*Updated* Ongoing Bank of Canada Benchmark Rate Announcements

[Winsor_Pilates]

Originally Posted by GGG

More likely that its pandemic regret rather than money causing the current surge in surrendered pets.

No one giving up their pet is going to tell the truth that they made a mistake adopting an animal when they were WfH on the pandemic. They are much more likely to tell a story where the blame is projected onto something else.

Adoptions of puppies and kittens are probably up for the same reasons. Less people getting new animals because they adopted during the pandemic and more irresponsible owners not getting dogs and cats spayed or neutered.

I remember everyone & their dog getting dogs during the pandemic and was worried it would end up like this.
Short sighted people who wanted the companionship during lockdowns but whose regular lifestyles can't manage them.

[CliffFletcher]

Dog ownership regret was entirely predictable (and predicted). Huge demand for dogs during Covid from people who hadn’t thought it through. Illegal puppy mills sprouting up everywhere to meet that demand. The Humane Society, etc. have been bracing for this for two years.

And people wonder why pet adoption agency are so strict about applications. It’s because half of the people who want a dog aren’t competent or committed enough to actually take care of one long-term.

[blankall]

Originally Posted by Yoho

https://twitter.com/user/status/1695110620390301754

I actually don't think longer amortizations are a problem right now. In fact,
I'd argue they are a great way to deal with the current mess. Clearly longer amortizations have financial downsides. However, it's a much better option defaulting or not being able to buy at all and renting your entire life.

The analyses around longer mortgage rates and extra interest paid never seem to properly take into account the effects of inflation or the actual extra capital you are accumulating.

[Yoho]

Originally Posted by blankall

I actually don't think longer amortizations are a problem right now. In fact,
I'd argue they are a great way to deal with the current mess. Clearly longer amortizations have financial downsides. However, it's a much better option defaulting or not being able to buy at all and renting your entire life.

The analyses around longer mortgage rates and extra interest paid never seem to properly take into account the effects of inflation or the actual extra capital you are accumulating.

These were some of the first steps taken in 2008 in the US before the job market tanked.

https://www.nytimes.com/2009/01/09/b....19232394.html

[GGG]

Originally Posted by Yoho

These were some of the first steps taken in 2008 in the US before the job market tanked.

https://www.nytimes.com/2009/01/09/b....19232394.html

There is a difference between reducing qualifying standards to allow longer amortization which further inflates pressures and Variable rate mortgages which have fixed payments until the entire payment is interest.

Making mortgages easier to qualify for would be bad right now.

[Yoho]

Originally Posted by GGG

There is a difference between reducing qualifying standards to allow longer amortization which further inflates pressures and Variable rate mortgages which have fixed payments until the entire payment is interest.

Making mortgages easier to qualify for would be bad right now.

It’s the renewals where they pretty much have to in a lot of cases.

[Qwerty]

Originally Posted by blankall

I actually don't think longer amortizations are a problem right now. In fact,
I'd argue they are a great way to deal with the current mess. Clearly longer amortizations have financial downsides. However, it's a much better option defaulting or not being able to buy at all and renting your entire life.

The analyses around longer mortgage rates and extra interest paid never seem to properly take into account the effects of inflation or the actual extra capital you are accumulating.

46% are longer then 25 years as well. Lots of people are paying interest only on loans and have amorts of 70+ years. When they have to renew they are not allowed a 70 year amort. Their payments are going to go up insanely. 2025 is when all the COVID mortgages expire. As I have said before, if rates are not much lower then today by then, housing will collapse.

[GreenLantern]

How many households in Canada do you think can afford a 800-1000 dollar increase to their mortgage payment over night?

[MoneyGuy]

Originally Posted by GreenLantern

How many households in Canada do you think can afford a 800-1000 dollar increase to their mortgage payment over night?

Very few. Half of Canadians can’t handle a missed paycheque without going into debt (MNP study).

[blankall]

Originally Posted by Qwerty

46% are longer then 25 years as well. Lots of people are paying interest only on loans and have amorts of 70+ years. When they have to renew they are not allowed a 70 year amort. Their payments are going to go up insanely. 2025 is when all the COVID mortgages expire. As I have said before, if rates are not much lower then today by then, housing will collapse.

The norm is a 25 or 30 year amortization. It's possible to refinance, restarting your 30 year (or higher. I think we'll see a lot more 35 year amortizations as common) amortization before allowing you to default. I locked in at 1.6%. If I was able to refinance on a fresh 35 year amortization, my payments would remain almost the same.

I don't see housing collapsing when there's a massive shortage of housing. People will be making the same desperate moves to hold onto their properties and kicking the can down the road.

Edit: In 3 years Canada is likely have another 3 million new residents and have built homes for about 1/3 of them. The housing crisis is the major issue facing the economy.

[FlamesAddiction]

Originally Posted by blankall

Edit: In 3 years Canada is likely have another 3 million new residents and have built homes for about 1/3 of them. The housing crisis is the major issue facing the economy.

Canada has the lowest housing per capita out of any G7 country. I guess someone has to be lowest, but we also have the biggest population growth relative to current population size. I don't know what answer is, but what's going on is long past being sustainable.

[calgarygeologist]

Originally Posted by FlamesAddiction

Canada has the lowest housing per capita out of any G7 country. I guess someone has to be lowest, but we also have the biggest population growth relative to current population size. I don't know what answer is, but what's going on is long past being sustainable.

Does that include igloos?

[2ArmBands]

Originally Posted by blankall

I actually don't think longer amortizations are a problem right now. In fact,
I'd argue they are a great way to deal with the current mess. Clearly longer amortizations have financial downsides. However, it's a much better option defaulting or not being able to buy at all and renting your entire life.

The analyses around longer mortgage rates and extra interest paid never seem to properly take into account the effects of inflation or the actual extra capital you are accumulating.

You’ll have to pardon my ignorance. I’d like to understand what is happening here. You mean to tell me 23% of all mortgages held at TD have amortization periods over 30 years? Are you even able to get a new mortgage with amortization over 25 years? I didn’t think that was even an option. What is causing this? People are essentially not able to pay their mortgage with new rates and they have to re-amortize to that long to maintain their payment? What is the play here…. Take a 3 year term on 30 plus year amortization and hope the rates go down and amortize back down?

Just curious more than anything. I’m just a standard dude that just takes the hits/gains on a new rate every few years and just keep paying.

[opendoor]

Originally Posted by FlamesAddiction

Canada has the lowest housing per capita out of any G7 country. I guess someone has to be lowest, but we also have the biggest population growth relative to current population size. I don't know what answer is, but what's going on is long past being sustainable.

Houses units per capita isn't a particularly useful metric. A single-person household needs 1 house per person while a 4-person household only needs 0.25 houses per person.

Within the G7, there are basically 2 groups; countries with older populations (Japan, Germany, and Italy are the 3 oldest countries in the world) and ones with younger populations (Canada, UK, and US). And the latter 3 have essentially the same number of housing units per capita while the former have more. Which makes sense, because older populations have far more single-person households while populations with more families will have more multi-person households.

And Canada is also building housing faster than any of those countries. Given Canada's average household size of 2.5 people, the current rate of construction would allow the population to increase by about 650-750K a year, which is in line with current targets for growth.

[calgarygeologist]

Originally Posted by 2ArmBands

You’ll have to pardon my ignorance. I’d like to understand what is happening here. You mean to tell me 23% of all mortgages held at TD have amortization periods over 30 years? Are you even able to get a new mortgage with amortization over 25 years? I didn’t think that was even an option. What is causing this? People are essentially not able to pay their mortgage with new rates and they have to re-amortize to that long to maintain their payment? What is the play here…. Take a 3 year term on 30 plus year amortization and hope the rates go down and amortize back down?

Just curious more than anything. I’m just a standard dude that just takes the hits/gains on a new rate every few years and just keep paying.

If I remember the rules correctly, purchasers who make a downpayment of 20% or more can get longer amortizations such as 30 or 35 years. But CMHC backed mortgages can only go to 25 years.

[opendoor]

Originally Posted by 2ArmBands

You’ll have to pardon my ignorance. I’d like to understand what is happening here. You mean to tell me 23% of all mortgages held at TD have amortization periods over 30 years? Are you even able to get a new mortgage with amortization over 25 years? I didn’t think that was even an option. What is causing this? People are essentially not able to pay their mortgage with new rates and they have to re-amortize to that long to maintain their payment? What is the play here…. Take a 3 year term on 30 plus year amortization and hope the rates go down and amortize back down?

Just curious more than anything. I’m just a standard dude that just takes the hits/gains on a new rate every few years and just keep paying.

Variable rate holders. A lot of variable mortgages (or maybe basically all of them) use fixed payments. So if rates increase, your payment stays the same but your amortization increases because you're paying down less principal every month. So as rates increase dramatically, these people are paying less and less principal, so at their current payments, it'd take 35, 45, 55, or more years to pay it down. There's a bit more to it than that, but that's the basica idea.

The rub is, when they go to renew, they can't get a 50+ year mortgage, so to get back under into the standard amortization limits of 25-30 years, their payments will need to increase significantly unless rates drop between now and then.

[Winsor_Pilates]

Originally Posted by calgarygeologist

If I remember the rules correctly, purchasers who make a downpayment of 20% or more can get longer amortizations such as 30 or 35 years. But CMHC backed mortgages can only go to 25 years.

Correct

[greyshep]

We are in a variable and I can definitely tell you our payment is NOT fixed. We get whacked everytime the interest rate goes up.

[ChuckieNZ]

That's technically an adjustable rate mortgage; strictly speaking in a variable rate mortgage the payment doesn't change unless you hit a trigger rate where interest calculations are higher than your fixed payments.

[Azure]

Home values need to decrease enough to make up for interest rate increases.

But will they? Likely not.