just deadbeats to be evicted so real tenants can move in.
There, don’t you all feel better now?
The only people I truly feel bad for are the people near retirement that need to use the equity in their house to retire. That and working class people on ARMs.
It’s really hard to have any sympathy for people with a 2 million dollar mortgage.
IF you are near retirement one would think you should NOT HAVE A MORTGAGE??? I never made more. than $45,000 per year at the top of my earnings and at 52 years of age when I retired AND
I had no mortgage and we had nice homes in the $400,000.00 range so it’s possible IF people wouldn’t take a $10,000.00 VACATION to hot spots every year. So what’s left of your $10,000.00 after a week in the sun? NOTHING. An extra $10,000.00 on your mortgage every year would sure help you out. instead of charging that credit card with that $10,000.00 vacation??? Oh well each to their own………….BUT don’t complain when the interest rates start going crazy like in 1980 when I had 21% Mortgage rates……..
It *was* possible. 45k per year will get you laughed out of the bank these days. Only 52 years old and sounding like you’re 75 lol. Get a grip.
Our vaunted socialist government cannot afford to bail out everyone, so whom and where are the favored ones that will get special treatment?
If this were twitter, I’d like and retweet. You’re 100% right and cynical enough.
Feel sorry for the immigrants. Many of these people end up with the alternative lenders. They have minimal deposits and live hand to mouth. They bought into the dream of owning your own home in a free country.
But you need the sharks to clean the water. I’m swimming toward this disaster with a fistful of cash.
Owning their own home in a FREE country? If they thought that and came here, they got both parts wrong.
The average annual salary in Canada is around $70 000/yr, before taxes.
This stat is utterly misleading, as its skewed by billionaires.
The mode salary in Canada is around $39 000, before taxes, ie there are more people earning that amount than any other amount.
The mode salary was once enough to have a single-earner family, a stay-at-home mom, a 3-bedroom house and a car, with enough left over to take the kids on a trip to the museum or what have you once a week.
Yup.
F*ck me…I wouldn’t even get out of bed for $39k.
You’d eat from a garbage can if the situation demanded it.
And he may yet do that, right after dropping his mask to get the tasty morsels down his gullet. He’ll eat z bugz and take z needle and love big brother.
Lol…my trade certs, boss set of tools, ability to fix damn near anything, and the fact my cash flow was always better whenever the economy went to s*it tells me otherwise. I’ll be flipping steaks long after you watched your kids starve.
Make sure you spell my name right on that coffee cup…
Me too Steve. Cash is king.
My job moved me around Canada a lot. This is my fifth home and it’s about paid off, right before I retire. I’ve been on the recieving end of bank, mortgage, immigration and real estate shenanigans for 35 years. I won’t feel sorry for the vampire’s business implosion. Most of the houses around where I live are constantly flipped, more than half of for sale signs have some Chinese on it. Lots of “students” driving expensive German SUVs. Next door neighbors are nice, live in a $700k home, no visible means of support. Guess who ends up paying for this bullshit: Canadians who just want a home to live in.
Zeihan talks about Canada’s demographic problem and the change in foreign ownership laws in this video released a couple of days ago.
https://youtu.be/GXsEO_PsX1I
It was barely a year ago when top business people … really top business prognosticators … were insisting that interest rates would/could NEVER go beyond 0%. That we were in a new era of permanent low cost financing. That we simply COULDN’T ever go back to increased interest rates … because the effects would be devastating.
Well … devastation … meet top business prognosticators
Oh! And PS … crypto will make you a BILLIONAIRE!! For doing and earning NOTHING.
Remember Modern Monetary Theory where you can borrow an infinite amount of money without affecting the economy? Where the heck did these guys go?
His name is Carney and he never left, he may well be the next Librano PM.
Making canaduh a turd world appendage of the US with zero gold reserves.
Nobody wants to talk about the raging inflation that is destroying buying power, the guy with the $2.37million mortgage is probably living in a slightly up-market ugly box near Toronto, all grey paint and stainless steel appliances, in reality that could be bought in most US locations for $700,000. and that is much closer to its real “worth”. The canaduh “economy” is built on constantly re-selling these hideous homes creating more real estate fees, property purchase tax, GST, movers fees, bank fees, lawyer fees. The economy is dead, get ready for real pain maybe even some bank defaults as they try to disguise non-performing mortgages and home-equity loans.
My question to Steve and Huron-how happy are you holding cash in a (presumably) canaduhn bank?
Free Tamara, I’ll butt in here. My small, retail portfolio is 87% cash (cash is king). Of that 87%, 85 percentage points points are in to High Interest Savings Accounts (HISAs) for my wife and me. They each pay 4.25% annually on a monthly basis.
Btw like your avitar name.
I’m happy holding cash when most of the assets I would normally invest in are crashing in value around me. I’ve owned my current property for almost 18 years and I’m looking at helping my daughter ease back into the housing market. She got out and stayed out a few years ago. She’s keeping a keen eye on the real estate market, hoping to get back in at a 20-30% discount. With a little help from her father. I’ve been through this a few times now. Prices go crazy. People rush to get in, making bad decisions in the process and become highly leveraged with no room for error. Economy tanks. This time interest rates have increased substantially (like in the 1980s). The hurt starts with the most vulnerable. It spreads to the unfortunate. Prices collapse for a short while. People who have no options, sell. Those of us who have options, buy. Prices slowly rise again. Having cash during an inflationary period is not a bad thing if you have a goal in mind. If you’re in cash just out of fear, your money is being whittled away by the government as they try to get out from under the debt they have created while in power (expressed as % of GDP). Governments are run by people with horrible financial abilities. If you know this you can win. During an inflationary environment, cash is king, as long as it is deployed correctly.
Steve: They didn’t go anywhere. They continue to gather once a week in Ottawa in the Liberal Party caucus … and they’re still in charge …. and still spending like drunken Liberals.
“insisting that interest rates would/could NEVER go beyond 0%”
You would have to have been nuts to believe that.
This didn’t age well. An article from our highly valued (?) CBC touting the benefits of modern monetary theory. From AUG-2020.
https://www.cbc.ca/news/business/economics-modern-monetary-theory-spending-1.5704124
“I think what you might see, paradoxically, is a situation where the Bank of Canada is essentially printing billions of dollars to fund government debt and deficits but that inflation declines,” Aquanno said in a telephone interview.
Haha – never happened.
“If Canada were the only one doing this, the loonie would likely lose value, he said. But as countries around the world all do the same thing, so long as the Canadian central bank doesn’t get ahead of the pack, there is little to worry about.”
Haha – countries all around the world did the same thing [printed money] and yet inflation hit 15% and now there is a lot to worry about [paying the mortgage, buying groceries, heating the house, buying a car].
I always take what Don Pittis says and multiply it by -1.
Critics of MMT argued that printing money would lead to inflation.
It should be labelled as Moron Monetary Theory, but that might be an insult to morons…
It’s a theory so airtight that only an academic would believe it…
Steve
There is NO inflation, there is an economic war being waged against the working middle class. It’s purpose is to steal their independence, and make them subjects of the state, and by extension big business that runs the state!
Yup.
Monthly payment more than I pay in a year.
Sucks to be you
The majority of expensive Canadian housing is in Toronto, Vancouver, Victoria, (don’t know about Montreal). Most of these folks voted Liberal, NDP, or Green. So they voted for a government that gave them inflation and high interest rates.
Now they can live with Trudeau’s solution: Double up, or triple, the number of families living in your house. Thus you can now afford the mortgage.
Turn it into a flop house.
Make more per month as a slum landlord.
Situation solved, more than one way to skin a rabbit.
The Fraser Valley cities (Surrey, Langley, Abfd, Chilliwack, Mission) have already seen substantial valuation reductions. No surprise, not the greatest places to live in BC. Wangcouver, Burnoutby, and the other urban LM cities have also seen reductions, though less substantial.
Victoria and the Island, down 5 to 10%, but values are holding. Despite the politics, the demand here remains strong, best climate in the country is a factor, as well as the natural surroundings, so expecting 40% fallbacks is in the LSD/magic mushroom spectrum. Not gonna happen, despite Garf Turner’s “all-knowing” Morontariowe perspective (he’s a through and through prog/Cheranna center of the world, MSM CBC dolt)
Morontariowe valuations are nuts, and have a long ways to fall. Despite the perception its the center of the world, the climate is awful, so are the neighbours and the United Nations neighbourhoods, and that’s not even starting on the politics.
Another Trudeau solution. Eat dog.
https://mobile.twitter.com/truckdriverpleb/status/1608565127648886788
But please ensure they didn’t come from Fauci labs.
I remember the heady days of the Eighties and Nineties when the generation X’ers were told by their college professors that they were going to inherit the biggest transfer of wealth that mankind had ever seen. Meanwhile back at the ranch Mom and Dad were working their butts off to pay for this higher education. Fat forward thirty years later the biggest transfer of wealth turns into the biggest transfer of debt the world has ever seen and the recipients don’t have enough education or knowledge to unplug a toilet or mow a lawn so they have to import foreign labour to do that. Meanwhile Mom and Dad who depended on the government to look after their retirement fund don’t have enough government benefits to pay the taxes owed on the house they bought at 50 thou., but is now valued at 1.5 mil. So now Mom and Dad have been deferring taxes for the last five to ten years and when the kids can’t afford to pay the tax arrears when they inherit the house so they sell, further undercutting the market. We’re just about at the point where there is going to be an implosion the likes of which mankind hasn’t seen since 536 AD. Even the Black Death will be as a pimple on an elephant’s arse when the debt balloon bursts.
Im kinda curious. What income does one need to qualify for an $11K per month mortgage?
Uber driver level or higher.
Roughly $44,000 per month gross
Can’t afford a mortgage?
The government has your back. New in 2023, MAiD for mortgage holders.
“When you just can’t afford the vig, some guys will swing by.”
Was that the guy(s) who painted the Sherman’s house?
What’s the interest on $1B
I hear they painted it red.
I’m interested to know what “Alternative Lender” loaned out at under 4%
And if the underlying property is of sufficient value to cover the value of the mortgage at 75% value or less…
About 18 months back I predicted on SDA, that this bubble would pop, as did many others here. My prediction was for a drop in value of 25 – 30%. Those of us who have paid off their mortgages will be in good shape if they haven’t run up too much debt in other mediums such as new cars and credit cards etc. No matter how much the value drops, I’ll still have a roof over my head.
However, those who threw money into high flying mortgages in the last few years will be suffering under greatly increased payments, and yeah many will go under, because they didn’t foresee the collapse coming. Now I’m clearly no mystic, but even I could see this approaching. Then again, so did most on SDA, and only a few of SDA posters are financiers or economists, the rest of us are just regular folk that have developed a jaundiced eye, and took notice of what is really going on, but shee-it, if we could see this stuff, then most regular folk should have seen it as well. I guess the stupid really is strong out there. (tip of the hat to VOWG) I do feel for those who have to face the possibility of ruin and bankruptcy while losing their modest homes, but I have no sympathy for anyone with million dollar plus mortgages. The writing was clearly on the wall regarding housing, inflation, fiat value, government stupidity, the WEF/UN/WHO cabal, green theocracy, food shortages, supply line issues etc.
If idiots chose to ignore those plain, simple, but loud warnings, then then they have no excuse for the lumps of coal in their beds, they made those beds that way. Years ago, I had a boss that thought it amusing that I was a mild to medium Prepper, I’ve lost touch with him, but I often wonder what he thinks of such prepping now. It’s gonna be a rough ride folks, so hang on tight!
Given that the bulk of this is a Toronto-Montreal-Ottawa thing, I’ll not lose a great deal of sleep. I’ll lose about as much as was lost, by those same people, over the hundreds of millions of dollars worth of commercial properties that have sat vacant in just my little Central Alberta, for nearly a decade. Yes, lots of it is owned by guys with very deep pockets. But, when an industrial condo sits vacant, eating up $40K per month in property taxes and utilities, even guys whose pockets are $30-50 million deep start to feel the pinch.
A neighbor said he foregode the rent so tenants stayed in business . That was so 2021.
Lloydminster was still flush with residential foreclosures too.
Toronto-Ottawa-Vancouver thing. The socialism is so strong in Montreal for so long that market didn’t participate, most were too poor.
I’d like to know what the gas or oil heating bill is on whatever size house this is.
The #Libranos carbon tax rises again 1. Jan. 2023 and I haven’t heard of electrical/water rates falling.
Nor heard of the #Libranos saying “oops we dropped the ball on the entire economy here”
They’ve deflected the blame entirely onto a flu from mainland China, looking back at the #Libranos
history, I expect they won’t apologise until about the year 2073-2083
It’s going to suck. More so if the banks can’t find suckers to buy these houses built for families of 7
We had a family of 7 in an 1800 ft split level house here in SW.Calgary, we weren’t stressed, but if
our mortgage interest went up that amount we would have walked away.
I doubt interest rates in Canada are finished rising … “they’ve got room to go yet” etc…
I find Ron Butler’s twitter explanations of what’s about to go down easy to read,
as he appears to be an honest man with no need to dress this disaster up, or “sell his points”.
April 1st is escalator day for the Carbon Tax, the Alcohol Tax, and the new Clean Fuel Standard
The entire Canadian Market will not collapse just the high end urbanite yuppie scum hyper-leveraged part of it. All the yuppie scum will be forced out of their McMansions and will have to find cheaper accommodation, so demand for that cheaper accommodation will increase, keeping those prices from falling too far.
1000 square foot bungalows will do just fine.
Fred
Yup, had that discussion with my real estate freind just recently!
Easy, non whites are not allowed to lose everything.. That would be racist.. The forthcoming subsidies to avert the Canada is racist disaster will support our entire housing market..
At 72, living and working in Calgary, I have seen at least 3 recessions. 1981/82 was the worst I remember. House prices dropped by half, and interest rates were high.
Now I have 2 young family members, in their early 30’s, with good jobs paying $80K+. They each have 2 houses with bsmt suites, that they rent out. Variable rate mortgages, with good tenants so far, they think they can easily ride out a downturn, and actually think it would be good for them, as they might scoop up some “deals”. If they don’t lose their jobs or their tenants, they should be okay. But if either of those happen, they’re going to be up a certain creek with no paddle. Ain’t youth wonderful?
People, this will help make “illegal” guns unfordable! Not to mention those evil e-bike batteries that kill millions!
You should be celebrating like the clowns that you are.
Cash is King and you think you are going to scoop up these homes the owners have given the keys back to the bank as the masses get impoverished? Just to whom will you rent those homes to when the economy collapses? During covid some countries enacted legislation that gave renters a holiday on payments. Never mind rent controls. Venezuela is expropriating rentals and selling them to the renters. That home in suburbia will become an albatross around your neck when economic AND SOCIAL collapse comes. Can’t see what’s happening in rural towns where the decay has been going on for over a decade?
The Fed Reserve keeps jawboning about rates going higher and staying high longer to kill inflation. The prescribed cure is BS and will fail. The market is looking for signs of the great “pivot” that the Fed will throw in the towel. It’s just a matter of time. The consensus is that inflation will rage on thereafter destroying what ever value the WEST’s fiat currencies still hold.
Lot’s of rural acreage with fixer-upper shacks in N.B. & N.S. Check out, load up on essential toys and keep stacking.
P.S. If you buy abandoned farmland, land improvements are deductible business expense allowing you to convert your RRSP savings into something tangible that grows food and fuel.
Have some sympathy. Back in the day, our first mortgage was 9.5% (okay, bought house for $24,000 but family income wasn’t that great). Also, over the years, organized the payback of said mortgage to pay it off as soon as possible. It helped that, when the city offered a discount for early payment of taxes, the bank with which we had our mortgage wasn’t interested in saving us money; we promptly switched to the local company-affiliated credit union which, once the dust was settled, allowed us to pay more than the minimum required and so – when interest rates rose (our highest was 16.5%), our payments were still more than required to meet the new interest rate. We, of course, benefitted when the rates dropped.
Have some sympathy but – point is – we took care not to max out on our mortgage or any other systems such as credit cards. Family is the same; all organizing their finances so they are paying down mortgages as quickly as allowed so they don’t get caught up in rate hikes when renogiations happen. That’s what prudent people do.