Canada's NEW Mortgage Rules Explained; Will they Help? (Or are they Political Hype?)
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- Опубликовано: 3 окт 2024
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In this video, The Federal Government has announced major changes to mortgage rules as it tries to make homeownership more accessible for young and first-time buyers. The new policies raise the insured mortgage price cap and extend amortization periods.
I discuss the pros and cons of these changes, their impact on the housing market, and potential political motivations behind the changes.
Also in this episode:
Learn how raising the mortgage cap helps buyers with smaller down payments but could increase overall debt.
Discover how 30-year mortgages make monthly payments easier, yet lead to higher total interest costs.
Find out why these changes may push home prices higher, worsening affordability in the long run.
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so in other word, the bubble will never burst, people will never be able to afford a home again.
😢 shit is hitting the fan
Well... "good" for the people that own homes already. But many people who dont will only be able to get into the market through inheritance.
The "generational fairness" they are lying about will ensure that future generations will have no chance of owning a home unless they are super wealthy.
Very sad times.
@@nickstark8479inheritance? Parents will literally spend all of the equity in their home when they live in seniors care
Pass that debt down the road 😂.
They'll drive home prices higher, period. Same plan as usual.
no, compare to a scenario where these rules do not exists, after 30y you'll have the exact same real-estate wealth value but the bank will have taken about 20% more dollars from you. Which in the end reduce your overall wealth by a nominal 20%. It's just a wealth capture, it has nothing to do with helping anybody.
The only solution is a crash in the housing market
100% agree. Sadly they don't allow it to happen as it should.
@@debbielockhart7762 soon or later it will happen. Already happened in USA
If the housing market crashes, housing costs will be the least of our worries.
As a younger voter without a home, this won't help. The problem is the price of housing.They're terrified of doing anything that might lower prices, which needs to happen. Increase supply.
This doesn't make any sense for lower or middle income earners. Affordability is already a problem. This is going to make everything worse. People are already struggling to save for a down payment. I'm going to be a first-time home buyer, I don't find this news any good. I surely don't want to pay more on interest. Thanks for this informative video.
I totally agree with you. Terrible plan for young generation. Great for the banks and gov.
In Hong Kong it takes 2 generations to pay off the mortgage... We're heading that way lol
I thought the same
Freeland is lost in space. The only way to fix this situation is the force an extended period of low sales. Drop immigration levels drastically, force al of the hoarding investors to deleverage and sell by taxing them at high commercial rates, drop the land transfers taxes, drop the development fees to almost nothing.... and let the market correct.
And when u realize that non of the things u mentioned are gonna happen, u will realize prices are about take off when these inflationary policies kick in. Watch how fast the inventory disappears and the bids begin. People will miss the bottom completely
@@xxrudebouyxx1363 so far everything I expected to happen has. They are already dropping temporary immigration levels drastically. And the Liberal govt is facing another non confidence vote from the Bloc who are trying to push more spending on senior’s retirement payments. You can’t drive GDP by just by adding people. We don’t have the infrastructure to support these people. And it will take decades to develop this infrastructure.
The BOC is quite frankly stuck. They are dropping rates because they see most of the economy falling apart. Even the developers are talking about shelving a bunch of projects. Do you know what that means? It means a lot of people being laid off, and suppliers seeing their sales getting cut massively. Corrections take years and we are only 2 years into this.
Back in the 90s it took almost 8 years to sort through the correction. A lot of things have yet to reveal themselves yet. Last big indicator was the un inversion of the UST10Y/2Y. That signals a recession is incoming.
You will own nothing and be happy.
"Can't pay your mortgage? Just pay it longer, stupid!" - Freeland, probably
We need more tiny house communities, especially for individuals or young couples or those looking to downsize in retirement. Municipalities also have to drop the square foot minimum on new builds. It's ridiculous how you can build a house the size of a castle, but try building a 500 square foot house. . Thanks for the video.
Great video but a correction is needed: For a $1.2M purchase, down payment would actually be $95,000 (5% for first 500k and 10% for balance). 😉
You are correct. Thanks so much for taking the time to point that out. I wish there was a way I could go back and correct the video, but RUclips doesn't allow that. Thankfully, conceptually you would end up with a similar results, but the numbers would be different at the end of the day. Again, thanks.
@@beaviswealth just make another video with amendment
In short. Marc you are 100% correct.🤦♂️
Hey Derek. Hope you're well. Thanks.
Unless government put efforts on working on the offer instead of putting up programs wich will boost the demand... we are only increasing the housing affordability problem. Can't they simply remember the aftermath of dropping interest rate 2 years ago?
None of this will help with affordability and will drive prices higher. These changes will only benefit the banks!!!!
To help home owners, and future home owners,
- allow for long term (15 to 20 year) fixed rate mortgages with interest rates that are pegged to the Bank of Canada Rate (e.g. +1% of BOC Rate).
- Make the interest payments tax deductible similar to the the US.
- Implement a capital gain on primary residences that sell from more than $1,000,000.
Build more houses!
Wonderful, more taxes which will cause people to be less willing to sell and rather transfer to their children.
Why is the answer in canada always more tax? Do you realize how badly the government spends the hard earned tax money?
It will not benefit the banks if people leave the country
How in the world raising the cap to $1.5M going to help first-time buyers??? I suppose there are first-time buyers with household incomes of two doctors with little other debt that would qualify, but how many of those are out there?
As for the 'risk' of taking 25 year vs 30 year, this is just way overblown. People's income is going to increase over the life of the mortgage and they can always pay off extra as their income goes up. I took out a 35-year mortgage and ended up paying it off in 11 years. The only reason I took that length was I was starting a new career and knew my pay was going up quite a bit in just a few years.
Great story; glad it worked out so well for you! Being from the Vancouver area, I'm used to younger people scrounging everything together to buy a place, often $1M+, but I know that's not normal in most of the country. So yes, the number of people who will actually benefit from this is probably pretty small in the big scheme of things.
Was wondering the same thing.. We can't even afford a 800k condo, how is 1.5M cap helping us? Tf
This should be pinned.
The question is, what percentage of people plan on staying in that household for a full 30 years?
The 30 year mortgage would lower the monthly payments.. yes... but considering that people in canada are more prone to debt and considering that we tend to be more about comfort and getting what we want.. I forsee that people would go into a bidding war to get the spaces the want. This will actually drive up the prices of homes.
In the long run, you will pay more for the property you want... both in the initial cost due to bidding war and in the amount of the cost of interest over a 30 year mortgage. So an unit priced at 1 mil, might sell for 1.1 mil or more... then if you pay the interest over 30 years... that actual cost of the home will be astronomical.
This will just take us more out of reach of financial freedom...
I appreciate your updates
Thank you
Marc, that is such a great explanation and exposure of the risk our first home buyers are having to weigh. I also realize how lucky we were when we bought our first new home in 1999. The gains have been tremendous to where I now own a condo in the woods that is worth 4 times of the price when I purchased in 2011. Of course that is never guaranteed, the prices will be vulnerable going forward, this cap towards 1.5mil.... Man I dunno, but some people will have the mindset that they can always sell if need be....
1999!!! Seems like eons ago now, right? Thanks for watching and sharing your story....
A few days after Mark Carney became an advisor. He's on the board of Brookfield, a member of the WEF and part of the Century Initiative to increase the population to 100M.
Yes these will help to destroy are children’s futures.
Dumb govt radical policies. Oh god please save Canada by getting rid of Liberal NDP shit show
The new ones won't do anything to lower prices either. It is all greed, and thry also own homes....
If you think the conservatives will do anything concrete about the crisis I have bad news for you. MPs from every major party have benefitted from the housing crisis and think they will get more votes id they keep prices high
It is not just NDP it is all government and politicians. The whole system is broken
Question - First-time home buyer, buying a pre-con new built with 20% down. Does this scenario qualify for a 30 yr amortization?
The new cap also allows for lower interest rates. Interest rates are placed in 3 categories uninsurable (highest) which previously was any property over 1 million, insurable (lower than uninsurable but higher than insured) but has over 20% downpayment or insured less than 20% downpayment (lowest interest rates). So it also helps people who are purchasing a home between 1 & 1.5 million enjoy lower interest rates when putting over 20% down.
Does nothing for us but helps the banks in Canada, why is it in the US they can lock in for 30 years, without dealing with renewals every 5 years. Here in Canada, the banks force us to make changes every time we renew, exposing us to new conditions and rate adjustments. Remove that power from the Canadian banks, then that would certainly help.
As the gen alphas would say, the cdn govt is just dumb, no cap.
How this will help? It is clear is just politics and increasing prices … extend 5 years and I cease the price in $200k: how that help? Sometimes I just do not know what many people in Canada has in the head.. a brain is not for sure.
We have so much debt per household, this will make it worse
Thank you for the explanations Marc, really makes it easier to understand.
These changes entice the younger generation to be less responsible of their financial future.
" Let's stick in that epipen pen now and don't worry about the really needed hospital run"
I wish I didn't agree with you, but I do. I don't think this will work out well long term.
while people will pay more in interest they will not be paying rent which is 100% loss
Agreed. But what about the fact you can rent for $2k and the equivalent owned property costs approx. $5k a month in mortgage, taxes, etc.
I “ don’t buy it “ literally 😅
Will buildable land come down in price? Will construction trades accept lower wages? Will building materials become less expensive?
“Affordable housing “? I think the definition of that term is required. The average income of Canadians hasn’t kept pace with the cost of those 3 key ingredients of building a home. The focus should be on education of our population to command higher wages. I seems we are falling behind in the one area we can control.
Why would i want to pay more in interest?
The housing prices in Canada are just too crazy, not that many people are looking for a house that cost a million. Houses need to be below $600,000
Mortgage rates are currently at an all time high since 2000(24 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market.
Happy to have already bought my condo two years ago. It was already crazy in prices and high competition in Burnaby, you needed to go over asking all the time to have a chance. I can't imagine people that will face higher prices and higher competition...
It's been crazy in the city, trying to outbid everyone else. Not a very comfortable shopping experience, for sure. Cheers.
IMO no one should be getting a $1.14m mortgage with only $60k down...
Marc, I agree with all your points. I'm curious to hear what you think would be the best way to address the affordability issue
When all these buyers started to default their mortgage payments, more foreclosures will happen. This happened to the US real estate market in 2009.
So far every single rule for Fist Home Buyers has been in our favour. However, common sense is strong for our generation, we can read price history of house and paying an increased $500k for a piece of land than 5 years ago is a no go. Even with the money, the value/price is not there. Likely a inflated price due to 1 to 1.5MM insurance coverage amount, however I think this policy announced might be to soften the property decline inbound. If government really want to help next generation they would heavily regulate all home buying areas; listings, agent, brokers, lenders, communications, etc. with increased fines, payback to those that have been manipulated by agents. All the best to genZ and millennials. So far everybody I know that has bought a house has required getting their parent intertwined in their debt. This property bubble has made multi-generations bed fellows!
Thank you so Mark for this information. ❤
Anyone using this tool to buy a home is buying a life long debt burden that will be ridiculous. And your risk is greater that you have not captured any growth in your investment. The government is using you to off load their financial problem. The chance you will see no growth in your investment is high. They are only trying to save the banks and government mortgage insurers at your expense. Stay renting and let the housing market collapse. It will only take 24-36 months
that is what they said during pandemic lol. I believe the market will crash otherwise people will cause a civil war as food is scarce in Canada
It works if you are a first time home buyer with a $500k+ income, no debt and for whatever reason unwilling to save up a 20% down payment in 2+ years. Please tell me if I’m wrong.
Or, if you are planning to rent out the basement and every room in the house, while making extra payments on the mortgage for 10 years.
Thanks for the video Marc. I'm having a hard time seeing bright future for the potential home buyers. At least we have you and Brendon to show us the facts.
You and me both. Sadly. Thanks a ton.
So basically people will stay in debt.
Take the mortgage you can actually afford. Then pay it off as FAST as comfortably possible.
You will still need $75,000 for 5% down on a 1.5 million. I don't think to many young people have that much to put down.
I'm so sick of their crap
We need more affordable homes!
Government: you can now take on more debt!
I had a 25 year amortization but made weekly accelerated payments and also did double down payments of a extra $100 a month and had it paid off in 17 years but the bank also allowed to make one extra payment per year no larger then 10% of what is remaining on the mortgage and did not do the full 10% but allowed me to make a little dent a few times in the 17 years. Getting your house paid off early allowed me to concentrate on my investments and I have maxed out RSP’s and almost maxed out the tfsa If people allow themselves to get trapped into paying a mortgage off for 30 years it will be nice to have your house paid off 30 years but if you take on a 30 year mortgage that stretches you to thin then you will have no savings when you retire and may have to sell your hard earned house in order to be able to retire
If my kids spent more than 1M on their first homes I'd have some choice words for them. Who does that?! What kind of society do we live in that 1.5M for a beginner house is considered normal!!! I hope there's an election soon so this policy can get scrapped before it even starts.
Increasing the demand without increasing the supply, no decrease in taxation or permitting cost.
Geez I wonder what effect this will have. If only there was a way to understand the economy. Like a field of study or something that evaluates basic principles like supply and demand...
Thank you Marc for your updates.
My pleasure, thank you.
Thank you! Great informative video!
Glad you enjoyed it, thanks! Cheers.
Marc, very good balanced & unbiased factual overview. Politically unfortunately it’s short term gain with long term pain. Thanks 👍🇨🇦
Thank you, and I agree with the short term sentiment. Cheers.
Set up mortgage payments bi-weekly. And make 4 extra payments per year, and you will knock your amortization down substantially. And if you are able , pay down 15% principle per year as most banks allow this.
Who is going to have that extra money to make those payments?
thank you.
Great video Marc
Thanks! Hope all is well. Cheers.
It’s only going to have an effect on the most expensive housing markets and only for the upper middle class. Maybe some normal people in normal housing markets will be able to buy a little more on a 30 year mortgage. But over all not very helpful. When the problem is really on the supply side, meaning government red tape.
Supply is a problem, for sure. Massive problem. Thanks for watching.
The sentiment towards home ownership will go to negative,
Living outdoors is becoming normalized. Not paying taxes or rent.
The lure of Canada as a place to immigrate to will decrease,
This trend will lower the value of houses and the purchasing power of currency at the same time.
Hopefully buyers taking the 30 year amortization will have the discipline to make extra mortgage payments as they get wage increases and career promotions.
Unfortunately I think this is likely a small minority.
Older millennial here. I wonder how many of the voters they are trying to please will want to pay a Million for a home recently worth $750k ? I know it’s been a conversation for my husband and I. Our brains can’t justify the prices.
with a million dollars I would leave this country forever.
To little too late
Got to love JT ❤️
I hope that you are being sarcastic.
He is slavering Canadians into unplayable debts while he fills his pockets with the Taxes you pay the government. Every time a moron and a conman leave home to hit the streets, business is made!!!
Good luck affording the mortgage payments, insurance and taxes on a $1.5M home with 5% down. Do the math. How is this feasible to lower or middle class?
Rent & never buy.