All Jake Moldowan needs to know about improving the house-flogging business in Canada was published on this site. Actually, I’ve nothing further to add. I think he knows it.
“I have been on your blog last night and this morning and am blown away by the responses your readers have given!,” the housing exec just wrote. “There is a goldmine of information here which just confirms the rational we have for you to participate. In reading over 100 of the responses (I will read them all but have a video conference call in 10 minutes) I can also see the struggle in maintaining your credibility with your readership as there were a number of comments relating to mistrust or trickery.
“This project is genuine and we have been and will be totally open to receive all points of view. The responses are invaluable to us in order to get a clear picture and understanding of the Consumers needs and wants. Only then can we begin to deliver a product and service that will improve organized real estate.”
I believe the request from the BC Real Estate Association for expert input on the future of realtors is best satisfied with a full copy of yesterday’s blog and the ensuing gush of comments. What better focus group could these guys have than the thirty-nine thousand people who came here in the last 24 hours? They should pay us for such pith and verve.
In fact, Jake offered. A thousand bucks if I’d send him two lists of five items. Instead I’m sending tens of thousands of words, and accepting nothing. This is not a commercial site. It takes no advertising. And I’m not for sale. Of course, you can always buy me a scotch and rub my ankle.
Remember those 1.99% mortgages the boys at Investors Group rolled out a few days ago? Sure you do. They had every media headline-writer in the nation wetting their Stanfields in excitement, which was the point. Lost on the geniuses who inform the masses was the fact these loans are variable-rate (not fixed), have short terms (three years), are restrictive (you have to sell your home to get out) and were primarily intended to give IG much-needed free publicity (that sure worked).
Dawn was one of many mortgage-shoppers startled by the thought she could get financing for less than 2%, so she applied. Why not? See what happens, right?
“They took down my info and then took until today to get back to me with an approval,” she told me a few hours ago. “Meanwhile I renewed with my own bank at 2.5%. I figured that given what you’d said about IG, there would have been strings attached. Here’s what they offered. Just thought you might get some entertainment value out this.”
Indeed. Below is the actual email Dawn received from the mortgage officer, telling her the loan had been approved. I reproduce it in full not only to show you that the offer has more holes than emmental and 1.99% could actually be 3.75%, but that IG has yet to discover SpellCheck.
“First off the Commitment Letter is not in stone as we are able to change, Amortization , Payment schedule, and amounts but I Nicole was able work the numbers under your goals for this mortgage, being a amortization being 10 years as well as a payment of $997.63 . the only issue we have is that we do not have a semi monthly payment schedule, so to ensure the 10 years based on the payment she went by weekly, To transfer the mortgage out there will be legal fees, as well as a discharge fee, which we have also put into the total mortgage amount, which means you do not need to have the cash for this, you’re looking at legal fees around 650 and a discharge fee of around 330.
“You will also notice the interest rate charge of 3.75% on the form, Nicole does this so you payment will not fluctuate during the 3 years , if interest rates go up normally the your monthly payment does as well, in this case Nicole has prepared it so it will not, you are still charged on the 1.99% but he difference is going towards your principal.”
Got that? If interest rates rise over the course of the next three years (which is a 100% probability) payments remain the same, but the amount of your mortgage principal increases every month. That’s exactly what a variable-rate mortgage means. The lender risks nothing. The borrower rolls the dice.
Here’s a BMO-generated chart of Toronto real estate prices (seasonally-adjusted, in constant 2002 dollars). See that first arrow indicating a price bloat in the late 1980s? It was followed by a housing correction which obliterated a third of people’s equity. It took almost 20 years for average prices to reclaim the pinnacle that they’d achieved in 1988-9.
Now look at the second arrow.
We’re so lucky it’s different this time…