Quote:
Originally Posted by BrownDrake
If you went into a bank in the USA now at 50 years old asked for a 30 year mortgage you would be laughed out of the building. Even in Canada its a well known fact your earning power past the age of 60-65 is negligible.
How come I know so many people with mortgages that will run into their low earning pension years?
We don't have exactly the same problems but we have our own problems. The government guarantee has been a gift to real estate in Canada. Someone will pay the bill eventually.
Heloc's are also a major issue in Canada, as well as 20 year boat and RV loans.
Everything reverts to norm eventually.
The problem with a lot of theses threads is guys like me don't understand its different here.
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HELOCs are capped at 65% LTV.
What % of the population owns a boat? If you want to use anecdotal evidence I know of thousands of people and I know 4 boat owning people. Two own them own outright and two finance them and have a household income above $250k.
Having a mortgage is irrelevant into retirement if there is substantial equity. It's not ideal since paying a mortgage without long term payment stability is a risk, but as long as there's equity in the house that's not going to contribute to a default situation followed by a value crash. The retired person will just have to downsize or have a crappy retirement. My boss has a mortgage. I think he's in his 60's. He could also likely wipe the entire thing out with one years salary or amortize the mortgage all through retirement. Why wouldn't he? At 2.89% it's great. '
Do you only hang out with poor planned near retirement aged people or something? I think you're being anecdotal to make a point that isn't working. CMHC comes out with statistics often enough on the Canadian mortgage market that show the majority of mortgages are well amortized, there is significant equity in the WHOLE market (not in little anecdotal side story's) with the risk of default very low.
Who will pay this government guarantee bill? No one, the vast majority of CMHC insured mortgages are well paid down. CMHC has been derisking for the past 7 years, the current default rate on insured mortgages is tiny. With improvements and now 25 year amortizations the risk to the system has declined substantially from a decade ago. And all those 35 year mortgages are now 25-27 year mortgages resetting in an ultra low rate environment. You know back when those 35 year mortgages were being done interest rates were in the 5-6% range? And they're now sub 3.00%.
The housing market could be volatile in the future and we could see some value destruction for sure. Some markets a lot, some a little. But the underlying mortgage market isn't going to crash and see a crises.