Oprah here. A fabulous blog for you today. Writhing in emotion. Let’s bring on our first guest, Arnold from the GTA. A big hand, ladies!
So, Arn, tell us about your pathetic self:
“I am 30 years old and married with two kids. My wife and I have been looking to move for about 6 months now. We have enough equity if we sell to put 20% down and amortize over 25 years on almost any house we want in our area ( Mississauga). I have been reading your blog and am now scared shitless! Everybody I talk to seems to think real estate only rises.”
You have a problem with that divine logic, Arnie baby?
“A part of me says screw it, just jump in and hope housing in our area doesn’t drop 20%. Another part of me says sell now and rent for 1-2 years and see where the housing market is. The renter idea sounds good to me, but I have brought it up to a few friends and family members and they have gone off and told me I must be crazy. “You’re wasting your money making a landlord rich.” It’s these sort of pronouncements that make me know I’m right. Unfortunately, I am unable to convince my wife that renting would be a better option. Anyway, I don’t know why I am even writing you, just thought I would pass on a little tidbit of my situation. Cross your fingers for less than 20%.”
“P.S. please don’t use this e-mail for a blog post. I don’t think it’s all that compelling and if you do think it is compelling I don’t think I could handle the ass lashing I might get from you and your wit.”
Not a chance, you cute widdle puddle of subservience. Happy wife, happy life! Am I right, ladies, or am I right?
Hmmm. You have no idea how many emails I get in this vein. Of course, it’s not always the female partner who could care less about macroeconomics, monetary policy or ending up in suffocating piles of debt, but usually so. Ironically, it’s often women who are dramatically more risk-averse than men, opting for guaranteed investments even if they have a substandard return. So how do we reconcile that Mars is reckless but worries about financial stability, while Venus is cautious but happy to leverage bigtime for a house?
Perception, of course. Men often see real estate as an encumbrance and a pit of debt. Women tend to see stability and permanence. And by all accounts, she’s winning.
I mean, look at the latest RBC survey churned out by the bank’s mortgage marketing department. Despite watching real estate destroy the US middle class for five years now, 90% of Canadians “are confident in the country’s real estate market”. Despite record household and mortgage debt, rising inflation and stagnant wages, 75% of these souls believe “they are well positioned to withstand a decline in the housing market.” Why? That’s easy: “69% said their home has risen in value over the last two years.”
So here we have a classic situation. Houses go up in value, so people perceive them as good investments. They rise further, even better. Like Bre-X. Or pets.com. Or Nortel. Human nature is to crave what other people want. This creates its own demand. Because more people pile in, values rise. Everyone’s opinion is validated. And that breeds more desire. So prices swell. The crowd wins. Emotion becomes fact. And here’s a bank survey to prove it.
Of course, I’m not picking on the Royal Bank.
But I could.
For example, one would think the country’s largest bank would know better than to circumvent, even unwittingly, the federal ban on 35-year mortgages, which takes effect next Friday. F murdered the little sucker because over the last year the overwhelming majority of all new loans had an amortization so long horses were envious. This, of course, encouraged over-borrowing and exaggerated the threat posed by a housing downturn (which 90% of people dismiss).
How does this ban work to change things? By forcing people to make higher monthly payments for an equal amount of debt, with the goal of disqualifying those who should never have borrowed in the first place.
But here comes the “Skip-a-Payment” option at RBC. Read about it here. Essentially the bank will allow people with 30-year amortizations to make only 11 monthly payments a year, with the 12th simply being added on to the mortgage principal. This (you can work it out) has about the same effect as turning a 30-year loan into one with a 35-year amortization, lowering average monthlies and goosing the interest the bank collects.
Example: $300,000 loan at 2.8% with a five-year term. Monthly payment with 35-year am is $1,121, or $13,452 a year. Monthly with a 30-year am is $1,232. But skip a payment and this costs $13,552 annually – virtually identical to a 35-year payment.
I am sure this is a coincidence.
Like estrogen.
191 comments ↓
first
this is getting ridiculous. with zero down, fake 35 years, not-really verified income and lending up to an insane % of your income. How come all this is legal?
Are we about to see interest only mortgages?
every time we think we’re getting closer to the norm (>20% down, 25year), the banks find a way to play with the rules.
If people are in trouble financially, they just borrow against their home. When they get to the point they can not borrow anymore, then skip a payment is the next option.
This is keeping mortgage arrears low for the moment, until the dam bursts.
Those sneaky banks, always have a loophole to maximize profits as long as the Government is not looking their way.
“financial innovation” – a.k.a. ways for banks to move around numbers on their balance sheets to keep the stock price up
Not exactly on topic of today’s blog, but what I’ve noticed in our little Port Moody BC, after looking at listings, is that the big, expensive houses seem to stay like that (for now), but old and small apartments and townhouses dropped in price quite significantly. Could it be heading to a situation like in some European countries (Germany), where the prices in the same town vary dramatically, depending on the size, quality, etc. and nobody is “priced out of the marked”?
I do not want Steve Harper in charge when Canada’s housing bubble hits. Steve and Jim Flaherty couldn’t organize a pillow biting fight.
………………
Steve Harper: never admit to anything
Mr. Harper sat and smiled and shared the odd chuckle. He reclined as best he could in his chair and fiddled with the cord of his desk’s earpiece. When he stood to answer the Liberal leader’s charges, he shrugged and sighed. If he was the least bit concerned, a tiny bit chastened, it was impossible to tell.
But, of course, he hardly ever appears daunted by such stuff. Indeed, if there is one thing that defines this Prime Minister it is his unrelenting undauntedness, his undaunting relentlessness. He is a man of the post-shame world.
The man who once said there wouldn’t be a recession now congratulates himself for having seen the country through the downturn. The man who once said he’d never run a deficit now says he’s the only one who can be trusted to get us out of the red. The man who once derided Canada now campaigns on his love of country and loudly questions the patriotism of all others. The man who once predicted that the Liberals would lose power when a coalition overtook them and who then joined with the leaders of the Bloc Quebecois and NDP to ask that the Governor General consider her “options” before allowing the Liberal minority government of the day to dissolve Parliament, now says “losers” don’t get to form government.
What the Prime Minister eventually did then and what he does without fail now is to steer into the skid, so to speak. He charges headlong into the charges against him. He dismisses concerns and dares his adversaries to do something about them. He is never anything but unapologetic.
http://www2.macleans.ca/2011/03/08/the-commons-stephen-harper-ever-undaunted/
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NeoCon talking points training video
http://www.youtube.com/watch?v=4vuW6tQ0218&feature=related
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♥
Nope…no greedy, unethical banks here.
This is Canada, dude!
It does say:”Additional requirements apply for CMHC-insured mortgages.”
wonder what they are…
JJ .. first
L ooooooooo ser
“Happy wife, happy life…”
“If Momma ain’t happy, nobody’s happy…”
Have truer words ever been spoken? As much a financial reality as an emotional reality…
Good Grief.
Well, I guess that the RBC brains are the “Smartest guys in the room” for now.
I’ll take the “Extended” package and skip 4 payments in a row plus take the free payment option….. then think about defaulting! Heck, it’s insured anyhow. By the time they go through the entire eviction process, it should be equivalent to about 2 years of free rent.
PS: Foreclosure rates still rising in Calgary. It isn’t Phoenix yet, but you just have to wait.
JJ: You’re first when it comes to being an idiot.
Why does it surprise anyone that RBC is “bending” the rules? They are only taking their ques from the current government.
Since we are on the subject, anyone who wants to photocopy and send me a tax receipt or two will have my everlasting gratitude. I’m getting ready to do my taxes and I need them by Saturday. In exchange, i’ll give you a few of mine…
It’s not just RBC. TD and others have had this “skip a payment” concept for a while:
http://www.tdcanadatrust.com/mortgages/flexible-mortgage-tools/skip-a-payment.jsp
Okay, so, once again…Joe Average Vancouverite arrives home at the end of a long day. He just filled the tank of the family cruiser at $132/litre. He notes with some dismay that he needs to Air Care the beast ($40) before he forks out another year of lower mainland auto insurance ($1200 – $?, depending on his level of driving incompetence).
Joe bought a couple gallons of milk on the way home. They cost him nearly two bucks more than two gallons cost him just three weeks ago (darned close to $5.00 apiece). He hears the price of electricity is set to rise, and he knows milk is just one of a kazillion grocery products that will become even more expensive than they already are over the course of the next few months.
Things are looking bleak in the Best Rainforest in the World. But wait! Salvation is at hand, in the form of the mainstream media. Global TV runs a spot that night, like it does every night, excitedly proclaiming that Vancouver real estate is HAWWTT!! He hears a realtor say, “Buy now or pay more when you buy later!” The Vancouver Sun goes wacko over the hordes of wild and crazy Asians here to keep our market headed skyward forever!
Not once does Joe Average hear or read anything in the local media that adequately points to the peril and the realities of buying into a clearly overinflated market. Increasing property taxes? Nobody mentions them. Maintenance, repairs, legal costs, the added expense of “home” vs “contents” insurance, the potential that we’re at this very moment at the peak, the very real truth that Joe might very well be handing over 70% of his income every month to service household debt? Nada. The media, the mortgage brokers, the realtors that the media turns to for “expert” commentary? To them it’s all sunshine and lollipops. After all, real estate’s moved in only one direction for the last decade, so there’s no reason to think it won’t continue to do so, right? Right!
And Joe Average Vancouverite, knowing full well that mortgage rules are changing and that he’d better GET IN BEFORE IT’S TOO LATE, realizes what he must do. He picks up the phone and calls a realtor. No more “throwing away money on rent” for him. It’s a new world, and he’s in charge.
Damn banksters!!!
and wives!!!
Your bang on when you say 90% of Canadians are confident in the real estate market. I can’t tell you how many times I’ve been told that housing will never go down now. I don’t get it! Last i heard we Canadians didn’t have money to burn. Maybe some will change their minds when they are standing in line at the food bank.
Wow. Give the guy or gal who invented that little scam a raise. Job well done RBC. It seems inevitable that we are destined to shoot ourselves in the foot when it comes to housing and not evem F can stop it. Its like drugs – so long as there is demand there will always be a supplier. Ask Charlie Sheen.
Un-flippin-believable. But the only way to convince the banks to play nicely is to rein in CMHC. Put in a cap (like there used to be) on the amount insured, no second homes, down payment, 25 year maximum amortization, and be very specific about what mortgage terms are allowed. That way if the banksters add new terms that aren’t on the list, the mortgage magically becomes uninsured.
Ultimately, if the Canadian market ever goes US, the taxpayer is on the hook for all this frivolity. In the US the Fed has already silently bailed out Freddie and Fannie to the tune or $350 billion, which is an astronomical number, and there is no end in sight. We should, as taxpayers, be much more vocal about what we are willing to backstop and what we are not. A bailout of CMHC and thus the banks is out of the question. Tell them to go pound sand as soon as CMHC is broke.
Unfortunately CMHC won’t make a good campaign platform until after they’ve already diverted $35 billion from the government coffers. Right now everyone thinks they are still a good thing because they are the number one influence keeping house prices elevated. Even bigger than low interest rates.
As for subject #1, well, that is the deal. If you want free marital relations you have to buy her a house.
What I find so interesting, in this era of Internet and “Social Media”, is how, with SO much information available, people will make the same mistakes as in the past.
There is THIS blog, that blog, this and that site…but, people will still be dumb enough to get in over their heads.
I think someone should take take this on as a Phd. thesis.
TWILIGHT IN SAUDI ARABIA? IF IT’S YES, THEN IT’S SUNSET IN CANADIAN REAL ESTATE, TOO!
Garth has been chronicling the stupidities of property “purchasers” for quite some time. It’ll be made more interesting after the 18th of March’s imposition of new mortgage rules, skipped payments notwithstanding.
But the real story about Canada’s future real estate “fortunes” will soon be bound up by a group of angry Shi’ites in eastern Saudi Arabia, the heartland of that kingdom’s oil empire. This is where the rubber will hit the road. Skid marks, tank treads and all.
The Shias are mad as hell and they’re not going to take it any more; “anymore” meaning overt oppression by the Sunni (Saudi) rulers.
As Friday approaches, the day of promised demonstrations, it’s appropriate to take a look back at a late famous Houston oil man’s prescient book.
In 2005 Matthew Simmons published “Twilight In The Desert.”
In a few hundred well-researched and written pages, with accompanying tables and diagrams, Mr. Simmons presented a compelling case for those who doubted the the Saudi rulers’ eternally optimistic statements of how much oil the kingdom had/has left and how much more it could deliver at the turn of a few spigots.
Simmons’ book analyses key fields including Ghawar, the King of Oilfields.
“Ghawar’s cumulative production has exceeded the production of the next few largest oilfields by a factor of two to three since it first began producing oil in 1951,” wrote Simmons (P.151). Its production to 2005 was 55 billion barrels!
Simmons goes on to detail that Ghawar was eventually put on a sort of life-support where Persian Gulf water was pumped into its empty channels.
That allowed for more oil to be pumped to the surface. Trouble is the oil was/is much thicker than the lighter crude the field used to provide to the world. That story has repeated itself in several other huge Saudi deposits.
Simmons’ book tore away enough of the nonsense to be the recipient of nasty rebukes from the Saudi rulers and a few others who depended on PR lies to keep their jobs.
MID-EAST “DISINTEGRATION”
So the question continues to arise, following production disruptions in Iraq and Libya, and who knows where next: can Saudi Arabia still be the producer of last resort over the foreseeable future? Simmons may have said no, had he lived to see what’s happening today.
But a very much alive energy reporter, of some heft, says “no”. Saudi Arabia ain’t what it used to be.
Ambrose Evans-Pritchard’s latest column in the Telegraph newspaper says: “Some investors see trouble. They are buying oil options for $150 and $200 a barrel with expiry dates late this year, either as a bet or as an insurance against Mid-East mayhem.”
He then issues this caution: “The entire political order of the Middle East has effectively disintergrated, risking yars of upheaval in a region that provides 36 per cent of global oil supply and holds 61 per cent of proven reserves.” And, no, that 36 per cent cannot be found ANYWHERE else.
Elsewhere the website, Oil Drum, and others also express doubts that Saudi Arabia can continue being the supplier of additional capacity saying Saudi production is going full tilt right now and that there is no more margin should another oil producer hit the skids.
In the US, meanwhile, there is a small surplus of oil (much of it Canadian sourced) which accounts for the dramatic difference between WTI crude and the world benchmark Brent prices.
“Supplies have risen to a record at Cushing (Oklahoma), which makes me want to stay away from crude,” said Kyle Cooper, director of research for IAF Advisors in Houston. “WTI has become its own little market, unrelated to what’s happening elsewhere.”
Should the Shias of Saudi Arabia decide to double down in the streets, God only knows what oil will be trading for soon.
REAL ESTATE WHACKOS
In that event, not even the smooth-talking property debt-assister Angela Calla will be able to do a damned thing about it!
For sure, lifestyles in flippish Vancouver will be sack cloth and ashes in a very big way.
Even some of those Chinese zillionaires will find the airfares too high, when the fuel surcharge is finally imposed, to come to Vancouver; except if properties are going for Florida-type prices.
Greetings: #10 [McSteve]
You referenced financial reality and emotional reality, but missed the third, physical reality. Wifey not happy, no nooki!!!
Forbes list of all the known billionaries in the world is out. About 1200 in total.
http://www.forbes.com/wealth/billionaires#p_1_s_arank_-1__-1
Here are some interesting points from the list:
Carlos Slim of Mexico is number 1 at $74 billion, Bill Gates number 2 at $56 billion and Buffett is number 3 at $50 billion.
The walton family, the founding family of Walmart would be number 1 at $90 billion if they were counted as one family rather than as four separate entries on the list.
Many interesting names on the list, I am sure.
I notice 3 members of the Mars family with $10 billion each. Chocolate bars, who knew?
Canadian names I noticed include first the Thompson Family in spot number 17 with $23 billion
Galen Weston and family (Loblaws) at $7.1 billion
Jim Pattison $5.8 billion.
James and Arthur Irving $3.5 billion.
Charles Bronfman (Seagram fortune) $2 billion
Daryl Katz (Rexal drugs) $2.0 billion
Chip Wilsen (lulu lemon founder ) $1.9 billion
James Ballsillie (RIM) $1.8 billin
Frank Stronach (Magna) $1.7 billion
Gerald Schwartz (of Onex an investment conglomerate) $1 billion
+++++++++++++++++++++++
I notice Charlie Munger, Buffett’s partner slumming it down there at just 1 billion. Barely made the cut-off!
Oprah Winfry and Donald Trump are tied at $2.7 billlion…
I notice a Herb Allen $1 billion or so (a friend of Buffett’s) and Paul Allen $13 billion Microsoft co-founder on the list…( hmmm I must check if i am related to either…)
One of the great myths out there is that “all the great fortunes of the world were made in real estate’. That story originates at least as far back as Andrew Carnegie 100 years ago. If it were true then, it is not true now. Very few entries ion this list indicate anything to do with real estate as the source of the wealth. banking seemed to be one of the most common sources for the wealth. In terms of the top 50 richest people, real estate is the source in only two cases and none in the top 20.
just wait for all those house horny weds to get real horny… and have babies! all of a sudden those affordable morgage payments become a stretch. add a little inflation, and bam youve got $100 diapers.
Hey Vlad, I like the coke can solar heater… seen that idea for a while, some country man tried it a while back. slap one of those on a greenhouse, add some LED lights, and a little wind turbine and instead of squirrel soup you’ve got squirrel stew!!
In case you have never seen this one before, the future is now, and we can all say that we have seen it before TPTB gobble it up and pretend it never was:
http://www.youtube.com/watch?v=CrxfMz2eDME
Apparently Canadians are confident with their ability to pay their mortgages. There’s no combination more toxic than over-leverage and overconfidence.
I see people at work buying houses and I think they’re insane. They don’t think twice about the prices. Honestly, I don’t know how they afford it but they’re pretty confident that they can.
Plus they’re ‘OK’ if their mortgage goes upside down. What a load of crap.
BTW – Check out this Inflation Guide…free until March 10:
http://www.planbeconomics.com
Garth,
Loved the post.
I did notice that your blog is about “economics, real estate and money” however, it is my opinion that the majority if your posts are RE focused.
It would be great to have you opine on other subjects more often!
Have a great one,
Matthew
This blog never mentions the cost of moving . For those with 50 % equity it costs 10 % of equity . For those with 20 % equity it will take 25 % of your equity. Try to recover those costs as a novice investor .
I am a female and I am the only bread-winner in the family. My husband couldn’t care less about the house, finances, etc. (cars, guns, ;) So I am a sole decision maker, too. But even though I work from home and most of my friends do not own houses meaning that I am almost out of culture and peer pressure, every time I visit somebody with a house, I feel I want one. Thanks God, I have enough male-style brain which stops me from making a financial suicide. What is it, Garth? Nesting instinct? Hormones? Even though we are happy renting and have always been renting nice places with a bit more space than we need for additional comfort… WEIRD!
I am turning to the dark side and buying several different bank stocks, they will not lose, just change the rules when they need to.
PS. I do not watch TV either.
It’s the 25% I’d be worried about. And you can be pretty sure a good chunk of the 75% are overly optimistic.
But here comes the “Skip-a-Payment” option at RBC.
____________________________________
Thanks for finding that, Garth.
Does the CMHC off load the mortgages it insures, to pension funds ?
CIBC approved me for a 2.15% VRM. Cheap cheap cheap! Oh yeah, rates are gonna rise and crush me down right? Of course, that’s what they told me in the last decade when brilliant minds took 6% FRMs. Get real! BOC won’t do anything. You mad?
Banks. Winning!
WOW….
and we were led to believe that the banks lobbied for these mortgage changes because of all the debt ratio….
Anyway hopefully atleast the max mortage approved will be less than before.
Nortel stock: only rises except for that one time
The mob have been doing this forever. When you hand them a light envelope, the amount in arrears is added to the principal.
See season 2 of the sopranos for a good example- when davey scatino falls behind on payments to Richie Aprile.
Richie says- when someone hands you a light envelope, it’s just the beginning. True dat.
Get rid of the CMHC now!
That skip a payment option gave me new respect for bank robbers.
Most ‘landlords’ that I know of these days are not getting rich off their renters – far from it.
The renters sometimes get a bargain because the fool they are renting from is often expecting to make his money on further price appreciation and is actually losing money every month – absorbing both the risks and the carrying costs.
–
#24 shanks — That’s a great link, the other one being the man from Newfoundland who has invented a way to keep homes relatively warm by using free solar energy. Posted the clip and his site — good to see some Cdns. still use their noddles for self-improvement. Thanks for the feedback!
#34 Dork — “You mad?” — No, I Mad, you Dork!
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“Happy wife, happy life”. — Obviously she’s overjoyed, as she is stringing him along by the balls, like a puppet on a string. He is her play’doh!
“Oprah and Arnie here, a.k.a. Mr. and Mrs. Terminator.”
Making it a humdinger of a night, toss in Groucho Marx, Britney Spears, Mongo, Betty Grable and there is one heckuva party!
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US$ Hits new low, which is why prices are rising so dramatically, and Govts. about to lose control of the markets.
Final Steps to global supremacy. This is where Gandhi’s non-violent, don’t help the authoritarians comes in useful.
Redistribution Forbes top 400 tripled their wealth in five years.
12:02 clip Vaccines. A mother tells it like it really is, and Vaccines Two.
NAU – SPP There is no war on terror, there is a war on freedom. Ours.
Peru Several civilizations were much more advanced tan us.
‘Quakes, Shakes and Bakes With the Christchurch, NZ and Japanese quakes plus aftershocks, there is a reasonable chance that the next several weeks are gonna see a lot of bumping and grinding thruout the world, esp. with that extra-large moon happening around March 21 or so. Here too.
Satire? Not too sure.
Propaganda Alert “The War Hawks floated this one in 2003, claiming Iraq had this weapon, but the weapon they described could not actually work.” wrh.com.
PIMCO dumps US debt China is using moving some of their US debt holdings into material goods.
Billions and Billions Suggestions on giving money away. I can handle a couple of million!
Turmoil Seems the tables have turned, and westerners are experiencing what people in third world countries go through.
Funny how they use $300K mortgage as an example. How many houses out there that actually cost $300K?
#28Kate-It is definitely hormonal, but you are apparently logical and controlled enough to overcome it. The vast majority of guys blogging on this site have the same experience with internet porn-they don’t necessarily want to look at it, but if they have internet access with any privacy (sometimes even without) they definitely will-again hormonal. Anyways-I quizzed everybody I know a while back with this question-try it and see your results-the premise is that you will get $125000 annually from the guv-to collect this cheque all you must do is live in a property valued at less than $125000. If you require additional income there are no restrictions on working-but you must have a principal residence of $125000 or less-you can live anywhere on the planet that will let you in. In Toronto, NONE of the women were interested-100% of the men were.
It’s because most women are still idiots and
DELETED.
> Men often see real estate as an encumbrance and a pit
> of debt. Women tend to see stability and permanence.
Of course women want the best house possible their man can or even cannot afford. It is considered “spoils of war” during the divorce.
My husband and I rent a $800K heritage house in downtown Victoria (it’s nicer than anything we could afford to buy here) and we manage to put aside about $1K a month after expenses.
In just the last 2 years, the owner has paid for a new roof, new water heater, new clothes dryer, new bathroom sink basin, new taps and shower head, about 10 plumber and appliance repair visits, clean-up crew for the flooded basement (twice), and for new pipes laid to the city drains so the basement doesn’t flood again. If this were “our” house, we’d have used up that 24K easily for all the maintenance; we would also be deep in mortgage debt with no way to save.
The decision not to buy right now is an easy one, but we do hope that housing prices become reasonable soon!
I can’t believe RBC is trying to circumvent the new directives from CMHC… CMHC should simply refuse to insure these types of mortgages… Either that, or privatize CHMC.
I remember the poor bank CEOs only a few short months ago begging for the government to save them from their shoddy underwriting only to actively try to undermine these regulations once they are tabled.
Amazing.
The more women I meet, the more I think the gheys are right, and the Pope is wrong.
RBC has had that “skip a payment” option for years. It has nothing at all to do with recent developments. But nice attempt at spin, Garth.
No spin. It’s back-door amortization lengthening. — Garth
#21 VICTORIA TEA PARTY wrote……
“Ambrose Evans-Pritchard’s latest column in the Telegraph newspaper says: “Some investors see trouble. They are buying oil options for $150 and $200 a barrel with expiry dates late this year, either as a bet or as insurance against Mid-East mayhem.”
———————————————————-
Thanks Victoria, you are always a good read.
I really enjoy Ambrose most days too. He is dead wrong on this topic though and is just feeding into the mythology of the Mid East, of the fear and anxiety of the moment by publication of those comments.
Two hundred dollar oil is just brain dead stupid thinking. It won’t happen anytime soon and those who are speculating on it will surely be losers. I even question if Ambrose has any solid facts that ANYONE anywhere is actually taking bets to that extreme. I will go check his post later (and admit now that I am responding here before even reading his comments)…..but it sounds crazy so I am not buying it.
Greek debt default is still the number one worry I have.
Conflicts in the Mid-East (and tempory rises in oil prices as an outcome) are merely a distraction from the real disaster awaiting us all. How the ECB contends with the structural problems they are facing in the EU community is of far greater concern. Let’s keep focussed on the real issues. Like debt that cannot ever be repaid.
For a less stressed perspective on the conflicts in the Mid-East and North Africa and some thoughts on where the revolts are really taking the globe in the years ahead,……… try this:
http://seekingalpha.com/instablog/325016-abegaz/144773-roberts-rules-not-robber-barons
Then get back to me with your opinion.
At #21 Victoria Tea Party
Spot on, being from the region myself, I can tell you one thing… we are in complete denial about the implications of peak oil. I fear for the future as Arab oil revenues are being spent on BMW’s instead of preparation for a world without oil.
When oil hits $200, that will be the end of suburbia in North America. Then again, cities will spring back to life with people walking around, and less car accidents… just my wishful thinking.
Why shouldn’t it? The bigger question is why there aren’t any consequences for the people who underwrite these mortgages or take them on. Or differently: Let’s privatize the CHMC. Give it to the banks, it’s for their benefit after all
Don’t blame the banks guys. Out here in BC it’s the government. First the BC government tore up a legal contract between hospital workers and the employer and rolled the wages back by a minimum of 15%. The latest theft by the BC government is over a million dollars worth of prepaid ferry tickets. But you overseas investors keep investing here as you can trust the government – ha. ha!
I love my wife …. great cook, keeps to budget and understand times to go forward, stand still or move backward for the greater good.
Suckers are those with wives that control them, don’t trust you are way to emotional or worst think they deserve the big house, big car and big debt.
duh winning:Does the CMHC off load the mortgages it insures, to pension funds ?
Yes. Exactly as Fannie and Freddie did it, complete with backing by the full faith and credit of the Government of Canada, which means you.
http://www.cmhc-schl.gc.ca/en/hoficlincl/mobase/index.cfm
“NHA Mortgage Backed Securities
For many years, investing in mortgages was limited to investors with large financial resources. Now, thanks to Mortgage-backed Securities (MBS), the investment is accessible to all Canadians. MBS investments guarantee a timely payment to the investor, and provide more money through mortgage markets to help Canadians purchase a home.”
Utopia, Mr. American and many others, thank you for your insights. I still believe that currencies are relative to each other and the USD will be dominant in future. So, countries like Japan will benefit from such holdings. According to Mr. Shilling gold would have to be worth $13,000 per ounce to be the new currency. Canada’s dollar rise is dependent on the imaginary economy that exists today so will eventually fall back to 60 cents.
Banks are big scammers, yet they get away because they are in cahouts with the government. Who the hell came up with the brilliant idea of an 11 month pay system? Wow, it astonishing how the abnks say they want to help you but are just more interested in more interest payments. The people of Canada are being fleeced, and they are not doing anything about it!!!! Damn, wake up! I am a Canadian citizen too, but if things get worse, I am moving elsewhere.
Geezers retiring, cash hard to find, expenses soaring – how much more is the government going to take to finance all this spending? I am 30 years old and I am seriously Fu***d. I have no debt and have 20k in liquidity, but I am screwed. Will probably move to the woods if things get bad. Hahaha.
In regards to women and houses, my ex-gf wanted me to buy a house (after looking for like a day on kijiji), and I said no! She was upset, but I do not care. I told her that she was not going to pay for the house, so better stop whining. It’s funny how she changed her mind and wanted to buy a house when she is pretty educated on how a house is a debt prison. Women man.
Majority of people in Canada are slaves to the banks with no way out. This is why Canadian banks do so well, even in downturns, since people must pay the mortgage regardless of the value of their RE.
But here comes the “Skip-a-Payment” option at RBC… The game is RIG. All the predictions goes out the window. You can t plan in advance with this corruption at the top. You never know when they gonna pull the plug. They are not ready… yet!
Skip a payment program is great.
Risk taxpayer, profit bank…
In fact it supports headlines such as this one in the Globe today
Homeowners confident, survey suggests
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/homeowners-confident-survey-suggests/article1935482/
Brought to you by H, F and C and our strong financial institutions…
Good way to cover up a credit bubble
Get to hide reality
Would not want Canadians knowing the facts now would we..
Our economic system is so screwed.
This stuff creates nothing but illusions and destroys fundamental financial principles
Promoting financial illiteracy
RBC had the skip-a-payment on all of their mortgages as far back as 1995. I worked there at the time.
They also have double your payment and prepayment options as well. Unfortunately too many people use the former and not enought use the latter.
Not sure if this has been posted before. This Irishman’s honest view of bankers and the financial mess.
http://www.youtube.com/watch?v=koY6kXhQDQo&feature=related
Skip your first payment of the year, save it to “subsidise” your next eleven payments, could work… however that assumes people are financially disciplined enough to save the money from the missed payment in order to cover the next eleven. Somehow I doubt this is likely from the kind of mentality who would buy a house with 95% leverage intending on missing one in twelve payments… don’t seem like the disciplined type to me.
Food riots coming to England?
Mideast contagion could spread further than you think:
http://www.heraldsun.com.au/news/breaking-news/rising-food-prices-could-spark-riots-in-the-uk-senior-economist-warns/story-e6frf7jx-1226018328257
Let the banks circumvent higher rates….
The Utah State House passed a law last week that would recognize gold and silver issued by the federal government as legal currency. Furthermore, the bill would also exempt the sale of gold from state capital gains taxes.
The correction is coming, and when it does there will be a lot of Canadians eating crow (in fact, many are even today).
————
And that’s why CD Howe is telling us there will be no inflation!
So how do we reconcile that Mars is reckless but worries about financial stability, while Venus is cautious but happy to leverage bigtime for a house?
Perception, of course. Men often see real estate as an encumbrance and a pit of debt. Women tend to see stability and permanence. And by all accounts, she’s winning.
———
Not so long ago, until about 1997-1998, you paid down your mortgage. It was forced savings. So for a century, a house protected the wife and kids.
For the last decade, refi and the house as an ATM has been the name of the game, but many people have not caught on yet. Capital gains has blurred the picture.
Kudos go out to Victoria Tea Party and Utopia. I always enjoy your intelligent posts.
I should add in “The American” as well. Many useful posts too.
But that’s exactly it – desire for owning a house is emotional, it’s wired in human beings, you cannot compare it to piling on a Nortel stock back in the days. The concept of keeping up with the Johnses is ages long, and look at these palaces of old days aristocracy! You cannot dismiss something that’s almost in a human DNA. Promoting renting over ownership is somewhat similar to advocating for staying single over a huge expense of having a wife and kids. And divorce could be equivalent of a crash down the road. Yet good luck convincing the majority of people of that. And rightly so.
P.S. RBC had this options for years, I was foolish enough to exercise it one time back in 2000 on a 25 years mortgage (the longest available back then, yet this option already existed).
I just did a little research yesterday…
In 1997, before this real estate frenzy got going, securitization revenues for the big 6 were probably around 300M.
In 2008 = 2.1 billion
In 2009 = 3.8 billion
In 2010 = 2.9 billion
We know who helped them securitize. And we know that once the music stops, these revenues will normalize.
Investors are currently putting 2X value on those non sustainable revenues.
And one they sell and get the cash, they use it to buy other stuff that generates more revenues. So once these securitization revenues normalize, it will impact many other revenue sources. A domino effect.
When real estate tanks, I’m trying to understand how the top line will not contract.
And one they sell and get the cash, they use it to buy other stuff that generates more revenues
——-
Correction:
And when the banks securitize and get the cash, they use it to buy other stuff that generates more revenues.
It’s not just RBC. TD and others have had this “skip a payment” concept for a while:
————
We are following in the Americans’ footsteps, we are just giving it a different name. The Americans called it the Option ARM.
It came out towards the end, when less and less families could afford a mortgage but they needed to keep the Ponzi going.
P.S. RBC had this options for years, I was foolish enough to exercise it one time back in 2000 on a 25 years mortgage (the longest available back then, yet this option already existed).
———
In the US, the esoteric mortgages weren’t a new creation, they had existed for a while.
What changed is who used them and for what purpose. In 99.9% of cases it was to prop up the Ponzi.
Yesterday #233 Nomad – “I see a lot of people saying Vancouver is a “shitty” city where they would not live.”
I have a passport and I have travelled, so I cannot understand this either. I guess Vancouver is not for everyone, but moving there or somewhere in B.C., is definitely in my future plans.
Yes, the real estate is expensive and if you do plan on buying, you need to watch when you buy and what you are buying (leaky condo), or perhaps renting will work better for you. Everyone’s situation is different.
Yes, it also rains a lot too. I’ve been there a few times when I wondered whether I should have packed flippers instead of hiking boots.
I haven’t checked any statistics, but I am sure that many more tourists visit Vancouver and B.C. than Ottawa, Toronto or anywhere else in Ontario and unless you’ve never been there, it’s kind of obvious why.
I personally, would rather have less money in my pocket (due to the higher cost of living) to live somewhere so beautiful and with an endless amount of things to do, than to have more money and live somewhere like Moncton N.B.
I currently live in Ottawa and cannot wait for the day when I am out of here.
#59 Frank on 03.10.11 at 7:48 am…
“…Majority of people in Canada are slaves to the banks with no way out…”
True statement Frank. Sadly though, it seems many don’t even realize this.
This isn’t new. The “Skip a Payment” option has been offered by all lenders forever. You make it sound like this is something RBC recently cooked up to dodge the elimination of 35-year amortizations.
And also, if you exercise the “skip a payment” every single year of your 30 year mortgage, you end up with 30 extra payments left at the end. That’s only 2.5 years. Of course, if you “skip a payment” those next 2.5 years, that adds 3 more months to the effective amortization, making the total amortization 32 years, 9 months. That’s still not the same as a 35 year amortization.
Finally, the “skip a payment” option was available with 35 year mortgages too, so you could in effect make those mortgages into 39-year mortgages, if you really want to dig into it. So they’ve still reduced the effective maximum amortization by 5 years, which is exactly what they were trying to do.
@ #33 duh winning
Does the CMHC off load the mortgages it insures, to pension funds ?
>> Just like the U.S. with Fannie/Freddie, many Money Market Funds and Fixed Income Funds in Canada (and many outside of Canada also) own Canada Housing Trust Mortgage Bonds… including most of the standard Bond Funds from the same big 5 banks that sign up all of these crappy mortgages and flip the risk to CMHC.
>> Just like the U.S., all of these bonds are rated AAA, because they are backed by the Government, and “house prices only go up”.
Look at the Top Holdings in these popular Big Bank Mutual Funds:
BMO Money Market:
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=53833
BMO Bond:
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=17695
CIBC Bond:
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=17572
RBC Advisor Bond (6 of the top 10 holdings are CMHC Bonds!):
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=52558
Scotia Bond (35%+ of assets in CMHC Bonds!):
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=74269
Scotia Income (26% of assets in 1 CMHC Bond!):
http://www.theglobeandmail.com/globe-investor/funds-and-etfs/funds/summary/?id=18113
Based on this, not only do Canadians “own” the risk on these crappy mortgages via CMHC, but many Canadians also “own” this crap via these Funds!
“Perception, of course. Men often see real estate as an encumbrance and a pit of debt. Women tend to see stability and permanence. And by all accounts, she’s winning.” – Hon. GT
Not always… :)
“The Button Defense”
http://tinyurl.com/6lbypnl
It’s because most women are still idiots and
DELETED.
————————————————
Interesting Garth…you invite him to the party with misogynist (def: having or showing a hatred of women…figure most of your bloggers need this def.) arms open wide…and then refuse him a piece of cake…a little precious, no?
“So how do we reconcile that Mars is reckless but worries about financial stability, while Venus is cautious but happy to leverage bigtime for a house?” This is misogynist, how? — Garth
Garth, your property in Pictou NS is still available. Down to 175K. 199K last time I looked
http://www.sunrisebrokerage.ca/853.listing
Garth.
I’ve been meaning to send you a picture of a Remax billboard on a very prominent corner in East York (O’Connor @ DVP ramp).
It states “Don’t get a divorce, buy a bigger house”!
You can’t make this stuff up.
A little more evidence why home builders are backing out….
http://www.theglobeandmail.com/news/national/toronto/hidden-fees-hike-cost-of-new-homes-in-gta-by-as-much-as-30-per-cent/article1936214/
So Garth, if skip one payment = 35 yr amortization, how long before some banker finds their other hand, adds them together, counts fingers and figures out that skip 2 payments = 40 year amortization?
Yahoo, that would put us back to the good old days!
I’ve got to say, I’m a little surprised by the calibre of commenters here. It seems I may have given your readers too much credit. Even after filtering out the juvenile “first p0st!” antics, and the misogynistic ad nauseams on poor Arnie’s wife, the remaining on-topic comments are surprisingly ignorant and misinformed.
For example, many commenters (and you yourself, Garth?) seem to be unaware that all banks offer the “Skip a Payment” option, not just RBC. Moreover, it’s definitely not new – it’s been around as long as mortgages themselves have existed. Yet that doesn’t stop your cadre of back-patters from piling on as though this were some new dasturdly scheme to dodge a rule that hasn’t even come into effect yet.
A couple more examples that really caught my eye:
Shanks: “add a little inflation, and bam youve got $100 diapers.”
A “little” inflation? How much inflation does it take to triple the cost of diapers? 200%, actually. I’d say that qualifies as considerably more than any reasonable definition of “a little.”
Or how about Peter Pan? “I remember the poor bank CEOs only a few short months ago begging for the government to save them from their shoddy underwriting only to actively try to undermine these regulations once they are tabled.” Apparently, this fellow is unaware that there’s a difference between US banks, which received a massive government bailout several years ago, and the Canadian banks being discussed, which received no such government bailout at all. Do they not have newspapers in Never-Neverland?
Garth, your posts are insightful, well-researched, and clever. Frankly, I expected a higher level of discord from your readers. Instead, they seem to just blindly pile-on, spouting made-up statistics and getting their facts completely mixed up (or just making them up from scratch, where convenient).
Oh well. If nothing else, it’s entertaining.
Yes, skip-a-payment is not new. Nor did I say it was. But it provides a route around new amortization rules. That’s news. As for the readers and posters here, suck it up. We all have voices and something to add. — Garth
#77 olliekk
I currently live in Ottawa and cannot wait for the day when I am out of here.
__________________________________
Make sure you land a respectable job before moving to Vancouver. You’ve been warned.
At #23: InvestorsFriends, yes I read that article. First, it was b.s. for several reasons. Naming the Walton family separately would dice up the family fortune, pushing them lower on the list. However, if you pay attention, the article clearly states that Carlos Slim “and family” were given the courtesy of lump-summing their entire fortune in order to grab the #1 spot. Also, it didn’t take into consideration the fact that Bill Gates GAVE AWAY $35Billion of his fortune and Warren Buffet GAVE AWAY HALF of his fortune to The Bill and Melinda Gates Foundation here in Seattle. What the hell has Carlos Slim done to better the world? ummmmmmm, *crickets chirping* Oh Yes, Carlos robbed the Mexican people with price-gouging tactics in telecommunications, creating a national monopoly. Shame on his ass.
@#77 – re. Ottawa vs. Vancouver…
You could do a lot worse than your current hometown.
I grew up in Victoria, spent time in Vancouver and Ottawa, and now live offshore. My years in Ottawa were, without a doubt, the best years of my life. There are many reasons why it made the #1 spot of top city in Canada to live.
I’m tired of hearing about how great everyone thinks Vancouver is. Is it beautiful? Absolutely.
LOOK! Its GARTH!!! Great commentary.
http://www.thecomingdepression.net/countries/north-america/3-reasons-canadas-real-estate-market-is-about-to-implode/
Not all woman have blind siders on. Like i’ve said in a previous post, me and my boyfriend just sold our home and we are getting on the renting band wagon. Clearing debt and stacking. I’ve learned in my short life on earth, if most people are doing one thing you may want to try the opposite :) Maybe it’s because I am awake, but I just don’t understand how people don’t see it.
Like Kate’s post above, I also don’t watch t.v. What a distraction…. That’s why you see stats like:
“Despite watching real estate destroy the US middle class for five years now, 90% of Canadians “are confident in the country’s real estate market”.
Because people get their information from mainstream media, who controls mainstream media…
People don’t take the time to do research and people tend to follow the crowds.
I think, that is :)
This has about the same effect as turning a 30-year loan into one with a 35-year amortization.
except when it comes time to collect the insurance from CMHC
supposing at the time CMHC were no longer captive to the banks, CMHC could argue (in a court) that the bank’s policy and practice had the effect of subverting the legal standards of prudent lending. Ergo ( a legal term) CMHC is not required to pay the banks. To the extent banks actually allow the mortgagee to skip a payment is the extent to which the bank removes its guaranttee with CMHC.
Arnie, buy her the house. A 30% loss on your purchase is still much less expensive than a divorce. That’s why lawyers live in big houses and send their kids to private school!
Ash!!…
Wait a few years, lets see how you think when you want your boyfriend to be your husband.
Btw…why did you sell that house?…To ‘get smart’ and realize any gains while you can, or did you sell the bricks and mortar to cover debts and effectively bring you back to par?
Rob Nelson on 03.10.11 at 3:08 am
“RBC has had that “skip a payment” option for years. It has nothing at all to do with recent developments. But nice attempt at spin, Garth.”
This option has been around for awhile, I believe, but doesn’t apply to traditional 10 and 25-year mortgages.
RBC has had that “skip a payment” option for years. It has nothing at all to do with recent developments. But nice attempt at spin, Garth.
No spin. It’s back-door amortization lengthening. — Garth
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Garth: Lets get real. I have been with RBC for 7 years with my mortgage and they have had this option since day one. I have never used it and never will. If RBC is now marketing it as a way to extend the amortization it is nothing more then a smart marketer putting a spin on an old idea. I’m sure most other banks have the same option.
If they are not marketing it this way then I agree with Rob, nice try at spinning this.
Canada’s largest bank might wish to review a policy which provides an end run around federal regs. You disagree? — Garth
#42 Nostradamus Le Mad Vlad on 03.10.11 at 1:37 am
–
#24 shanks — That’s a great link, the other one being the man from Newfoundland who has invented a way to keep homes relatively warm by using free solar energy. Posted the clip and his site — good to see some Cdns. still use their noddles for self-improvement. Thanks for the feedback!
……………
Remember seeing both of those news items. Not sure the car will ever become reality – remember Who killed the Electric Car.
Just sent my husband the link re the solar panels. We put in an Electric Thermal Storage Unit – http://www.steffes.com/off-peak-heating/ets.html
in Dec. or Jan. & are considering putting in a small unit upstairs this year. Price would be about the same as a solar panel. Wondering if these units work if one has an air/heat exchanger. As he’s more science minded, I’ll let him figure it out. With the ETS I only use the dryer (winter mos.), dishwasher (before 7 am), do lots of cooking, etc. on weekends to take advantage of off peak hours. Have gotten used to it. Our electricity costs are very high where I live. They say it takes 5 yrs to recoup costs, but I think we’ll do it within 3+.
……………………
“Happy wife, happy life”. — Obviously she’s overjoyed, as she is stringing him along by the balls, like a puppet on a string. He is her play’doh!
………………
LOL – Day we were married, by a JP, in our previous home, we took some pics outside. Husband put the dog’s collar around his neck & had me holding the leash. He never has been on one tho. Thankfully, we both basically have similar views financially & otherwise.
From RBC’s website that Garth linked to:
“Please note that Skip-A-Payment is not available with terms of 10 or 25 years.”
So yes, this is specific for 30+ year mortgages. However, a few years ago, I seem to recall the “skip-a-payment” option being available to regular mortgages.
I guess the real telltale sign would be if the RBC is promoting this to young couples as a way to have their “35 year amortizations”, as opposed to just stating that it’s an option they should only use in case of emergency or when money’s tight during a particular time.
One thing young homeowners should keep in mind though is that at the beginning of the mortgage, maybe one quarter of their mortgage payment goes towards the principle. The remainder goes towards interest payments alone. By skipping a mortgage payment, they are in effect setting themselves back 3 or 4 months when it comes down to repaying the principle. That will just raise the monthly amount the next time they renew the mortgage.
The bottom line though is that it does go to show you that between governments (including some local governments like Saskatoon and Calgary) and the banks, they never cease doing whatever they can to keep this bubble inflated. The question remains – how long can this charade go on? Will it be yet another decade until house prices start becoming affordable again? Or will this Canadian housing bubble only start barely nudging downward when gas is $5 per litre, or unemployment is 20%, or inflation and interest rates are in the double digits, or CHMC is backstopping $10 trillion in mortgages, or only after some major black swan event has occurred, such as after the US has collapsed under its own debt load, or when every homeowner has to go the food bank in order to be able to eat? One of my favourite quotes from Scotty from Star Trek is “Capt’n, I canna bend the laws of physics!”. Yet somehow this country has managed to bend the laws of economics for quite a while now.
#46 NLN on 03.10.11 at 2:25 am
Of course women want the best house possible their man can or even cannot afford. It is considered “spoils of war” during the divorce.
……………
Not the women I know. Your reply is stereotypical.
Animal Spirits, Primitive Superstitions –
“Address numbers could hold key to fortune”
CBC article/video excerpts,
stills and transcription
http://wp.me/pcq1o-1Yf
Yes, skip-a-payment is not new. Nor did I say it was. But it provides a route around new amortization rules. That’s news. As for the readers and posters here, suck it up. We all have voices and something to add. — Garth
And that is the problem. Nowhere did you mention it wasn’t new. Readers, including myself without ever knowing about “skip a payment” would instantly side against the banks. When I heard it here, my thoughts were those evil banks again trying to get around the rules. I do not think you deliberately left out info for your advantage but the perception was exactly that.
Think what you wish. The reality is that this circumvents rules which take effect next Friday. One would hope scrutiny like this makes banks reconsider some of their product offerings. — Garth
Interesting take on the US RE market from coming additional financing costs.
“What does this mean for residential real estate prices? I’ll attempt some quick, back of the envelop calculations here. Raise the cost of financing by 40%, and you can knock 40% off the value of your property. That is off of today’s prices, which are already down 40%-60% from the 2007 peak, depending on your neighborhood.”
http://www.madhedgefundtrader.com/march-4-2011-3.html
Kate @28,
“… I am the only bread-winner in the family. My husband couldn’t care less about the house, finances, etc. …”
Where have you been all my life?
#84 – Go back to your REIN site, a lot of good folk read and leave comments here. But your not smart enough to realize that.
Here’s a good trading stock, this not a stock to invest in, its a trade only mark that needs to be watched constantly, in and out twice a week is sometimes necessary, DO NOT INVEST IN THIS, TRADE ONLY.
HNU.TO
Bankruptcy is the salvation for a lot of people. Believe it or not, it is so for those who are indebted deep. Banks want you to be on the hook perpetually. You don’t want to do what’s good for the bank. Run your own race. This is the path, the financial elite really don’t want you to take. Not an easy hanging fruit, but doable.
Garth Says “Canada’s largest bank might wish to review a policy which provides an end run around federal regs. You disagree? — Garth”
I disagree, because however distasteful this policy is, it’s clearly not an ‘end run’ around the rules. Skip-a-payment does nothing to change the amount that a borrower can qualify for. You still have to qualify under a 30 year amortization.
Of course, but it does allow a 30-year to become a 35-year. It bears reviewing. — Garth
#90Ex-The funny thing about the survey saying Vancouver was the “most liveable city” on the planet-if Vancouver circa 2011 is the most liveable city on the planet, what does it say that most would agree that Vancouver circa 1961 was far more liveable?
#100Live-On these internet dating sites, women should be putting that right at the top of the description in bold letters-something like I AM NOT INTO POSSESSIONS ESPECIALLY BIG EXPENSIVE HOUSES. Then just sit back and watch the inbox oveflow.
“75% of these souls believe “they are well positioned to withstand a decline in the housing market.””
In repeated polls, most people believe themselves smarter than average.
We bought our house in 1988 and RBC had skip-a-payment back then too.. our interest rate were 12%, I had to put 25% downpayment!
@ #20 Boombust
“….What I find so interesting, in this era of Internet and “Social Media”, is how, with SO much information available, people will make the same mistakes as in the past…..”
Its not so hard to figure out once your realize that the majority of people are lazy.Mentaly lazy, physically lazy, or both. Not stupid, just lazy…
“its too complicated” or” Financial stuff is boring” or “my friends told me that…” None of these responses actually involves work. Whether that work is investigation via books or internet, reading a financial book, or just listening to a few tv or radio shows on finance and or investing.
Our school systems teach math, history, english,etc. But apparently Math and History dont get combined into ,say a course on The Great Depression and how it happened . Or a one year course in elementary school , then one year in junior high and then one year in senior high to reinforce the basics of spending LESS than you EARN. Wow what a concept.
That would involve work.
..
First off i fully agree with Garth 100%. But i am putting my money where my mouth is. If you really believe things are going to sh*t the fan look at the historical charts for the Dow, S&P 500 and the TSX. They are peaking. Get out now and start shorting. Just like realestate the stock markets are due for a correction. This scenario can be a win win situation if played correctly. Sell your house and rent, then get back in at the bottom. Get out of your portfolio at the top (NOW!), short your way to the bottom and buy back in once the bottom is established….
Mr. R.
#77 olliekk on 03.10.11 at 9:53 am
You’re right about one thing…your opinion.
I grew up in southern Ontario and after discovering BC in my early twenties, thought it would be a wonderful place to live. In my experience, when you are a vistor, you tend to admire all the positives that your destination offers. Living there and visiting are two completely different things.
I did move there, and stayed for 14 years. My four children were born in the lower mainland and to them, BC was home. We moved back to southern Ontario several years ago, and the intersting thing is that three out of four of my kids now prefer Ontario, and the fourth could take either.
#1 LJ,
“PS: Foreclosure rates still rising in Calgary. It isn’t Phoenix yet, but you just have to wait. ”
Do you have a link for the above? Thanks
#45 George- You get what you attract.
Others have mentioned and I agree, CMHC is the cause of the high RE prices. Take away the gov’t insurance and banks would be on the hook for their loan decisions. All other causes are secondary.
I bet there would be no more 0 down, no-credit customers getting mortgages. Loans would be approved based on ability to repay , not on equity increases. If a bank wants to make 50yr ams. and other creative loan provisions, go for it, just understand the gov’t is not there to bail your a$$ out when your bad decisions go sideways.
I run a business and I don’t extend credit to people living under shopping carts just to increase my volume. I live or die by my choices. Banks need to as well.
Owning a house at 22 is not some socialist right, you save money for a downpayment and qualify. The gov’t has this housing entitlement idea all wrong.
Garth:
Men often see real estate as an encumbrance and a pit of debt. Women tend to see stability and permanence.
_____
I disagree Garth. While financial stability and permanence seem important to most of the women I know, their main reason for wanting a house is to fit in socially or to slightly increase their status among their peers.
The men who are commenting with low opinions of women, obviously you have been burnt and are now hurt. Probably because have a ex gf or wife who had those important features such as a great bod or fluttered their eyelashes at you. Well, don’t blame women for your lack of intelligence at picking a good team mate. Perhaps you should have looked at what you would have considered 2nd or 3rd tier. To those men who chose their partner based on solid values , good on you – those who chose based on looks-porn, well you got out of your mess, just like those who have house-porn should get out of their mess.
SPRING MELT CHILLIWACK BC
A housing outsider’s update from the Eastern Fraser Valley, where greeting at Walmart gets you a fat mortgage and the local car dealers are society’s upper class, but it appears real estate does not in fact always go up…
http://www.realtor.ca/propertyDetails.aspx?propertyId=10429908&PidKey=1967007812
Listed Autumn 2010 for mid 5’s. Just dropped another 20 G’s to 479. How low can we go? (and this in one of the ‘poshest’ neighbourhoods in this little floodplain of a town). Bummer about your retirement.
http://www.realtor.ca/propertyDetails.aspx?propertyId=10331666&PidKey=-309354515
Listed Autumn 2010 for 380. Dropping steadily…
http://www.realtor.ca/propertyDetails.aspx?propertyId=10358205&PidKey=821834923
Listed last Autumn, pulled off the market over winter, re-listed a month ago for 20 grand less and still sitting.
http://www.realtor.ca/propertyDetails.aspx?propertyId=10331694&PidKey=282871132
This one’s been on the market since Autumn 2010 as well. No price change yet…tick tock…
http://www.realtor.ca/propertyDetails.aspx?propertyId=10371113&PidKey=1856175768
Listed six weeks ago for 330. Forty grand price shave in the second week. Oops! This ain’t Richmond folks.
And there you have it: anecdotes and misinformation brought to you by Prollywrong.
PS: Average home price in Chilliwack in 2001: 150,000.00. Average home price now: around 350,000.00…for the same forty year old mouldboxes in a swamp.
#19 nonplused on 03.10.11 at 12:04 am
rein in CMHC. Put in a cap (like there used to be) on the amount insured, no second homes, down payment, 25 year maximum amortization, and be very specific about what mortgage terms are allowed.
______________________________
Won’t work. If you go the specifics route the banks will game the system – invent new terms, previously unforeseen, that don’t change existing terms.
What’s needed are 2 clauses – one that says “any substantive change – addition or deletion” will give CMHC the right to charge bad mortgages back to the banks.
And second, any ambiguities are adjudicated in CMHC’s favour, and against the bank’s interests.
#77 Olliekk
Ahhh this is familiar. I remember living in Ottawa and hating this “City that Fun Forget” soo much and dreaming of Vancouver. Got a job in Vancouver and packed up my little Jetta and made the happy trek to my new life. Then I arrived in Vancouver and realized this city is nuts. I’d never be able to afford to buy a house given the ridiculous housing market (this was 2005) plus the much lower salaries. Driving raised my blood pressure and would probably eventually kill me (no convenient Queensway like you have in Ottawa). And the people were just as cliquish as they are in Ottawa. So I hated Ottawa, and didn’t like Vancouver either. Then opportunity knocked (same job, $20K extra salary a year) and I moved to “big bad Toronto” and fell in love with the Living City that fun definitely did NOT forget. But, now I’m stuck back in Ottawa.
Anyway, the point is the grass is always greener on the other side. And Vancouver and Ottawa suck equally ;)
#46 NLN – Are you making a general statement about women because you’re high? Or are you just profoundly stupid and are surrounded by hosers.
Once in a while some of us get paycheques, buy properties, carry our man financially (without bitching about it) and oh yeah, clean up after them on top of it all. You do understand that you are a disgrace to your sex with that mouth right? There are plenty of men on here that would agree with me and be disgusted with your sexist ass so button it. Maybe all of the sexist jerks on here can take a shot at growing up in private, off of
our clock here of course.
To all of the ladies that carry at least half of the financial burden, and those who carry all of it, and even those who just (right) raise the kids and run the household >>>
No assholes aloud, am I right Ladies?
#62 jman on 03.10.11 at 8:19 am
RBC had the skip-a-payment on all of their mortgages as far back as 1995. I worked there at the time.
They also have double your payment and prepayment options as well. Unfortunately too many people use the former and not enought use the latter.
…………….
You’re right. We went with RBC. We doubled up and also had the ability to annually put down a percentage of the ORIGINAL mtg., which we did.
Its already been posted here but that skip a payment plan has been around for a long time and used to be available for other term mortgages. Now it seems its only available on 30 year mortgage.
It is a workaround and im sure it is totally legit in terms of meeting CHMC terms and conditions or else they wouldnt offer it.
Once the market turns there is no magic bullet. The US tried that and it did not work.
As for the women wanting houses vs men. Somewhat true but not totally. I have co-workers that are men that are gagga over housing as well.
“So how do we reconcile that Mars is reckless but worries about financial stability, while Venus is cautious but happy to leverage bigtime for a house?” This is misogynist, how? — Garth
—————————————————
Hi Garth,
Okay, I’ll bite…I think you answered your own question in your blog. In the market today, “emotion” is trumping “logic”. The difficulty I have with the blog entry is the notion that women are the ones succumbing to a lack of logic, and somehow dragging their partners down with them. Rather a stereotypical assumption, no? Arnie has no idea what to do…he describes himself as “scared shitless”, “screw it…just jump in”…He’s worried about what everybody else thinks about him and he can’t “convince” his wife…yet he’s the logical man, and she’s the estrogen-driven real-estate nut?
Though your post was not in itself misogynistic…the unfortunate sexist assumptions just set the tone, in fact, invited the clod above (and several others) to do his thing…hey, I really enjoy your financial advice, all the real estate talk and your humour…just don’t want to have to tear my eyes out every time I have to wade through the sexist mire to get my fix….
#28 Kate on 03.10.11 at 12:20 am
Bad grammar aside, I have to say, adding to the women-degrading doesn’t really help anyone. I’m also the financial head of my household, but I wouldn’t say I have a “male-style” brain. Thank goodness, or I’d only think of sports, sex, and beer ;) I know just as many guys telling me to “buy now or be priced out forever” as gals, if not more. I have to bite my tongue listening to them going on about real estate at social functions all the time, since they are such great financial gurus.
Seriously peeps, the other day it’s bash the boomers, now it’s bash the wives. Have some respect for your mothers ;)
To #87 Kevin on 03.10.11 at 10:39 am
For example, many commenters (and you yourself, Garth?) seem to be unaware that all banks offer the “Skip a Payment” option, not just RBC. Moreover, it’s definitely not new – it’s been around as long as mortgages themselves have existed. Yet that doesn’t stop your cadre of back-patters from piling on as though this were some new dasturdly scheme to dodge a rule that hasn’t even come into effect yet.
Some of us were not aware of this program. Been around as long as mortgages have been created?
I don’ t think so. Perhaps you could explain why it is necessary today and why banks would advertise it.
Please enlighten us with your deep wisdom and knowledge on this subject.
“#13 McSteve on 03.09.11 at 11:49 pm
Why does it surprise anyone that RBC is “bending” the rules? They are only taking their ques from the current government.
Since we are on the subject, anyone who wants to photocopy and send me a tax receipt or two will have my everlasting gratitude. I’m getting ready to do my taxes and I need them by Saturday. In exchange, i’ll give you a few of mine…”
***
I think you meant “cues”? Or did you mean “queues” as in lineups?
I pay my share of taxes. The fraud you are suggesting cheats me and other honest Canadians.
The skip-a-payment plan may not be new, but the marketing of it is. Not long ago, it would have been an embarasment to resort to skipping a payment. Now I don’t doubt there will be mortgage brokers explaining to clients why they can still afford a to buy due to only needing to make 11 payments per year. Throw in a cash-back plan and Bob’s your uncle.
The banks are Brilliant. Another Transfer of Wealth Scheme. Thats because they are not liable for anything and have very low risk.
Notice the Banks Stocks has been going up up and up.
They control the government, they control the media and best of all they control Canada.
Its simple, they are in the business for one thing. To make money. MONEY MONEY MONEY. They don’t give a damn about the average canadian. When it all goes to hell they will walk away with a train full of loot and leave Canada to deal!!!
You watch once they made the dough and have low risk in realestate, they will gear up the media to about faces and start slamming the market and cause fear and probably indicate we are heading for a US style crisis.
At the same time they will buy up what is really valuable in Canada, the resources like oil and mineral.
Once Canada’s in the pooper, then they will start sweeping up real estate again, “JUST LIKE THE MOVIE TRADING PLACES”
#98 Live Within Your Means — Good morning, LWYM.
The solar panels and electric thermal storage units are a very interesting way to reduce heating / cooling bills and costs. Have to do more research and investigation. Electricity is going up 6% this year, n.gas is also going up a bundle (replacing infrastructure).
Our wedding (32 yrs. and counting) was also simple. Opening and closing pics are of me washing the dishes!
The lesson we should learn here is only marry a partner with values similar to yours if you want to avoid a lot of troubles, and if you don’t find such a partner then stay single. It’s comforting to know that, even though we are a small minority, there are like minded others out there who actually prefer to avoid financial suicide when given the choice.
#87 Kevin – true. I can attest to at least a 20 yr run with skipped pmt policy from consumer loans to mtgs in ghe industry, and no doubt it probably even further back.
Garth knows this too but I think he may also be presenting the fact that they keep recreating the marketing angle, ie new names for the procedure and in this case timed with the amortization rule changes. The Banks know that fresh blood is out there daily and the profit attributed to getting their attention at every single opportunity presented is a disgusting reality. Banks want long term relationships, and in Canada especially, once that fish has been hooked they tend to stay for life, or at least for the length of the mortgage.
To sum up. despite how disputable the real estate and banking industries have been leading up to this crash, here comes another totally unethical marketing push. I believe that THAT is Garth’s point in this regard.
To those saying that “Skip-A-Payment” isn’t available on 10- or 25-year mortgages, it’s not true. It’s not available for 10- or 25-year TERMS — those where your rate doesn’t change for 10 or 25 years.
It is available for 10- and 25-year amortizations.
It’s not a new feature, but I think Garth’s point is important — how COULD this feature be used or sold? If you are allowing 30-year mortgages to skip payments as a feature, it is lengthening the mortgage through the back door.
Double-Up payments are sold as a way to pay off your mortgage faster. Skip-A-Payment isn’t going to be sold as a way to make your mortgage last longer, but it’s essentially the same feature in reverse.
I was hoping a few dozen more people would post that the “skip a payment” option has been around for a long time. Seriously people. I think it’s safe to assume that Garth’s point is that the new, tighter rules don’t necessarily have teeth since the workarounds are already there and can easily be brought to the foreground.
All of these creative ways to game the system only serve to pump up the bubble.
#101 vreaa on 03.10.11 at 12:06 pm
Animal Spirits, Primitive Superstitions –
“Address numbers could hold key to fortune”
CBC article/video excerpts,
stills and transcription
http://wp.me/pcq1o-1Yf
………………
Gees our number is one solitary 8. Wrong city. LOL
#129 new_era
Why is everyone all over the banks? I know they make easy targets, being the evil capitalists and banksters. But at the end of the day, they cannot do ANYTHING without government’s permission and blessing. Skip-a-payment isn’t some back-end run around government or CMHC rules, there are explicit regulations about it. Bank and finance regulators put their seal of approval on all these schemes. Then they’ve transferred the risk from banks to CMHC/taxpayers.
Banks are hardly innocent, they are engines of profit for bond owners, shareholders and employees. They COULD be “principled” (if a corporation can be) but then they’d have their lunch eaten by other banks, who will happily take their credit hungry customers. If you want to reign in banks and lending, look to the ones who have the monopoly on regulating them.
to # 95 Throwstone :)
I actually don’t want to get married, I personally don’t see a need for it. I know how I feel and that is all that matters, I don’t need a piece of paper.
And actually no, I did not sell to “cover debts and effectively bring me back to par?”
Don’t get me wrong, I have a couple of thousand in debt, that I am clearing easily as I am not materialistic and I make good money. We sold because we want to be free and not in a rat race. Owning a home with a mortgage is like having handcuffs on. Mind you, it all depends on what your intentions are owning and how responsible you are with your money/debt.
I like being able to work half days, taking days off, doing what I need to do for me. LIVING!! :)
I plan to, as cheaply as possible, build myself a home that is self sustainable and slowly and steadily weed myself away from depending on the government for things, ie. food, water, electricity. That is my goal
Sorry, meant to say “despite how DISGUSTING” near the end there. Darn autofill.
TSUP ? Hate mail from the Brown Shirts.
Tchenguiz brothers arrested in Kaupthing investigationProperty tycoons Robert and Vincent Tchenguiz are among nine detained in connection with the collapse of the Icelandic bank
Share181 Simon Bowers The Guardian, Thursday 10 March 2011
The Mayfair investment tycoons Robert and Vincent Tchenguiz were among nine people arrested in dawn raids by the Serious Fraud Office on Wednesday as part of its probe into the collapse of the Icelandic bank Kaupthing. London-based former bosses of the bank were also targeted.
More than 130 police swooped on two business properties and eight homes, arresting seven men aged between 42 and 54. They were being interviewed in central London. Two further arrests were made in Reykjavik…(guardian uk)
From de to re
The good bank /bad bank
Northern Rock reports £232m loss
Nationalised bank insists preparations for a return to the private sector are on track, as unions step up calls for it to be remutualised
Bank of America plans to isolate nearly 50% of its 13.9 million most uncertain, worst-performing legacy loans into ‘bad bank’ to create a classic good bank, …
======
nameless speculators
Chinese officials are blaming speculators for soaring property prices and are vowing to build 36m affordable homes over the next five years.
Hi #42 Nostra, Thanks for two links with info about vaccines/flu shots. The info. in your links isn’t always told to use before we give consent, it’s suppose to be informed. Seems you must educate yourself about ‘thimerosal’- (49% mercury) at a minimum, read the package inserts! Make the informed choice for yourself based on all information you can find before you deciding/choose to consent. It’s ok to say no or yes if you choose, but make it an informed choice first.
Canada has band many mercury containing products (It’s a good start), but not all!
Silver & gold filling give of mercury vapor. Check lables for “Thimerosal” is(was?) in eye drops, and many vaccines/flu shots. (Why would you want any mercury or some other stuff injected into your blood steam in the first place?)
Lots of info on the web if you look.
Here what ‘Bill Gates’ was taped saying about ‘vaccines’ and population!
Think about it! (Isn’t YouTube & the web great!)
Hi!
I read this blog all the time and even tried to research this years before I found greaterfool. Even as little as over a year ago you could find virtually nobody speaking about there being a housing bubble, but its more common now, sorta! So we can’t possibly buy, everyone knows that, we have no desire to end up super house poor, or deeply indebted to the banks, so we’re renting right now, as we have for years. But here is some food for thought.
The house we are in went up for sale a month ago. We are basically powerless against the hordes of filthy, commision hunger estate agents traping constant 23yr olds through this 500k house. Its a constant invasion of our privacy, sometimes they are hear over an hour as we attempt to find something else to do (often right after work) I love having people wander through our private life, staring at our laundry on the floor, judging us, while these digusting Calgary estate agents rub their hands together gleefully at the thought of the fat commision.
I hate having no control, I hate having my privacy invaded, this is not the first time I’ve had to deal with landlords who attempt to screw us, steal our damage deposit and generally be difficult. (we are ideal tennants, really clean, careful, respectful but we never get that in return)
Somedays I muse that people know well there is a bubble, and they might get swamped in payments but its better then dealing with landlords and barley 20 yr olds wandering through my house whenever and however they want.
*sigh*
#51 Utopia, #52 Kuwait
BE CAREFUL WHAT WE “WISH” FOR. SCAREY OUT THERE
Hi Utopia. Abegaz’ piece is full of hope for the Middle Easterners. He hopes for improvements to womens’ rights, more individual wealth so citizens there can become consumers just like us.
Eventually this could come to pass.
But there are some painful realities that impede such prospective change. For wont of a better word it is “boundaries.”
SO MANY LINES IN THE SAND
Ah, yes, Let’s count them up: geological, geographic, political, the latter invented by the so-called western Imperialists. And, finally tribal boundaires, Sunni vs Shia and various subgroups between them.
Pour on a good dollop of tradition, a few thousand years worth, and we get the picture. So much to do, so little time to do it.
RENAISSANCE ARAB/PERSIAN STYLE
It’ll take the residents there time to sort through all of that if some “good” is to come to them. And they started with the self-immolation of a hungry and pissed-off food peddlar in Tunisia a couple of months ago.
Where this all goes is anybody’s guess. But it’s getting bloody out there, for sure.
This, then is what one could fairly describe as a rennaisance, or a reformation, or some other kind of re-awakening there. The Middle East has been held down by its own people and outsiders for eons, it seems. Once upon a time there was an Arab and Persian cultural structure that was the envy of the world.
At that time the Europeans were true pagans and fairly brutal ones at that. They had their own tribal conflicts that ended in 1995 with the eventual suppression of various parties in the Balkans (but that conflict seems to be boiling anew). These sort-throughs take time!
Bottom line for the Middle East is whatever the people there decide it will be thus. Westerners will have little say in this process, except for a lot of silent prayers and crossed fingers in favour of continuing of cheap oil/natty gas prices.
ENERGY PRICES TO GO UP
As far as future energy prices are concerned I’m more in agreement with #52 Kuwait.
I remember 15 years ago when talk of $100 a barrel oil was met with pure derision in the West. Couldn’t happen. No way Jose!
This day oil which “cratered” a few bucks in London and New York this morning, on concerns for slower growth prospects in China, have now recovered and Brent is up a few pennies while WTI is down a few. Not a good sign for cheaper oil advocates.
Two hundred dollar oil is a distinct possibility if the “right” conditions come along. Those include double-digit inflation, regardless of causes; supply disruption in the Mid-East through the fall of the House of Saud; other supply and demand concerns.
On the flipside of that equation and something #51 Utopia is right about is the old canard that the cure for high oil prices is high oil prices. In other words demand destruction. Yes, but. We wait.
COMMUNISM’S COLLAPSE
Another point Abegaz talks about is the collapse of the Soviet Union and Communism as being comparable to what’s shaking in the Levant.
I don’t believe that. The Middle Eastern “revolution” or renaissance, or whatever, is a creature we’ve never seen before. This is new. There IS something NEW under the sun afterall!
FINANCIAL FINAL FINAL
And, finally Utopia’s point that Greek and other Euro debt is the real killer out there. Definitely!
These debts can never be repaid, so some kind of default is the end game there.
That will destroy the Euro and throw into doubt the so-called credibility of all fiat currencies.
This development would also destroy the US dollar as the world’s reserve currency, create huge inflation, destroying millions of hopes and dreams EVERYWHERE. Gold and oil prices would blow clear into outer space.
We’d be lucky for $200 oil. We’d be grateful indeed.
Greetings: #125-[Ottawa S]
“Seriously peeps, the other day it’s bash the boomers, now it’s bash the wives.”
I think Garth likes this to be an equal opportunity blog, so here goes: Why does a man have a hole in his penis??
So his brain can get air!!!
First: The skip a payment is not new, it’s been around for 10+ years.
Second: A 30 year amortization is a 30 year amortization, nothing is going to change that. At the end of your term or when you negotiate your mortgage you can elect to change your amortization period back to 30 years is you so wish. This is not new, you have been able to do this for as long as I have had mortgages , which has been 35+year. You could have a mortgage for ever by just simply changing your ending term amortization back to the the original mortgage term if you wanted. Stupid idea though.
Third: There are restriction. From BMO skip a payment option:
http://www4.bmo.com/personal/0,4518,35649_36760,00.html
*Take a Break and Family Care options are not available with the Low-Rate Fixed Closed Mortgage. Take a Break and Family Care options apply to principal and interest payments on conventional and GE/CMHC-insured mortgages for owner-occupied single-family dwellings only, including condominiums and duplexes. For mortgages insured against default, customers must have prepaid principal at least equal to the amount of payment(s) to be skipped. Any mortgage insurance premiums and tax payments cannot be skipped. For MICC mortgages, only the Take a Break option is available. The Family Care option is not available to self-employed individuals. Customers currently receiving Accident & Illness Mortgage Protection (provided by Sun Life Assurance Company of Canada) are not eligible for skipped payments. Interest for the skipped payment is added to the principal. The balance of your current mortgage plus the skipped payment must not exceed the original amount of your mortgage with us. For conventional uninsured mortgages, the balance of your current mortgage plus the skipped payment must not exceed 75% of the lesser of your home ’s present value or the original amount of your mortgage with us.
So again
What you can do: Skip payments and interest and principal, but it will be added to your mortgage amount if you meet the restrictions.
What you can’t do: Get a CMHC (hence Glenworth) insured mortgage for more than a 30 years.
Does anyone know when YYZ started all night flights?
I recall at one time all night flights were extremely rare at Person airport if at all. (I grow up in Mississauga)
How are the people closer to the airport like Brampton, Mississauga, Etobicoke finding there sleep lately?
I’ve woken a few times lately and heard jets engines in the distance.
Some areas of Brampton have city signs up about noise from low flying planes and danger to your hearing.
I can’t imagine the noise when trying to sleep at night.
Is anyone doing sleep studies/effects on the populations health since the night flying started???
(Maybe more sleeping pills and ear plugs are being sold locally?)
And has anyone been track the effect night fights had on home prices under the areas lining up to the runways since night flights started?
Just asking.
#87 Kevin on 03.10.11 at 10:39 am
———————————–
what does it matter if it is a little or a lot? it really only matters how you quantify and qualify the amount and calculation. Since you seemed to have missed the point, I will clarify:
people are buying houses that are at the edge of their budget. Garth says this is bad because if/when interest rates go up, people get screwed. I was trying to bring light to the fact that it is not only interest rates that increase, all sorts of things in life get more expensive as time goes by. For instance, having a baby increases the monthly expenditure. If diaper prices rise, and wages dont, you get trouble. Your assumptions that I was refering to a $33 pack of diapers led you to believe I was implying 200% inflation… not wise to assume anything and make comments about the quality of the sites commentators.
I think the summary of what Garth is trying to convey is that everything is being done to facilitate indebting people via homes and fueling imaginary gains via home price increases that are not being matched with income increases. The skip a payment option is not really in the best interest of the homeowner, it only leads to a longer morgage and a larger amount of interest paid. If it keeps someone in their house great, but to go into a deal thinking “I am going to use this cash back morgage, move my money into an RRSP, take the tax refund and put it to the down payment, withdraw the RRSP for the downpayment, take the longest amot period available, and then skip a payment every year”, you may be overextending yourself, given the volitile nature of life. Maybe not, it would really depend on an individuals situation. However, by doing all this, you would really only be making the house seller, agent, and bank richer.
SKIP TO MY LOU
Skipping mortgage payments, especially since it’s legal, is really bad form.
Canada’s chartered banks have bags of credibility world-wide, so why be so corporately irresponsible by allowing mortgage holders to shuck one payment each year?
In this STILL low interest rate environment that means it’s OK for consumers to continue their delinquent and terrible spending habits, visiting massive debts upon their heirs and successors.
I hope that with higher interest rates and the accompanying economic downturn that fewer people will be able to buy homes, mainly those who really can’t afford them.
Shady bank lending practises, such as this, will have huge and bad implications especially for those who really can’t afford to buy in the first place. Ref: US housing market.
Sovereign credibility through a nation’s banking system is a very rare commodity these days. F should be on the case immediately.
#114 tran, Calgary
“PS: Foreclosure rates still rising in Calgary. It isn’t Phoenix yet, but you just have to wait. ”
Do you have a link for the above? Thanks
===================================
The stats are from the Canadian bankers association at http://www.cba.ca
Go to “media room” then “statistics” and then look for “mortgages in arrears”
Alberta’s most recent info is on page 14.
It gets updated monthly and the latest one is for Dec.2010
http://www.cba.ca/contents/files/statistics/stat_mortgage_db050_en.pdf
#125 Ottawa S on 03.10.11 at 2:34 pm
Well said. For years I was the sole bread winner.
146 GregW, Oakville on 03.10.11 at 4:05 pm
To answer your question, I grew up at the end of runways (Father was Air Force) and learned to sleep right through the “passovers”
I actually lived right under the flyway to Pearson when it was Malton Air Port. (Jets are MUCH quieter than recips. I know.) So, you can get used to anything.
It might not be so for all but hey, You pays your money, you takes youir chances.
#146, there are signs up in some Mississauga neighbourhoods about the neighbourhood being in a flight path with warnings about noise, too… around the Heartland Town Centre area.
The same area is built on top of an ex-landfill, too, so it’s a tough one in more ways than one :)
In fact, thanks to Google Maps, you can see for yourself:
http://maps.google.com/maps?f=q&source=s_q&hl=en&q=Britannia+Rd+W+%26+Terry+Fox+Way,+Mississauga,+Peel+Regional+Municipality,+Ontario+L5V+2T3,+Canada&aq=&sll=37.0625,-95.677068&sspn=48.555061,67.236328&ie=UTF8&geocode=FfdkmQId7ds_-w&split=0&hq=&hnear=Britannia+Rd+W+%26+Terry+Fox+Way,+Mississauga,+Peel+Regional+Municipality,+Ontario+L5V+2T3,+Canada&ll=43.605924,-79.699244&spn=0,0.016415&z=16&layer=c&cbll=43.605877,-79.699165&panoid=a1TF3joXG994bmgLFkZq8w&cbp=12,161.56,,1,3.53
#21 VICTORIA TEA PARTY (et.al)
Nice post.
As for #51-I was surprised to see a bit of a fluff piece on ‘Seeking Alpha’. . .that article made almost no mention of important factors such as rising food costs, population growth and tensions between Si’ites and Sunnis – it was more of a Jeffersonian rahrah account of ‘democracy’ breaking out.
If $200 a barrel oil seems to be out of the realm of possibility, why was $147 a barrel oil hit 2 1/2 years ago? Notice how everything fell apart 90 days later? I try not to sound too much like a doom and gloom type, but with the Saudi army on standby for the next 24 hours it is hard not to see how things will not spike with oil prices again. And again. When prices go up, suburban housing (and ex-urban/rural) property prices are bound to be affected.
Anyway, I am glad to see things are moving away from advice for getting dates.
47 SwampLily
I too rent in Victoria, same deal, yes rents went up in the last 5 years, shortage of rentals? Don’t know, but I cannot get a mortgage for what I pay in rent, and the landlord does the landscaping, plumping, new slide door, new windows this year, and a new roof is coming soon. My calculated cost to buy at todays prices, with a realistic rate (not 2%) would be 1800, not including tax and repairs, and that would be collapsing $50K as a down payment. My return on $50K and the extra 600 invested every month, is returning much better than dumping into a house. But yes, I too will wait this out.
This summer will be the tipping point.
As for the readers and posters here, suck it up. We all have voices and something to add. — Garth
_____
According to you this is not the case though. . .my comments are being censored and not added to the threads even though they contain none of the swears and sexism of some other posts.
I told you why in our email exchange. Then you made a threat. So buzz off. — Garth
Skip a payment and especially extended skip a payment are also part of the way banks hide delinquencies.
It’s called Extend and Pretend.
Buffett has said, you can’t default on a promise to pay nothing.
So I promise to pay my mortgage monthly. Then I lose my job but arrange an extended skip a payment or cash in on double payments I made over the years and they let me skip an equal number of payments. (Equal to how many double up payments I made in the past, although there may be some limit to how many)
Now I promise to pay nothing for the next 6 months. And I don’t
Voila! a delinquent loan is kept off the delinquent list…
Some food for thought when you’re deciding whether to keep your money stocked away in a bank account, those highly endorsed preferred shares or to put it into real estate or some other tangible asset:
“A fractional banking system is called as such because only a fraction of the public will be able to get their money out, the rest nothing.”
Bull. — Garth
“blue chip thinkers”
Mar 09, 2011 12:25 PM
Twelve Indicted in Arizona in Multi-Million-Dollar Mortgage Fraud Schemes
Twelve Arizona residents were charged in two indictments for their involvement in multi-million-dollar mortgage fraud conspiracies. Between the two cases, the defendants fraudulently obtained more …
Twelve Indicted in Arizona in Multi-Million-Dollar Mortgage Fraud Schemes
Twelve Arizona residents were charged in two indictments for their involvement in multi-million-dollar mortgage fraud conspiracies. Between the two cases, the defendants fraudulently obtained more than $19 million in loans and more than $5 million in “cash back” loan proceeds. The defendants are charged with various counts of conspiracy, conspiracy to commit wire fraud, wire fraud, aggravated identity theft, money laundering, and conspiracy to commit transactional money laundering.
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“It appears that some smaller banks advised clients not to participate in the voluntary disclosure scheme,” he told swissinfo.ch. “They may have thought that they could reap the benefits of a windfall, but anyone who thought this was naïve.”
In the meantime, other Swiss banks have exited the US markets because of tough changes to disclosure rules. Foreign banks are now obliged to report on clients who buy or hold US securities and could soon be forced to divulge the details of those that inherit such stocks and bonds.
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In April 2008 Wachovia was investigated by United States federal prosecutors as part of a probe into drug money laundering by Mexican and Colombian money-transferring firms. The investigation of the alleged laundering also included other large U.S. banks. Meanwhile at the same time Wachovia announced a $144 million settlement for federal charges that it had failed to stop telemarketers from taking advantage of thousands of elderly consumers.[73]
Wells Fargo has since admitted that its Wachovia unit was involved in money laundering for drug traffickers.[74] In March of 2010 Wachovia agreed to pay a $160 million dollar fine for involvement in Mexican drug cartel money laundering that could total up to $420 billion dollars. [75]
Check out this MLS listing in Winterpeg where the houses have become way overpriced in the past couple of years. Please please please buy me before Mar 18th …
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=10433204&PidKey=-1418920972
There is blood in the water and fools rush in …
#121 Lily Spring
> Once in a while some of us get paycheques, buy
> properties
That’s the problem. A mortgage is a 30+ year commitment. If you’re only getting paycheques “once in a while” and relying on someone else to fill in the gaps you better live within your means.
If you want to pull your weight hire a foreign housekeeper/nanny and get back to work. The low level wage the foreign housekeeper makes represents the true value of your worth at home.
Zero Hedge post: US Real Estate
Household Deleveraging Continues As Net Worth Jumps On Stock Market Gains; UBS Sees Stagflation Coming As Real Estate Values Drop To Q4 2003 Levels.
#104 Where have you been all my life?
I am here. And where are you?
#125 Ottawa S Bad grammar aside… I’m also the financial head of my household, but I wouldn’t say I have a “male-style” brain. Thank goodness, or I’d only think of sports, sex, and beer
Apparently I am coming from a different culture and apparently we have different sets of males around ;) Anyway I meant logical and not emotional part of my brain. Sorry if I didn’t put it correctly and offended anybody.
Garth-You are not possibly suggesting that RBC or any other Canadian bank may be playing with the new rules? We know quite well that our high streetbanks would never do something like that, they are venerable ethical institutions, pillars of our economy. That is why we ensure that they all the risk they judiciously underwrite is passed back to us, the taxpayer. So that when the sh-t hits the fan, they will be seen as rock solid institutions, nothing like the US banks, God forbid. The main difference between Canada and the US is that in Canada we sociliza the losses, BEFORE they hit the banks, in the US they are socialized after the fact, in both of course gains are fully private and go to a priliged elite. Asa business, I think Canadian socialism is a better deal than American capitalism. In both, the taxpayer gets the raw end of the deal.
8 days until the implosion of Canadian real estate intensifies!
15 February 2010
Speech by Adair Turner, Chairman, FSA
14th Chintaman Deshmukh Memorial Lecture, Reserve Bank of India, Mumbai
Speaking at the Reserve Bank of India in Mumbai, FSA chairman Lord Turner said that both the Asian crisis of 1997 and the recent crisis had made clear that expansion in the scale and sophistication of financial activity is not always beneficial to the global economy
========================
What about the OUTFLOWS Mr. Turner?
•Policy instruments such as taxes which place constraints on short-term speculative inflows may be particularly relevant for some emerging economies.
Black money: How tax offenders hide their identity
And that’s how for many years now, India has been losing crores of rupees of tax money – the money that should have been fuelling India’s economy, …India Today
http://indiatoday.intoday.in/site/Story/131970/world/black-money-tax-havens-exposed.html
predatory subprime INDIA styled
millions of people in BONDAGE which is illegal in INDIA
http://www.freetheslaves.net/
Bonded labour
None of them had heard of the Indian law that made bonded labor illegal more than 30 years ago.
According to estimates by policymakers, activists and scholars, the number of modern day slaves ranges from about 10 million to 30 million.
COLLAPSE IS UNAVOIDABLE Likely by Christmas – W. O’Brien
http://www.youtube.com/watch?v=i6C5xc2gF5A&feature=player_embedded
RE:#143 VICTORIA TEA PARTY
What is in the tea you are drinking? You sound like a friggin’ lunatic.
What did I do!! I sent my husband the link about the cansolar panel. Now my husband is interested in building his own. He understands the technology, & thinks he could do it for far less. Time will tell. But, I do know that when he gets an idea in his head, he doesn’t relent. He just tried to explain it to me while I’m making dinner- duh.
I guess if everyone doesn’t want the banks to offer products that can make them more money we should just go to a centralized, government run bank.
That would be better right?
Is anyone doing sleep studies/effects on the populations health since the night flying started???
—
No. Harper says private industry should pay.
I recently moved me and the wife from Vancouver to Ottawa as I promised her that we’d actually have a hope in hell of owning a house in the latter someday. She’s already wondering when ‘someday’ is… Well, by moving from bubble ground zero, I would have already saved about 50% were I to purchase a home now; but let’s see if I can save another 20-30% by waiting a couple years and still preserve the marriage!!
ASH-#138…
That’s excellent!!!…I too am looking down the same path….
Look into purchasing your land through Dignam and Dignam…Crown land auctions. It will be rural but you will be able to be self sustainable.
http://www.dignam.com/
“To those saying that “Skip-A-Payment” isn’t available on 10- or 25-year mortgages, it’s not true. It’s not available for 10- or 25-year TERMS — those where your rate doesn’t change for 10 or 25 years. It is available for 10- and 25-year amortizations.”
After all these years, I never realized 25-year terms were ever available. I thought the max was 10 years. Silly me! LOL
Okay big Guys! Are you interested in housing conversations, or are you here to point fingers who is the bigger idiot?
Let me tell you big macho guys, I am a woman, and I know what a hell I am talking about. I have come across many crazy men, and many crazy women.
When it comes to money, I do not need anybody to put me on a budget. I know what I have, and what I can spend. Let me tell you guys, as a woman speaking, I do not follow crowd. I make financial decesions not on hormonal emotions, buy on facts.
I have advice for you men, if you wish to make your own decisions then ‘ stay single’. It does not make sense to me for you to complain about her, and then share bed with her. Get it!
“I hate having no control, I hate having my privacy invaded, this is not the first time I’ve had to deal with landlords who attempt to screw us, steal our damage deposit and generally be difficult.”
Don’t ever expect to get your damage deposit back — it is not going to happen.
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#141 GregW, Oakville — Hi Greg.
Now a proven link between H1N1 shots can cause narcolepsy, when the original H1N1 started making its rounds, a lot of people skipped having the shots, so there was quite a lot left over.
Throw it out? Not a chance! Don’t waste a good crisis! The US health officials simply added the leftovers to this year’s flu shots, and never told anyone.
Things, in more ways than one, are sure looking ugly.
#144 Dodged-A-Bullit-in Alberta — “So his brain can get air!!!”
That explains a lot! I hardly learned anything at school, but I often wondered where smart men got their intelligence from. Now I know!
#169 Live Within Your Means — Way to go! Now you’ve got him occupied, he’ll stay out of your way more ’til he finishes it!
*
Saudi Arabia “When a government opens fire on their own people, it proclaims its failure to the world. There is no going back after you cross this line.” wrh.com.
1:30 clip Global protests and timing.
Playboys Crumbling “The era of the greed-monsters is starting to crumble, and it started in Iceland, where a furious populace threw out the government which attempted to bind them into odious debt.” wrh.com.
EU Bond Rout Things don’t seem to be rosy across the pond.
Latest Figures Unemployment up (US).
Utah approves sound money. Own Currency More than anything else, Utah and Tennessee are saying they don’t want the US Fed anymore. Good for them. Arizona Starting one’s own monetary system is the main step in moving away from DC.
14:12 clip “I brought these with me (SHOWS HANDCUFFS). I’d like anybody who works on Wall Street, anybody who works for one of the banks, just take a look at this. This is what is coming for you. Because the people aren’t going to take it anymore. The people are going to demand justice, they’re going to demand that your ass is in jail.” — Michael Moore.
Dictatorship One See where dubya and Obama have taken the once-proud US, and Dictatorship Two. Dictatorship Three The US, Canada and Ireland all have dictatorships — the IMF and EU, run by the Rothschilds and a few ultra wealthy friends. Dictatorship Four Man, they’re getting desperate!
Wisconsin is in the process of losing it altogether, and there was a mag. 6.2 near Bali today, ‘tho it was 510 miles below the surface, so no tsunami.
Science Fraud Germany dumps GW. Sensible.
Rising Interest Rates and precious metals.
4:16 clip BP kills humans (TPTB).
Pensions “Why are the pensions running out of money? Because the global bankers got greedy, and bought into the fraudulent mortgage-backed securities offered by Wall Street.” wrh.com.
Crotia Add to the ME and African hijinks.
Amtrak “The US Government has declared war against YOU! TSA are the front lines!” wrh.com.
#170Plow-Hate to wake you up but what exactly do you think we have right now? Five flavours of the same popsicle-if this country lasts another 50 yrs it will be the identical five flavours to choose from-real cutthroat free enterprise.
Sadly true! I pinch my self after talking with very smart people about those facts. The problem is they are to smart, so forget it, they know better. So *us* have to go on with our life until the inevitable happen. One skill that they dont teach you in school, witch is to be… street smart. The BANKERS are laughing at you, they are burning you people, wake up! Spread the message, one person at a time.
“Let me tell you big macho guys, I am a woman, and I know what a hell I am talking about. I have come across many crazy men, and many crazy women.”
I am speechless, sorry.
Last!
Alrighty then:
What are you sorry about exactly? Since when a man like you became speechless?
#2 Montrealer “Are we about to see interest only mortgages?”
In 2008 I bought a flipper house with an interest only mortgage but under a line of credit. I had to put 25% down and the interest rate was CIBC prime.
For my short term purposes it worked great, but certainly not a long term position to take.
For the battle of the sexes crowd:
http://abcnews.go.com/2020/Entertainment/story?id=1526982
The above is a summary of a 20/20 episode from a few years back. I was lucky to catch it. Norah Vincent
disguised herself as a man to study what makes us tic.
Her book is titled “Self made man” but I have not read it.
One thing she noted was the extreme pressure some men face in providing for their family. They simply dont see
any other choice, and no matter how hard they work,
their families never seem satisfied.
You’ll be pleased to know that BMO is offering consumers that same deal:
http://www.bmo.com/home/personal/banking/mortgages-loans/mortgages/bmo-mortgage/payment-options
Thanks all, who gave some input to my question.
Here in the Okanagan we would love to $1.21 a liter gas. It’s gone to between $1.25-$1.28. As the prices of houses goes down the price of gas and taxes goes up. If I didn’t know better I’d say some one was trying to destroy the middle class
Yesterday, stock markets tank on debt news from Spain. Today, largest earthquake in Japan’s history pretty much shuts down the 4 largest economy in the world and the markets in Canada and the US go up.
The world just doesn’t make any sense at all sometimes.
Robert Hare, PhD and Paul Babiak, PhD co-authored a book entitled “Snakes in Suits” It is a study of psychopaths in business. This is what we are dealing with. Psychopaths do not care about your situations. Here is what Amazon says in short form “…Psychopaths are described as incapable of empathy, guilt, or loyalty to anyone but themselves; still, spotting a psychopath isn’t easy.”
Psychopaths are not able to tell the difference between right and wrong. They only know of the urge to satisfy their personal needs. I see more and more of them in top business and political positions. I was fortunate to have studied under Robert Hare, PhD. He is considered to be the world’s leading authority on Psychopaths.
A Few Signs: lack of normal emotion, massive manipulation through body language, facial expressions, and tone of voice. Also, they are continually telling falsehoods.
I hope this helps.
You will find similarities between your concerns for the vanishing middle class, the movie “Soylent Green (Soylent Green is People), and psychopaths/cannibals like Hannibal Lecter who could have said “Yes, Soylent Green is very tasty people”.
The situation of the middle class is not a concern of the successful psychopath.