I’m sure there’s an argument to be made about not buying things you can’t afford, but looking at the graph in that article, people are going to get fucked on mortgage renewals. Anyone that locked in for 3/4/5 years are going to be renewing between now and the next couple of years and going from BOC rate of 0.25% to 5% or more is going to hurt.
Someone I know is looking at renewing their mortgage in the next couple of months and they’re already looking at a jump from 3% to >6%.
In 2020 I locked in at 1.79%. 2025 is going to be about a 1.5k mortage payment hike if things stay the same. Luckily I moved to a cheaper area and reduced my mortage and will be paying extra for the next 2 years. Even with all that this is gonna hurt!
All those people have to live somewhere. Or there will be a massive increase in homelessness.
With a flood of houses on the market, they will snapped up by… people with a good cash flow… like… corporations. Who will then turn around and rent them out to you and me and all those people forced out of their homes… at whatever rental rate they desire… while raking in the cash.
I assume you can’t afford a house now and couldn’t afford a house when rates were as low as 1%. Even if a house is foreclosed on and dramatically drops in price, do you think you will actually be able to pony up and pay a downpayment and manage a mortgage rate at say… 8 percent? I seriously doubt it. A $1.8 million home (at today’s valuation) isn’t going to pop onto the market at $150,000 in 2 years when the renewal hits.
The reality is that the banks will do whatever they can to keep people in their houses. I checked my bank today to estimate what my mortgage renewal will look like when it comes up and they are offering mortgage terms up to 59 years. I can afford my renewal even at the new rate because I bought a bit over at 1/3rd of what they approved me for… I knew rates would go up, and I knew what I could afford at more typical rates. I’d rather pay the lower rates of course… but…
Yep. It’s like this is specifically targeting people who could finally fucking afford to buy homes in their thirties and jumped on it before it was too late. (I know it isn’t actively malicious, but the effects down the line - and let’s just throw in https://lemmy.ca/post/1338829 while we’re at it - are going to be horrendous).
I guess I’m gonna have to pay off as much as I can before the renewal hits.
It was sort of obvious it was too good to last though. When it made sense to pay off your mortgage as slowly as possible because you expected better returns investing that money it means that something is probably wrong.
I think the last 10 years has been too good to last, at least when it came to interest rates.
What I don’t think a lot are anticipating, is this is going to release a torrent wave of shit in about a year or twos time. Imagine all those Vancouver/Toronto folks having to renew at like 6 or 7%. It’s going to wipe a lot of people out. Even the pandemic buyers are probably only a couple years out from their renewals. Hopefully some panic selling takes place to cool off a lot of the markets they pumped up.
I’m sure there’s an argument to be made about not buying things you can’t afford, but looking at the graph in that article, people are going to get fucked on mortgage renewals. Anyone that locked in for 3/4/5 years are going to be renewing between now and the next couple of years and going from BOC rate of 0.25% to 5% or more is going to hurt.
Someone I know is looking at renewing their mortgage in the next couple of months and they’re already looking at a jump from 3% to >6%.
In 2020 I locked in at 1.79%. 2025 is going to be about a 1.5k mortage payment hike if things stay the same. Luckily I moved to a cheaper area and reduced my mortage and will be paying extra for the next 2 years. Even with all that this is gonna hurt!
I renew next August
RIP me.
Haha, I’m in danger!
Look on the bright side. If enough people default on their loans, I might be able to buy a house one day.
That won’t go on your favour. That will go VERY badly.
Why not? Genuine question. If a bunch of people go under and their houses hit the market, supply increases, homes get cheaper.
All those people have to live somewhere. Or there will be a massive increase in homelessness.
With a flood of houses on the market, they will snapped up by… people with a good cash flow… like… corporations. Who will then turn around and rent them out to you and me and all those people forced out of their homes… at whatever rental rate they desire… while raking in the cash.
I assume you can’t afford a house now and couldn’t afford a house when rates were as low as 1%. Even if a house is foreclosed on and dramatically drops in price, do you think you will actually be able to pony up and pay a downpayment and manage a mortgage rate at say… 8 percent? I seriously doubt it. A $1.8 million home (at today’s valuation) isn’t going to pop onto the market at $150,000 in 2 years when the renewal hits.
The reality is that the banks will do whatever they can to keep people in their houses. I checked my bank today to estimate what my mortgage renewal will look like when it comes up and they are offering mortgage terms up to 59 years. I can afford my renewal even at the new rate because I bought a bit over at 1/3rd of what they approved me for… I knew rates would go up, and I knew what I could afford at more typical rates. I’d rather pay the lower rates of course… but…
Yep. It’s like this is specifically targeting people who could finally fucking afford to buy homes in their thirties and jumped on it before it was too late. (I know it isn’t actively malicious, but the effects down the line - and let’s just throw in https://lemmy.ca/post/1338829 while we’re at it - are going to be horrendous).
Corporate investors can’t wait for you to default on your mortgage! They can scoop up all these discounted properties and rent it back to you.
Fml. That’s me!
Me too thanks.
I guess I’m gonna have to pay off as much as I can before the renewal hits.
It was sort of obvious it was too good to last though. When it made sense to pay off your mortgage as slowly as possible because you expected better returns investing that money it means that something is probably wrong.
I think the last 10 years has been too good to last, at least when it came to interest rates.
What I don’t think a lot are anticipating, is this is going to release a torrent wave of shit in about a year or twos time. Imagine all those Vancouver/Toronto folks having to renew at like 6 or 7%. It’s going to wipe a lot of people out. Even the pandemic buyers are probably only a couple years out from their renewals. Hopefully some panic selling takes place to cool off a lot of the markets they pumped up.
I wonder if home insurance claims are also increasing?
Why would they be increasing? The insurance company rebuilds the house as it was before, they don’t pay you cash.