Quote:
Originally Posted by kevman
You sure showed them! Assuming a $500,000 house that 5% spread on your down payment over the last 5 years would have earned you almost $70,000. Subtract the $10,000 or whatever CMHC fees are and you're still up $60k. Please explain how you came out on top here...
Edit:
And yes, this is a forum full of opinions. In my opinion in this low rate environment you can do very well by maximizing your mortgage. That is of course if you actually save/invest the difference...  |
Thanks for pointing out that the math makes perfect sense. I wasn't questioning the math, it makes very good financial sense providing you're house doesn't lose value and your investments are liquid and actually make you a return. Some level of debt is healthy especially at low interest rates. Assuming the majority of people with a CMHC mortgage of say $300K actually has an additional $150K to $300K in cash or liquid investments outside of an RRSP's is probably not the case.
The point is why were they so concerned about getting me into CMHC and in 1999 they pushed you hard to avoid CMHC? Are you willing to admit its probably because the CMHC mortgage becomes a very sellable triple A security, the other mortgage is risk for the bank and has little value.
When you want to sell something and are encouraging debt - you don't think there is the slightest chance they have approved these types of mortgages to people that otherwise would not be "good risks" because they weren't concerned about them ever paying it back and the mortgage was sold shortly after the ink dried?
Why has a bank executive told me they are less stringent on CMHC approvals than borrowers with higher incomes and down payments that want to avoid CMHC?
In 2003 about 7% of Residential mortgages in Canada were securitized, today that number is over 40%.
Record low yields on traditional government bonds etc. and the lowering of interest rates is intended to encourage risk and debt, it also creates distortions in markets as the reach for yield by starved investors and pension funds creates demand for products that otherwise wouldn't be there (MBS, high yield debt - US oil companies).
It's different here, nothing to worry about, I get it