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Wait, you have several mortgages?

Why do you have several mortgages? You can probably live in just one house.

Or are you one of these guys who's making homes unaffordable in Canada by buying several properties, all of it debt financed.

Maybe you should strongly consider selling all your properties except the one you live in. Look at how high home prices still are... probably better to sell now than before interest rates go sky high.
Individual property investors are far from tipping the scale to "making homes unaffordable in Canada".
 

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I strongly disagree, Mr Mortgage Underwriter. Boy talk about bias. You worked your whole career in the mortgage industry and got rich off this.

Many individuals in this country are involved with hoarding property portfolios. @Letran appears to be one of them, but there are tons of others. It causes harm to other Canadians and deprives them of home ownership.
i guess we will agree to disagree.

Before you take aim at individual investors, where do you classify large property management companies?

Demand and supply are what drive prices. Not individual investors.
 

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The boomer mortgage underwriter, rubbing it in my face. Very classy... got to love rich boomers.

How rich did you get off the mortgage boom?
Not sure who's more classy now......

James, something is clearly off with you. If you want to have a debate, I'm all for it. Name calling, inaccurate assumptions.......very childish. That hardly belongs in a playground.
 

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Back to the first original question of variable vs fixed. I have always had variable. However, I did advise a friend to get fixed when they renewed last year. The person after a nasty break up and some hard financial times, needed to have the most stability while they are rebuilding. I am so glad I did. Currently their fixed rate is 2.09 until 2026 which is lower than my variable. So that should give them a few years to settle and plan for larger payments. They could not handle much now for increase. Just to remind people that generally variable is better but there are exceptions.

I just got off the phone with our mortgage broker. Normally, I can always get ahold of him. He says people have been freaking out and calling a lot. In our case, my mortgage isn't up for renewal until next June. I considered locking in or doing an extend and blend or something. Good thing cooler heads prevailed. Our balance pretty low, we have under 3 years left, and can still make lump sums. My plan is that if the rates keep climbing, we will make a lump sum at the end of this year, and the mortgage will be paid off at time of renewal.
You have to consider that a fixed rate carries a large penalty should you need to break your term.

Also, you cannot compare your mortgage rate with a different period in time. When your friend locked in 2.09%, you should be comparing it to the variable rate at that time. Also, you cannot just focus on 1 rate for 1 term only. Typically, a mortgage cycle will contain 5 renewals. Therefore, its the average of all rates that you should be considering. Choosing the lowest rate at each renewal guarantees you that you will end up with the lowest average.
 

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Variable rates continue to be favorable. The spread is still significant. Variable rate will always outperform the fixed when looking at the life of a mortgage.

Qualifying for a fixed rate is becoming more difficult due to the stress test. Some are defaulting to variable for that reason alone. I suspect this will change once the benchmark rate increases to compensate for the rising rates.

I just googled "variable open rate mortgages" and found a result that says " 5 year variable open". Not sure what that means. If it's open, that means you can cancel at anytime without penalty. So why does 5-year come into play?
The difference between a variable open and closed term is that you can payoff an open term anytime without penalty. A closed term will trigger 3 month interest penalty. The "5 year" pertains to the discount obtained at the time of signing the mortgage. So in a scenario of Prime minus 1.00%, the Prime rate will vary whereas the 1.00% discount is guaranteed for a 5 year term. An open term will carry a much smaller discount or maybe even a premium added to Prime.
 

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Thanks mortgage. I assumed this was the case from my fixed income experience (as commented up thread).

Is there any rule of thumb, or better yet historical data on street pricing for variable and fixed? I'd like to build a link to a model I have that forecasts bond prices.
The problem is all these statistics are derived from Bank "posted" rates, which are astronomically high and not one customer obtains those rates. These statistics simply show the rate "trend" which is a good enough indicator to demonstrate the spreads between fixed and variable.....but not good enough to benchmark against bond prices.
 

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Many people don't seem to realize that this is quite common. Borrow against one property, use it as a down-payment on another property.

I was astounded when I first learned that people did this. Really shows you how real estate prices (buying pressure) is fuelled by the easily availability of credit.
That's how the corporate world works. You secure a loan against an asset, invest the borrowed funds and grow your business. Nothing new.
 

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@james4beach

You keep pointing fingers to the amateur investors and assume they make up the majority of RE owners. Even if they do, you can't assume they're all idiots.

What do you consider "insane" leverage? Cause I know more corporations going bankrupt for being overleveraged than property owners - yes, even the "amateurs".

Stop assuming.....just like you assume I'm a mortgage underwriter.
 

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There is value in RE. Just like a chain restaurant owner can get more leverage than a no-name restaurant. Or a dentist vs a mechanic.

You should be more concerned with consumer debt than secured debt. That’s what makes people go bankrupt.
 
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