Quote:
Originally Posted by opendoor
They don't really factor into rate decisions, other than the Bank of Canada considering the drop in demand that the higher mortgage rates will lead to.
But in terms of why people are concerned for the renewals in the near future, it's because the disparity between the old and new rates will increase. Until the last 2 years, the majority of fixed rate mortgages were 5-year terms which means most of the fixed mortgage renewals that have happened were originated in 2018 and 2019, when fixed rates were 3-3.5%. I'm an example of that where my rate from 2018 wasn't much lower than my rate in 2023; I think my mortgage payment went up maybe 7-8%. But once we get into 2025 and 2026, people coming off 5-year loans will be renewing from 1.5-2% rates they got in 2020 and 2021. If rates stay at their current level, that represents more like a 40-50% increase in payments.
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I get that, but many people have already experienced it and have been able to cope. So as a sample size because the significant population has adjusted on their renewals, the remaining should be able to withstand it as well.
Anyway, to me the government really needs to crack down on investment in housing besides your principle residence. If supply is such a big issue, you penalize investors, issue solved. At least in Toronto, I imagine the investor market is staggering. Anecdotally, friends on mind got jobs 20 years ago right out of high school and invested in houses and now own something like 11. And because it appreciated so much, and because they worked as police or teachers they are now 40ish and can easily retire. While I don't think past performance should be penalized, going forward it should be prohibited in a city like Toronto where there isn't that investment needed.