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Old 03-07-2019, 01:07 PM   #21
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Originally Posted by PsYcNeT View Post
House poor is probably the most easily avoidable form of poor, and yet people are so bad about buying to the top of their affordability that we need rules like this to get them to pump the brakes.

Sad.
I agree, but when everyone else is willing to take on enormous debt, it drives prices up unnecessarily, making it impossible to find a good home at a decent price. So you're kind of forced to extend yourself in order to get an adequate home.
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Old 03-07-2019, 02:06 PM   #22
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Originally Posted by MillerTime GFG View Post
Paul Taylor, CEO of Mortgage Professionals of Canada on March 5th:

https://www.facebook.com/MortgagePro...341?__tn__=K-R

Mortgage arrears are around 0.24% in Canada, one of the lowest rates in the world. There is not a week that goes by where at least one client doesn't say something along the lines of "I never used to have to provide this many documents" or "why are there so many documents required?" There is major due-diligence required to determine affordability even before the stress test was implemented.
What has been the biggest change in terms of documentation required? Is the documentation different on a renewal vs a new application with 20%+ down vs an application with less than 20% down?

When I got my mortgage back in 2016, I basically gave the bank a letter from my employer saying I actually did have a job, my last three pay stubs (that were clearly loaded with overtime and LOA payments) and let them run a credit report.
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Old 03-07-2019, 02:35 PM   #23
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Couldn't you rent out your current place and move for the new job and rent there?
Looked into it and I could. Rental market is bad here, though. Based on my mortage payments and property tax I'd probably be losing $700 a month or $900 or more if I use a property manager.

The place I'd be moving is in the U.S. too. Might just bite the bullet and do it, though.
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Old 03-07-2019, 02:49 PM   #24
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Although if interest rates were 5% or higher, there would still be a real lull in the housing market. Probably even more so.

As an aside, how do people in Toronto and Vancouver even afford their homes? I make nearly six figures and under the current rules, the most expensive house I can afford is $450,000.

So in a city like Vancouver where there are virtually no homes under $1 million, what do you do?
The simple answer is that almost no one is buying property in Vancouver, and prices are finally starting to plummet. The prices in Vancouver were the result of foreign investment from China. China put on major restrictions on capital outflow, and the real estate market has come to a grinding halt.

There were quite a few locals who were either speculating or just borrowed far more than they should have under the old rules. There are still some properties moving in Vancouver, but very few over the 1 million mark. The entry level attached market is doing okay. Vancouver remains a desirable place to live, and you'll never find bargain housing prices there, but things are coming back down to reality and quickly.

Quite frankly, the "stress test" is really just a test to see if you can afford the exact same mortgage under what the predicted economic conditions will be in 1-2 years. It's not just a way to cool the market. It's also a way to protect the public from themselves. No one should be borrowing to the max that they can afford. You should borrow in a way that accounts for potential rising interest rates and an economic slowdown.

I fully support the stress test, as it's simply just forcing people to take precautions they should take anyways. The stress test is, in my opinion, not the reason for the market cooling either., nor even a major contributor. Vancouver and Toronto are cooling due to decreased foreign capital inflow. Calgary is cooling due to low oil prices.
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Old 03-07-2019, 02:52 PM   #25
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I have no problems at all with increased stress testing. I wouldn’t mind it if you needed 20% down to secure a mortgage in all honesty. *Anti-big business bias here*. The housing market is one of those weird things where I feel like there is nothing but incentive and benefit for the controlling parties to have costs as high as possible, and giving easy mortgages does nothing but help that. Mortgage firms, builders, realtors all make money directly proportionate to the sale price of the home. By taking on slightly more risk by giving loans to anyone they can, costs are naturally inflated, and the cycle of over valued housing ‘owned’ by over-stretched mortgage payers carries on.
Housing may have been a great investment years ago. Run the figures on an average single family dwelling, including the cost of mortgage insurance, interest and the cost of your initial capital, and it’s absolutley absurd what it actually ends up costing. Every time a young couple gets approved for a mortgage at the top of their ‘affordability’ the inflates price is maintained, while a 25 year albatross is proudly clinched around their necks.
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Old 03-07-2019, 03:00 PM   #26
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The only crappy thing about the stress test is that it wasn't implemented in 2010 or something.
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Old 03-07-2019, 03:10 PM   #27
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Lots of good points in this thread I agree with, I think it is a bit late and I understand the frustration of those in the business or those currently looking, but it's just protecting people from themselves, which we need to a point.

Traffic safety laws are the same thing, ya most people could drive 70 and not get in an accident, but there is a portion who can't, so the speeds are set accordingly to protect the bigger group.

Dare I compare it to immunizations as well? Public health care? Examples are all around us in our society.

Protect the ones who can't protect themselves. Renting sucks vs. paying a mortgage, 100%, but I can guarantee you that bankruptcy/living on the streets will be much worse. And inflating the market and causing destabilization is not a long term plan.
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Old 03-07-2019, 03:13 PM   #28
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Quoting doesn't seem to be working, so this is @ 81MC:

Quote:
Every time a young couple gets approved for a mortgage at the top of their ‘affordability’ the inflates price is maintained, while a 25 year albatross is proudly clinched around their necks.
If someone doesn't own a home though, they're most likely renting. Renting really isn't much cheaper than a mortgage payment, so while you may have this massive liability around your neck for 25 years, at the end of it you have an asset. When renting, you do not.



The mortgage insurance (ie. CMHC) you eluded to is generally paid off within the first 2-3 years of your first term (based on today's interest rates).
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Old 03-07-2019, 03:17 PM   #29
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The stress test was implemented way too late. But now that's it's doing its job and making the market more affordable people want it removed. It will take awhile for things to settle out, but they'll eventually start growing again on a lower base value, which will be more sustainable.

Save removing it for a fiscal stimulus in a really big recession.
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Old 03-07-2019, 03:20 PM   #30
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Originally Posted by MillerTime GFG View Post

Renting really isn't much cheaper than a mortgage payment
This isn’t exactly true: https://www.cbc.ca/amp/1.4490332
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Old 03-07-2019, 03:26 PM   #31
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Originally Posted by Scroopy Noopers View Post
This isn’t exactly true: https://www.cbc.ca/amp/1.4490332
While renting obviously is cheaper. Does it take into account getting 0% return on your money? Article wasn't opening for me for some reason.

Last edited by Weitz; 03-07-2019 at 03:29 PM.
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Old 03-07-2019, 03:54 PM   #32
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Originally Posted by llwhiteoutll View Post
What has been the biggest change in terms of documentation required? Is the documentation different on a renewal vs a new application with 20%+ down vs an application with less than 20% down?

When I got my mortgage back in 2016, I basically gave the bank a letter from my employer saying I actually did have a job, my last three pay stubs (that were clearly loaded with overtime and LOA payments) and let them run a credit report.
Probably not a ton has changed since 2016, aside from the stress tests. I will say though that anytime overtime is included, lenders will now need a full 2-year average of it in order to use it. Can't be used for someone who has less than 2 years with that employer. Same goes for bonuses, etc.
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Old 03-07-2019, 03:55 PM   #33
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I started this thread not knowing this would be coming, but just now I find out that an organization that I’m involved with is being asked to send a letter supporting the housing industry’s plea to have these rules relaxed. I can’t support retreating to the way it was. I’ll see what it is they want from us. Similar organizations across the province are being asked for support.
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Old 03-07-2019, 04:03 PM   #34
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Originally Posted by Scroopy Noopers View Post
This isn’t exactly true: https://www.cbc.ca/amp/1.4490332

A $500,000 detached home that will rent for $1,700? Yea I feel like that is pretty cherry-picked. Certainly not the case for homes I've come across.

I had a client buy a $388,000 downtown condo, which is a completely over-saturated market, rented out for $1,700.

I will attest there may be more of a gap in today's economy/market than what we're accustomed to.
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Old 03-07-2019, 04:10 PM   #35
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nm

Last edited by Flamenspiel; 03-07-2019 at 04:18 PM.
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Old 03-07-2019, 04:55 PM   #36
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Originally Posted by MillerTime GFG View Post
A $500,000 detached home that will rent for $1,700? Yea I feel like that is pretty cherry-picked. Certainly not the case for homes I've come across.

I had a client buy a $388,000 downtown condo, which is a completely over-saturated market, rented out for $1,700.

I will attest there may be more of a gap in today's economy/market than what we're accustomed to.
Well you kind of start to cap out what “renters” pay. You aren’t going to find too many people who can pay $3000 a month to rent, but can’t afford to buy a place.

Even where I am in Ontario (not torana), it’s cheaper to rent than to own by a couple hundred a month + property taxes. So I’m in NO RUSH to buy. Of course one day I will. But why wouldn’t I save for 10 more years and drop an insane down payment on a place instead? No reason not to.
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Old 03-07-2019, 04:59 PM   #37
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While renting obviously is cheaper. Does it take into account getting 0% return on your money?.
I really don’t see it that way. I understand what you’re saying, but the risk outweighs the benefit to me. One day I’ll own something, but not in a hurry. If I wasn’t saving money, and buying a house would somehow improve that, that’s different.
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Old 03-07-2019, 05:02 PM   #38
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While renting obviously is cheaper. Does it take into account getting 0% return on your money? Article wasn't opening for me for some reason.
If renting is cheaper housing is over valued.

Renting is far more liquid with minimal risk. It should be more expensive for the equivalent product when all costs and benefits are accounted for.
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Old 03-07-2019, 05:03 PM   #39
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If renting is cheaper housing is over valued.

Renting is far more liquid with minimal risk. It should be more expensive for the equivalent product when all costs and benefits are accounted for.
But it doesn’t need to be because landlords bought before it ballooned and they are all making bank. So they don’t really care. I’m over and above covering my landlords mortgage.

It’s a crazy balance game I don’t enjoy playing haha.
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Old 03-07-2019, 05:11 PM   #40
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I fully support the stress test, as it's simply just forcing people to take precautions they should take anyways. The stress test is, in my opinion, not the reason for the market cooling either., nor even a major contributor. Vancouver and Toronto are cooling due to decreased foreign capital inflow. Calgary is cooling due to low oil prices.
I agree with the first half of this.

The issue with the “cooling” due to decrease foreign capital inflow, is that foreign capital inflated prices to begin with. They shouldn’t have been driven up to the level they’re currently at. This is the problem.
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