Really?American-style amortization periods stretching beyond 25 years were also relatively unknown in Canada.
Could you explain what you mean? "Cdn bank profits saved them more than stingy lending." Not really. Canadian Banks, unlike American banks, keep mortgages on their balance sheets, Therefore, Canadian banks are very interested in the quality of those mortgages. American banks tended to sell mortgages as mortgage-backed securities and absolved themselves of all responsibility once the MBS were sold. That practice has been blamed for at least part of the real estate crisis. Also, Canadian banks had higher capital requirements.Really?
Seems more to me like the Cdn bank profits saved them more than stingy lending. I know people with 0/40 mortgages in Canada
How do they think that the housing market will settle out in the spring when people start selling? As far as I know, when someone sells their home they BUY another one, no?
Actually lots of my peers had $0 down because they believe buying a house is always smarter than renting even if you have no down payment. Based on their disposable income and the price of their houses, I can only assume most of them are more than 25 yrsYou may know people with zero-down, 40-year mortgages, but I'll bet you know very few. That mortgage is very rare in Canada, especially with the clamp down on loose mortgage lending.
I was commenting on the original article which predicted that housing prices will settle back down when it warms up and more people start selling.I'm not sure what your point is when you say that people buy another home as they sell. So what? Buying another home as you sell doesn't guarantee that housing prices will remain firm. As interest rates rise, I believe housing prices will fall. Whether prices will crash remains to be seen. Economists with a good track record, like David Rosenberg, are stating that housing prices are excessive.
Lots of your peers have zero-down mortgages? I'll take your word for it. However, truly zero-down mortgages are unusual. Even under the old rules 5% was the minimum down payment. A former mortgage broker I know told me that "helpful" (less scrupulous?) brokers would arrange zero-down mortgages. Mortgagors would borrow the down payment from another source, so the entire amount was borrowed. However, especially with the new rules, this practice will likely be less common.Actually lots of my peers had $0 down because they believe buying a house is always smarter than renting even if you have no down payment. Based on their disposable income and the price of their houses, I can only assume most of them are more than 25 yrs
Housing moves in cycles. In Edmonton I've seen prices gyrate (up and down) even with lots of buyers and sellers.I was commenting on the original article which predicted that housing prices will settle back down when it warms up and more people start selling.
So they are assuming more supply vs demand when summer comes and people put their houses on the market, and I'm pointing out that it's a moot point if they all buy another house, no?..
So bubbles in real estate can't happen in Canada? It may more difficult, but it can definitely happen. In Alberta there have been several real estate booms and busts over the past few decades.There are a couple of interesting charts that compare the US and Canadian housing markets since 2000 at http://bubblemeter.blogspot.com/2009/12/housing-canada-vs-united-states.html
Seems to me that some have been calling the price increases in Toronto and Vancouver "bubbles" for decades.
It is normal for house prices to go up when interest rates for down and for house prices to go down when interest rates go up.The prices do not plummet as with bubbles in stocks unless the market is flooded by defaults though - and that is unlikely to happen in Canada given the differences in lending practices from the states.
I did not say the can't happen. I said that prices don't plummet drastically unless there are lots of mortgage defaults - which is what is happening in the US. Given our lending practices a flood of defaults is not on the horizon.So bubbles in real estate can't happen in Canada? It may more difficult, but it can definitely happen. In Alberta there have been several real estate booms and busts over the past few decades.
Yes you need 5% down, but that can come from 5% cash back from the lender, effectively giving you 100% financing. Depending on a person's financial situation it is not actually a bad deal right now.The rules changed as far as I know everyone needs 5% down and everyone needs to qualify for a 5 year mortgage at fixed rates even if they get a variable rate mortgage.
As I have said before... I know a lot of investors and none of them get CMHC financing on single family home, they just don't want to pay the fees. These are landlords who have multiple properties. Further it is almost impossible to buy a place that has positive cash flow in Toronto and most of them just aren't buying right now. I had an investor who was looking to buy a few months ago and the bank wanted 35% down on a second property.
Actually on the other thread, I didn't even get 'it' the first read through. I thought the GT article explained the 'five year funnel' clearer.Canadian Mortgage Trends does a good job of covering this topic. See March 8 post "Five Year Funnel".
Also related is another thread on this forum titled "Will the new Mortgage Rules Affect You?"
Yep. The other thread is full of misinformation and corrections, so it is a confusing read.Actually on the other thread, I didn't even get 'it' the first read through. I thought the GT article explained the 'five year funnel' clearer.
And yes Canadian Mortgage Treads does a good job on this topic too. Thx.