5833 replies to this topic

[Mike K.]

I don’t think I’ve ever dealt with a mortgage rep at a bank who has had a mortgage.

[dasmo]

I saw this coming after the QE of 2020. I locked into a 5 year fixed at 1.81%. I had to argue with the guy at the bank. He insisted that I get a variable because the interest rate was 0.4% lower. I told him that I expect interest rates will have to rise in the future and I was expecting maybe 2%. He assured me that would never happen.

Damn. Good move. I almost did at 2.5%..... almost. 

[max.bravo]

It's all about timing. Locking into a fixed rate in 2020 might feel good for the remaining 2 years of your term  right now (2023-24), but who knows what will be available when it's time to renew. You might get caught by 7%+. Big decisions!

[Matt R.]

I don’t think I’ve ever dealt with a mortgage rep at a bank who has had a mortgage.

I’ve noticed that too, bank doesn’t pay that well or something?

[dkuitu]

It's all about timing. Locking into a fixed rate in 2020 might feel good for the remaining 2 years of your term  right now (2023-24), but who knows what will be available when it's time to renew. You might get caught by 7%+. Big decisions!

 

If we're 3 years into this mess and interest rates are at 7%+ percent I would gamble with a variable. I don't think that's where we're headed. I'm also plowing every penny I can into my mortgage right now while I have this rate. 

 

The mortgage stress tests were implemented for this very reason. I got my first mortgage in 2011 and was a little upset that I had to qualify for 6% interest when it was only 3%. It seemed unfair at the time shortly after the no income no asset (NINA) era. Everyone renewing their mortgage is experiencing the pinch, but they qualified for their last mortgage with the stress test that accounted for this pinch.

Edited by dkuitu, 23 November 2022 - 12:17 PM.

[max.bravo]

Yeah, theoretically every homeowner is pre-qualified for rate increases. But it's going to result in some BIG lifestyle changes for many when its time to renew. People will be ditching boats, RVs, second cars, etc. Not to mention all the HELOC spending that'll need to be reigned in and paid down once it stops feeling like free money. 

 

It'll send big ripples through the economy.

Edited by max.bravo, 23 November 2022 - 12:35 PM.

[Victoria Watcher]

Reined in. Not reigned.

[lanforod]

Whatever it takes to keep people in their homes is what will be done.

Try building a new house right now. It’ll be $300k in just basic materials, nothing flashy. Double that for labour. Add another $450k for the cheapest L ot. House prices generally reflect what it costs to build one, so anyone expecting any sort of magic downward pressure on real-estate well below that cost might find themselves disappointed.

 

So much this. People just do not understand this for some reason. 

[dasmo]

Because it wasn’t the case during the financial crisis down south.

[dasmo]

My builder buddy lost everything because he was a builder. Bank cut off his line of credit so he couldn’t finish the three houses he was building. They took her a house and sold it for 50% of what it cost him to build.

[Victoria Watcher]

Because it wasn’t the case during the financial crisis down south.

In that “crisis”, who suffered? People with $4900/mo. mortgages that had to revert to paying $2800 rent?

I have little compassion for someone suddenly facing a $5,100 mortgage payment - compared to one using the food bank and on a $900 fixed income.

It’ll work out for the former.

Edited by Victoria Watcher, 23 November 2022 - 01:32 PM.

[Mike K.]

My builder buddy lost everything because he was a builder. Bank cut off his line of credit so he couldn’t finish the three houses he was building. They took her a house and sold it for 50% of what it cost him to build.

Right. That’s a calamitous scenario, like a liquidation sale. They do happen, but they require calamity.

The bank would have been a big loser there, too. Presumably they financed the construction.

[dasmo]

In that “crisis”, who suffered? People with $4900/mo. mortgages that had to revert to paying $2800 rent?

I have little compassion for someone suddenly facing a $5,100 mortgage payment - compared to one using the food bank and on a $900 fixed income.

It’ll work out for the former.

I'm making no value judgment. Just pointing out the bank did not help anyone to stay in their homes. Lots of people benefited too. My other buddy stayed in his condo for free for a year since he stopped paying the mortgage and by that time they stopped evicting people. Then he declared bankruptcy and walked away. then bought a house with his wife for less money than the condo. 

[dasmo]

Right. That’s a calamitous scenario, like a liquidation sale. They do happen, but they require calamity.

The bank would have been a big loser there, too. Presumably they financed the construction.

The banks were the big losers yes. This move made no sense. The local manger was replaced by a young outsider. If they didn't cut his line of credit he could have finished the houses he was building. This is what he did for a living. There was no sense in it at all. 

[Barrrister]

I shocked to get a bit of insight into actual construction costs when my insurance appraiser from TD insurance provided me with a fairly detailed breakdown of what it would cost to replace my house in the event of a total loss.. It come out at just over six mil which was a real shocker (it was why I asked for a more detailed appraisal breakdown since I was having trouble with her price point). That does not even include the value of the land. No wonder houses are so expensive.

[Fox]

I shocked to get a bit of insight into actual construction costs when my insurance appraiser from TD insurance provided me with a fairly detailed breakdown of what it would cost to replace my house in the event of a total loss.. It come out at just over six mil which was a real shocker (it was why I asked for a more detailed appraisal breakdown since I was having trouble with her price point). That does not even include the value of the land. No wonder houses are so expensive.

 

6 mil?  What does BC assessment list your manor as being worth?

[dasmo]

If it's a large old quality Queen Anne house then replacing it as built is a fortune because it requires specialized skills and materials with lots of ornate details. Both are extremely rare now. 

[Mike K.]

At that price I’d throw in the land for free!

Barrrister, how much is your insurance premium?

[Barrrister]

I had to renegotiate the insurance down to just couver total loss and for a single much lower payment. But dasmo is right about a lot of the cost being items such as custom carved molding and trim and custom made mahogany doors and lots of burled wood. Twelve inch hand turned baseboards are a staggering amount of money as is the curved and custom handrails. The list just seemed to go on including the custom made tile for all the fireplaces. Had no idea that once things are custom made by skilled artisans then the price to reproduce goes through the roof. The place is a hundred years old and even stuff like the stained glass appears to be rather pricey to have made today. It is not any one thing but rather a lot of things all together. 

[dasmo]

Sounds like an amazing place.