Interest rates / Canadian real estate

[Mazdatruck]

This thread is about everything to do with Canadian interest rates and how they relate to the Canadian Real Estate market.

Due to interst rates rising over the last 18 months, most of the Canadian banks have seen their mortgage book with amortizations longer than 25 years increase +2000% to +4000%, from 1% to 2% of their mortgages with amortization longer than 25 years to 23% or 43% of all mortgages over 25 years amortization. That is quite a large increase in less than 2 years.

Royal bank has 23% of their mortgages with longer than 35 year amortizations!

BMO has 45% of their mortgages with longer than 25 year amortizations!

20% of mortgages at 3 large Canadian banks are now negative which means the people are making payments on their debt but the balance owning is getting larger everything month. Truly underwater loans.

https://www.castanet.net/news/Business/ ... rates-rise

What is going to happen over the next year is all those Canadians that bought houses that they cannot afford will be sent letters from the banks demanding a lump-sum payment and greatly increased mortgage payments schedule to get their loans back to 25 year amortizations. This will not be pretty.

Anyone invested in real estate is watching this closely.

[Catsumi]

Priced out of our homes.

Best to buy shares in Jones Tent&Awning, camping supplies and dehydrated meals.

Will the BoC have the nerve and verve to hike interest rates again? Nothing seems to be working except bad news for those not wealthy enough to not be disturbed by higher mortgage rates.

This morning, listening to news, I believe I heard that production down, debt up, and the Canadian economy run by twits, was at a standstill. Grocery purchases down to the basics and miscellaneous purchases down to the point where shipping companies that deliver your Amazon purchases are laying off workers.

Maybe I heard wrong as I was half asleep. After all, it’s only been 8 years that we’ve been diving to the bottom.

[Mazdatruck]

Priced out of our homes.

The Royal Bank was giving out mortgages to unemployed people during COVID.

The stress test didnt factor child care costs into the formula, among other things.

Lots of people bought homes they couldn't' afford.

When interest rates rose sharply in the 1980's there was no extending of amortizations. The very large adjusted mortgage bill came in the mail, there was no online banking and everything was done in person moreless. You either made the payments or you didn't. 2% of Canadians defaulted. Prices remained static in real estate for almost 15 years in Canada after that.

Already a bailout is occurring in real estate in Canada in this no-mans land grace period of unlimited extended amortizations. There are many documented cases of 50, 60 or even 90 year mortgages in Canada right now. This is all being allowed to prevent a sell-off and kicking off downward pricing trajectory. They are ripping off the bandaid slowly.

[BC Landlord]

Then, they call it "housing crisis". How do you make housing more affordable by making mortgages more expensive?

[raft-cove]

Priced out of our homes.

The Royal Bank was giving out mortgages to unemployed people during COVID.

The stress test didnt factor child care costs into the formula, among other things.

Lots of people bought homes they couldn't' afford.

When interest rates rose sharply in the 1980's there was no extending of amortizations. The very large adjusted mortgage bill came in the mail, there was no online banking and everything was done in person moreless. You either made the payments or you didn't. 2% of Canadians defaulted. Prices remained static in real estate for almost 15 years in Canada after that.

Already a bailout is occurring in real estate in Canada in this no-mans land grace period of unlimited extended amortizations. There are many documented cases of 50, 60 or even 90 year mortgages in Canada right now. This is all being allowed to prevent a sell-off and kicking off downward pricing trajectory. They are ripping off the bandaid slowly.

Calm down, man.

A collapse will still take place.

You can extend debt-repayment but you can't escape the interest.

Weight of interest on some of these 'speculators' will topple their aspirations of becoming Canada's NEXT TOP Landlord.

Banks will be taking some homes, taking some losses.

Stocks will take a hit.

[seewood]

Then, they call it "housing crisis". How do you make housing more affordable by making mortgages more expensive?

exactly.

I really hope trudum doesn't figure printing more money will solve this. The drama teacher doesn't or didn't realize if the country prints an obscene amount of money and spends it, inflation is the result and higher interest rates are the result of higher inflation and then the housing market could very well have an adjustment, and not for the positive for many unfortunately.

What are gold futures looking like?

[oldtrucker]

The Royal Bank was giving out mortgages to unemployed people during COVID.

The stress test didnt factor child care costs into the formula, among other things.

Lots of people bought homes they couldn't' afford.

When interest rates rose sharply in the 1980's there was no extending of amortizations. The very large adjusted mortgage bill came in the mail, there was no online banking and everything was done in person moreless. You either made the payments or you didn't. 2% of Canadians defaulted. Prices remained static in real estate for almost 15 years in Canada after that.

Already a bailout is occurring in real estate in Canada in this no-mans land grace period of unlimited extended amortizations. There are many documented cases of 50, 60 or even 90 year mortgages in Canada right now. This is all being allowed to prevent a sell-off and kicking off downward pricing trajectory. They are ripping off the bandaid slowly.

Calm down, man.

A collapse will still take place.

You can extend debt-repayment but you can't escape the interest.

Weight of interest on some of these 'speculators' will topple their aspirations of becoming Canada's NEXT TOP Landlord.

Banks will be taking some homes, taking some losses.

Stocks will take a hit.

Mortgage supplement cheques coming soon. They can't let RE take any hit of any significant amount. Not when debt to gdp ratio is over 150% and the entire economy is riding on RE.

[Patron]

Priced out of our homes.

Best to buy shares in Jones Tent&Awning, camping supplies and dehydrated meals.

Will the BoC have the nerve and verve to hike interest rates again? Nothing seems to be working except bad news for those not wealthy enough to not be disturbed by higher mortgage rates.

This morning, listening to news, I believe I heard that production down, debt up, and the Canadian economy run by twits, was at a standstill. Grocery purchases down to the basics and miscellaneous purchases down to the point where shipping companies that deliver your Amazon purchases are laying off workers.

Maybe I heard wrong as I was half asleep. After all, it’s only been 8 years that we’ve been diving to the bottom.

yup, we have been being priced out of our homes for the last 10+ yrs

but it was great for Investors and amateur LL's and the Government was promoting RE as our main industry, for the regular Homeowner who just wants to live in their one home and still be able to afford it, not so much

rates should have been raised slowly but raised after the baby 2008 recession ( and that cannot be blamed on Trudeau) and boy are we paying for that dumb decision to not raise them today- if rates were normalized after 2008 , we would not see so many over leveraged people like we do today- when money is cheap to borrow, many just spend never ever thinking about tomorrow

[Mazdatruck]

Mortgage supplement cheques coming soon. They can't let RE take any hit of any significant amount. Not when debt to gdp ratio is over 150% and the entire economy is riding on RE.

Page 45 of the 2023 Federal Budget specifically mentions using special tools to extend amortizations and other little goodies for people who decided to leverage themselves beyond their means.

https://www.budget.canada.ca/2023/pdf/b ... 023-en.pdf

The federal government, through the Financial Consumer Agency of Canada, is publishing a guideline to protect Canadians with mortgages who are facing exceptional circumstances. Specifically, the government is taking steps to protect Canadians and ensure that federally regulated financial institutions provide Canadians with fair and equitable access to relief measures that are appropriate for the circumstances they are facing, including by extending amortizations, adjusting payment schedules, or authorizing lump-sum payments. Existing mortgage regulations may also allow lenders to provide a temporary mortgage amortization extension—even past 25 years.

Nurses that are living in their cars because housing is so unaffordable have to get in line behind international students at the food bank, and unemployed people who FOMO'ed their way into a 1.2 million dollar house with a little creative income verification paperwork will be protected.

Canada 2023.

[Mazdatruck]

How do you make housing more affordable by making mortgages more expensive?

How to you prevent investors from scooping up an entire building of afforable housing and flipping it or renting it on AirBNB? How to you prevent investors with access to moreless unlimited capital due to low interest rates from outbidding Canadian families on suburban homes?

It was low interest rates that got us into this mess in first place.

We quite literally are making housing more afforable by making debt more expensive.

If you have access to a smaller and smaller bucket of debt money it's hard to bid-up a house price. Letting people borrow larger and larger sums of money to make things "more affordable" is sort of like how a child thinks a credit card works.

[raft-cove]

Calm down, man.

A collapse will still take place.

You can extend debt-repayment but you can't escape the interest.

Weight of interest on some of these 'speculators' will topple their aspirations of becoming Canada's NEXT TOP Landlord.

Banks will be taking some homes, taking some losses.

Stocks will take a hit.

Mortgage supplement cheques coming soon. They can't let RE take any hit of any significant amount. Not when debt to gdp ratio is over 150% and the entire economy is riding on RE.

Give it 6mo.

Recession is here now.

RE can't be they only horse we plow with.

Interest rate impact, job losses, bankruptcies; they all lag.

People borrowed significant amounts at low cost, then overpaid for RE.

Time to pay for risks blindly taken.

[BC Landlord]

People borrowed significant amounts at low cost, then overpaid for RE.

Yet, they made significant amounts in equity. RE is still the safest thing you could invest in to shield your money from the inflation. As evident by the demand over the last couple of years.

[Even Steven]

Well, I'll be calling my mortgage company this week, trying to refinance and pull cash out of my property to pay as much as possible with the other.

Wish me luck lol.

[BC Landlord]

Well, I'll be calling my mortgage company this week, trying to refinance and pull cash out of my property to pay as much as possible with the other.

Wish me luck lol.

Anyone who gets their foot into equity is just fine.

[Patron]

if you used your "equity" which is a HELOC to borrow for another home , toys or vacas etc you are even more hooped because rates raised on them too and HELOC's are demand loans the Bank can call them in anytime they want but even if you have a HELOC and never used it the interest rates are very high on them right now ( 9%) so beats me how your equity can help you out right now ?