Borrowers drastically extending mortgage amortizations
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- Опубликовано: 30 авг 2023
- Sean Humphries, mortgage broker at Dominion Lending Centres, joins BNN Bloomberg to discuss data from Canada’s largest banks that shows more and more homeowners are extending their mortgage amortization periods by choice.
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"Is stretching out your amortization a good strategy in the short term?"
Other good short term strategies:
- Doing heroin
- Driving as fast as possible
- Eating junk food
- Running a ponzi scheme
Absolutely!!!! Crack is still KING!!!
isn't that kinda ironic? talking about short-term when extending your amortization means its meant for long-term
Good for the banks. They are taking in the lions share of gains from ventures and with no work nor risk. This is an excellent racket. 10/10 would recommend
It's great for them. People will literally never pay it off and keep paying interest forever.
No worries, the taxpayers are always on the hook for all risk of subprime lending. Profits are privatized however. Banksters always win.
Mortgage broker here. Mortgages do not start at more than 30 years in length. The reason some mortgages are now beyond 30 years is because people are not making their full payments as rates have gone up
So it's a technical default? I thought that was not allowed by ofsi?
@@seanyoung5397 seems like special rules are in place where the assumption is that rates will go down in the not too distant future, at which point principal will resume being paid
@@seanyoung5397 osfi is letting it slide while the term is still ongoing. The question is will they require customers to get back below 30 when they go to renew.
...which means they couldn't afford their house in the first place and should instead sell at a loss.
@@daisemanlike the way you rent at a loss …
Yep. Just keep adding more heavy blocks on a small 4 cylinder truck and keep expecting it to continue to run. There are so much load you can add to it before it cripples. It seems that there are a lot of shadow defaults out there. But they keep saying that Canadians mortgages are still in good standing with only zero point something percent mortgage holders experiencing default. I am sure that the true default rate is at the upper 20 percent if you count all those shadow default. I am sure.
People are not "choosing" to do this. They are being forced to do it. No other options are available.
More than 25 years, more than 35 years...but no information on the actual number of decades the payments are being extended 😂
Note how they don't reveal statistics on the number of decades the amortizations are being extended.
The banksters are extending payments up to 90 years! Yes, that's 90 years!
We are allowing men like this to put us into a life of indebtedness.
I always laugh as an advisor attempts to convince people the degree of slavery they will be under and the best way to position themselves for the Royal screwing they are about to receive.
Big bank financial magicians invented new default terms; this will only end badly.
Why was so much money lent to these people in the first place? I have absolutely no sympathy for people living beyond their means.
Stretching out a mortgage to 30 or so years is called renting from the bank till death. Only difference is you do and pay your own maintenance. Pay the property tax. Pay your water, gas and hydro. People say but I make on my home in the end. Except all those costs and add up your interest say for even ten years by the time you move again. You then pay moving costs, real estate agents. Lawyers, land transfer costs. I bet you anything you are losing in the end now.
There will not be a housing crash; the smart thing to do for households having trouble meeting payments is a short term increase in amortization period and pay down debt as fast as possible. Anything else is financially illiterate - rates won't stay high for ever - higher capital payments can resume when rates fall again and bad as this is, it is better than losing your home and ending up as a renter in a rent spiraling environment with all the instability that entails. Not ideal, but not a disaster either - a disaster is being foreclosed on, forced to rent at high rates, being evicted for non-payment of rent and then being made bankrupt as the bank chases their loss, which is the alternative.
Do you work for Trudeau?
Spoken like a real broker
This is insane
Ah yes. Just imagine until all those fixed rate mortgage holders get switched to 4-5% when their term is up.
Fixed payment variable is way worse
More like 7-8%
Just got a 50 year extension on my hotplate financing !!!
Great dialogue, very informative thank you
Kids are wondering if their parents will have a basement for them to live in. Trudeau said interest rates would not go up.. Ask Glen.
All that interest to the big banks = big profits
Anyone remember Money mart it’s was a good idea when you knew nothing about the value of money like when you were 16 and got your first pay check you wanted the cash right away not in 7 days
I make good money. I live in a payed for mobile home. So much for a new house. Oh well no mortgage
Just be patient. Wait for a crash.
waiting for a crash 🧟♂️💀
And if they add a equity tax on sale of your home look out!
People just rent their homes, banks are their mortgage lords.
It's essentially quenching thirst by drinking poison
Individuals can sell and go bankrupt if they have to and live on. Banks can not claim bankruptcy and survive. These measures are protecting the banks, shareholders, and the government. The banks and the government are not your friend.
Is stretching amortization good for individuals in the short term? What is that question? Do you need an expert to answer that?
People don’t want longer amortization they want reasonably priced homes and mortgages that they can afford on their current salaries. Perhaps it’s time to allow mortgage interest deductions on our income tax. Longer terms would also help reduce exposure to the whimsical rate hikes coming from all the central banks. If we can’t decouple from the US (and world) economy then at least we should have access to similar mortgage products such as 30 year terms.
Which means houses prices keep going up. We going straight Venezuela now. 😂
Yes prices need to come down. But unfortunately it may not come down to where the majority of people can afford them. At an average cost of a home in Canada of 750-800000 even if it came down 40% most won’t be able to come up with the down payment and or pass a stress test of 6% on 450-500000 home. That is the reality.
Mortgage = deal with the devil
I agree, but what are our options? Pay cash, rent or leave country?
@@ballatician10 that’s a good question. Depends…probably a good topic for a video. Immigrant? No investment in Canada? Leave before you loose your shirt. Invested in Canada? Have gone? Live frugal, build rental unit in backyard, rent out basement etc start RUclips channel :) so many variables.
Extend the mortgage forever then go line up at the food bank before heading to work until you drop dead. Canada sounds great.
At some point they will have to renew then what
can you imagine paying for years on a investment that does not diminish in debt ( principal) meanwhile the actual market value is decreasing. CANADIAN people will walk away from their mortgage. just a matter of when.
Rent out basement or a bedroom or a closet. Crazy times
40 to 70 years amortizations = You are paying 15X times more than what you are purchase prices. Do Your BASIC MATH.
NEVER go beyond 20 years.
You are making the Big Banks and Private Banks = eating all your rates plus FEES.
Those periods are insane. I think I saw 40 year amortizations for the first time in the early 2000s. I bought a modest home back in 2010, so I am relatively ok. For people who bought too expensive in the last few years they hardly have any choice now though. Try to sell or extend their amortization. Or am I missing something?
How this Shylockry is legal is beyond me
Renting and the current rental market isn’t any better. Rather be renting from the bank than Jagjhit.
So all those people who now have mortgages in the 30 and 35 year range, they must be really happy they voted for trudo... How is that "budget will balance itself" strategy going? Maybe printing so much cash by the Bank of Canada for trudo's pet projects wasn't such a good idea after all, eh?
Another good news story to normalize destructive behaviours and outcomes. Tsk Tsk Tsk....
Basically most people on 35 year mortgage are tenants and bank is the landlord. You will own nothing and you will be happy, after you are worn out trying come ahead of this debt.
Risky. Risky !
If people buy a house at 40, and work until 65...I don't think you can increase the amortization past 25 years guys.....do the math. 65-40 = 25. Most people below the age of 40 can't afford housing. Many of us are actually waiting for our parents to die to get an inheritance (their house sells first and gets split between 1-4 kids). If they live til 75 (on average) then we're what 50? You can see why you have having troubles with population starting families. So what are you guys doing?
Here's a thought: only allow loans up to 300k. Then people can pay them off. If they can't afford housing? Tough. Make them live with their families until they're 35 earning full time pay and saving up. If you're paying these wealthy kids 100k a year and they work for 10 years they should have enough. Only them though....
Does anybody else see the problem with our society? (O_o) How many people make 100k? I guess you gotta make 50k a year and marry someone who makes 50k a year....both smart enough to save money. Yeah how often does that happen?
Great so what happened to the age of ONE paycheck households? Middle income families? Guess we're not allowed to exist anymore. Does that mean you richey riches gonna start doing some work if you're going to take all the jobs and salaries and kill off the rest of us? HA. Do you have jobs to give all your wealthy TWO-FOUR incomes a family? Let alone find people in those families willing to work? I didn't think so.
I guess we're all just staying home until we're 40....probably not getting married and supporting our aging parents (or they support us if we can never find work) while you ship in some foreigners then. That's what they really want anyway. They're fine with killing us off, they just don't realize its going to happen to their kids too. Maybe they just don't care about their kids....
Now there are too many white folks, then there will be too many indians, then too many chinese....etc etc. They'll always be wiping someone out with more foreigners and denying the local population work. Its a shame we ran out of jobs. The foreigners would love to rush the borders....you folks really dumb at managing immigration and population. Certainly shouldn't be loaning money to these folks. Look what they're doing to the banks back home.
However , if you have the financial ability to save up more then 20% DP then you likely can afford to overpay to the max allowable and pay down the principal faster , negating the extra premium the bank will charge for risk, particularly if done early on.
Thank you for the random statement
Have you seen the home prices?
lol
1987
Never understood the need for a mortgage broker...just another unneeded middle man (person)
@@owenlangis well I have had a few...didn't need a mortgage broker
Exactly
Extend your mortgage... so you can screw your future self
Good strategy bud
Canada needs recession to fix housing bubble.
Housing crash the only way.
A big part of the problem is the myth that buying a home is better than renting. Pro tip: renting is often a better financial decision.
Especially if you bought in Alberty - namely Edmonton in the last 20 years . My house I bought new in 2014 is somehow still worth less than what I paid for it.
@@MustyBastard....and how much equity have you built in it?
@@lucassquire4768 275k . I had some equity I bought from my first home back in 2012 about 70k. But if you include
75k- down payment on house
50K spent on developing basement in rental suite.
15K on landscaping over the years.
that is only 135k in equity build after 12 years. current house costs about 4k a month.
4X12X12= 576,000
I know the first two year was a little less, but still. I spent 500k to build 135k in equity. F Alberta real estate
Thank your nearest Liberal voter. They've enabled horrendous policy 3 TIMES now that's caused all this.
Everyone that voted liberal must go to jail