Mortgage Flux
With the passing of the March 18th deadline, where CMHC reduced maximum amortization lengths to 30 years from 35, there has been discussion over how many buyers have advanced their purchases to qualify for lower payments. (A move from 35 years to 30 years, all else equal, increases monthly payments by about 7%.) But that’s not all that has been going on recently in MortgageLand. If one looks closely, banks have been pulling their 35 year amortization advertising. To wit:
- TD’s and Scotia’s mortgage calculators won’t let you put in an amortization longer than 30 years
- CIBC says one can get “An amortization period of up to 30 years to pay off your mortgage”
On the other hand, it seems business as usual over at Canada’s largest non-bank lender First National, where 35 year amortization options are displayed.
It appears like the Big 5 banks are reducing their advertised amortization lengths in close conjunction with CMHC reducing its amortization length. However banks have other tricks up their sleeves, including:
- Scotia has dropped advertised qualification criteria on their loans.
- Despite posted 30 year amortization, banks will, apparently, offer extended 35 year amortizations “behind the scenes” to those who negotiate and qualify, likely on loans that are deemed not to require any mortgage insurance even if less than 80% LTV.
- Smaller lenders like some credit unions still use “offset” instead “add to income” for adding revenue from rental properties to mortgage qualification amounts. (I know some major banks used offset a while ago and, for sub-markets like Vancouver, may do so today; this would need to be verified.)
So the question is, why would banks reduce their posted amortizations to 30 years? Are their risk departments raising a big stink in the boardroom and are they tightening standards in response, or maybe the government has had something to do with it? It was made clear by Bank of Canada governor Mark Carney that banks must bear long-term responsibility for ensuring homeowners can afford their mortgages for the duration of the planned amortization. I should hope so; his bosses bear the brunt of any fallout damage if prices significantly weaken. Here’s what Carney said back in November 2010:
The one thing we can say with high degree of certainty is that over a thirty year mortgage interest rates are not going to be at the same level as they are now, they’re going to be higher, and that Canadians, individuals, should be comfortable that they can service their debt at higher interest rates, and the banks that lend to them should also be comfortable about that.
Hm. I just noticed now how he said “thirty” and not “thirty-five”; that’s a bit odd. Now we see banks starting to tighten even on low ratio loans, albeit not universally. The margins of loose lending are being pushed out into the fringes.
So is anyone seeing any change in what/how lenders are lending to non-high-ratio customers? I’ve given up going into lenders to find out; every time I do they run a credit check and ding my rating 
March 21st, 2011 at 7:35 pm 1
It looks like the days of the conventional "for rent" sign are numbered. I was recently in Coquitlam and saw one of those rented commercial signs in front of a CAPREIT building. It was screaming out "$500 move-in special" in huge colourful letters and numbers. I wonder how the surrounding condo owners feel about the big ugly sign on their street and what its saying about their "investment"?
(it was on Howie street, its half condo and half rental buildings)
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March 21st, 2011 at 8:18 pm 2
30 years is a joke. Those having kids and thinking the world will go on for more than a couple more years are FOOLS
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March 21st, 2011 at 9:53 pm 3
Att: RE Pimps:
Just to show good will on part of the bears, below is a standard form for press releases and bs to tell prospective buyers who might bring up the “bubble theory”
“There is no evidence of a housing ‘bubble’ in (Fill in the Blank), and housing demand should stay strong for years to come. Three major factors lead to this conclusion.
First, the(fill in the blank) baby boomers are approaching the peak home ownership ages and will be buying second and third homes.
Second, immigrants, a growing share of the (fill in the blank) population, tend to buy houses ten years later than people born in (fill I the blank) of the same income group and family size.
Third, mortgage rates are not likely to go high enough… to put a crimp in demand. Despite some areas of concern, overall home-owners’ equity is at record levels ,and delinquencies are still less than one percent of mortgages outstanding.”
Nothing creative here, I borrowed this from what they were saying in the US before the crash,
If all else fails, show a video clip of helicopter flying Chinese buyers.
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March 21st, 2011 at 11:20 pm 4
This morning on CBC Radio (Go Public) budddy complained about the bank dinging him $30K+ for breaking his 400K mortgage as he had to sell his condo due to financial problems.
Long story short, they negotiated it down to 20K and he needs to take a part time pizza delivery job ("I have to deliver 5000 pizzas") to pay that off.
Not wanting to mock this poor guy but there's your classic case of a family buying real estate that should not have bought real estate.
I look forward to the shoe-shine anecdotal story to officially pop this bubble. Shoe-shine story anyone?
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March 22nd, 2011 at 12:12 am 5
Here is the link to the CBC story referred to in comment 4
http://tinyurl.com/6fzvcvr
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March 22nd, 2011 at 12:22 am 6
hahaha bears…
Once again, you failed to anticipate that the institutions would do everything to keep the party going….
No March 18th rules crash..
The rules join the list of failed predictions of the catalyst for the crash – the recession, rising interest rates, Olympics, HST and April 2010 mortgage rules….
You guys are such shitty armchair analysts..
If you had analyst jobs you woudl have been fired by now
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March 22nd, 2011 at 12:40 am 7
I know it's tempting folks, but please don't feed the trolls. They're like the shit hawks at Granville Island. If you don't give them anything, they piss off somewhere else where people are dumb enough to pay attention to them.
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March 22nd, 2011 at 1:15 am 8
@No Trolls Here: Hear hear. Maybe Pope can erect a sign above the "Leave a reply" text reminding people not to feed the trolls. This site seems particularly prone.
Or maybe "this is your blog, this is you're blog with trolls" poster.
In other trolling news, guess who got banned by RET? I bring it up because said outcast will be looking for a place to land.
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March 22nd, 2011 at 1:16 am 9
Caveat emptor is such a quaint notion now. It's become as relevant as flapper girls and 8-tracks.
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March 22nd, 2011 at 1:26 am 10
@Bear Patrol:
Pope has an anti-troll gun if Horton tries to land here.
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March 22nd, 2011 at 1:28 am 11
Hilarious!
Advertisements that promote products as luxurious or "high-end" have been banned in a move experts say is designed to protect social harmony.
The clean up means commercials posted or aired in public can no longer include words like "supreme", "royal", "luxury" or "high class", all of which frequently appear in Chinese promotions for real estate developments, vehicles and wines.
more at
http://www.chinadaily.com.cn/cndy/2011-03/21/cont…
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March 22nd, 2011 at 1:37 am 12
specialfx3000
How's this for a shoe-shine story – my neighbourhors (late 60s, early 70s) have no retirement plan other than the government so have decided the way to fund the rest of their lives is to go into the development business because, as they say, real estate only goes up. They HELOCed the hell out of the teardown they've been living in for 30 years (never had the money to maintain or fix up) and purchased a house down the block for $1.5M ($150,000 over asking and they were the only offer). They were in a panic to get the money before March 18th because they needed the full 95% of assessed value of their own house to be able to do their deal. They are expecting to sell the development for over $3M when it's completed – the lot they bought is 33' x 120' half a block in from a busy street on the west-side. I see a world of pain in their future – they were scrambling to find cash to pay for liability insurance on the development site.
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March 22nd, 2011 at 1:42 am 13
The banks know 35 year amortizations are risky. They also know there will be plenty of defaults down the road on these mortgages. That is why they lobbied to have the rules changed. The bank management probably felt they had to participate in the risky 35+ year amortizations up till now in order to keep earnings in line with other banks.
When mortgages start defaulting the bank executives will want to save their jobs and bonuses. It will also help them qualify for a federal bail out when things unravel. If they are giving loans out at terms CMHC will no longer insure it will be viewed the banks took too big a risk and the management is to blame. This a CYA move. The banks have known all along this ponzi scheme will end badly. They are just playing the game following the governments lead.
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March 22nd, 2011 at 2:02 am 14
#13 Renting Says:"It will also help them qualify for a federal bail out when things unravel."
Didn't the CMHC already bail them out? What risk to they carry on loans meeting CMHC qualifications?
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March 22nd, 2011 at 2:10 am 15
@vancouverite: If that story is true, and it wouldn't surprise me, those folks are in for a world of hurt.
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March 22nd, 2011 at 2:20 am 16
@Frank Grimes: What really surprised me was that the fee goes UP, the less time left on the mortgage. Wait, what? The bank has made their money off you, it's not like you got a mortgage, they expected to spread out recovering the cost of issuing it over, say, 18 payments and then they're good. This Canadian twist on it caught me by surprise.
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March 22nd, 2011 at 2:23 am 17
@specialfx3000:
(“I have to deliver 5000 pizzas”) to pay that off.
>>>>>>>>>>>>>><<<<<<<<<<<<<<
This guy will be picking pepperonis and wads of cheese off your pizza while in transit.
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March 22nd, 2011 at 2:27 am 18
@vancouverite: This anecdote really drives home how silly it is to assert that the banks are safe because the loans are non-recourse. There will not be any money to get.
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March 22nd, 2011 at 2:27 am 19
we should all comment on that China Daily article to at least warn the Chinese that Richmond isn't all it's cracked up to be, or at the least tell them that's the last place they want to be if there is an earthquake here.
Maybe link an Olympic Village article or two?
I think they are being told a much different story from Vancouver Realtors…
http://www.chinadaily.com.cn/cndy/2011-03/21/cont…
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March 22nd, 2011 at 2:28 am 20
@specialfx3000:
"This morning on CBC Radio (Go Public) budddy complained about the bank dinging him $30K+ for breaking his 400K mortgage as he had to sell his condo due to financial problems."
How on earth was it 30K? Usually it's 3 months interest, which would be about $3K, or it's based on the interest rate differential. Which only comes into play when rates go down.
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March 22nd, 2011 at 2:30 am 21
@chilled:
>>>This guy will be picking pepperonis and wads of cheese off your pizza while in transit.<<<
Well, his kids have to eat too don't they?
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March 22nd, 2011 at 2:41 am 22
@fixie guy:
None.
I was referring to non CMHC insured mortgages. The banks appear to not be offering 35 year conventional mortgages now.
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March 22nd, 2011 at 2:43 am 23
I love how the on the referenced "China Daily" site, the biggest ad is for Massage in Shanghai. The ad is nothing but scrolling pictures of white bleached and round eye asians (what is with that, the closer to white you are, the better?).
And I though that the Vancouver Sun and Province advertisement revenue sources were bad.
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March 22nd, 2011 at 2:45 am 24
@Anonymouse: According to the article, the fee is the greater of the two formulas.
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March 22nd, 2011 at 3:08 am 25
@AG Sage:
Indeed it's usually the greater, but the Rate Differential only applies when rates have decreased since you took the mortgage. So I'm trying to work when he must have bought for the penalty to come to $30K….
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March 22nd, 2011 at 3:14 am 26
@Anonymouse:
If you want to pay off your mortgage at any time, you can get an open mortgage. That's what they're for. They have a higher interest rate to compensate for the increased risk to the lender.
People taking out closed mortgages cannot expect to pay off the mortgage at any time without penalty. The lender can't demand their money back at any time for their part.
Mortgages are contracts which have obligations for both parties. But of course in Vancouver, anything to do with RE is regarded to be all gain and no obligation.
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March 22nd, 2011 at 3:49 am 27
@patriotz:
"People taking out closed mortgages cannot expect to pay off the mortgage at any time without penalty. "
I realise that, but $30K sounds high for a $400K mortgage.
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March 22nd, 2011 at 3:52 am 28
@Renting: It may have something to do with banks' hedging strategies. Even with a 70% LTV loan the bank may want additional protection in the form of MI.
If otoh you want a 10% LTV loan the bank could give you a non-amortizing loan (or worse) with close to zero exposure for them.
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March 22nd, 2011 at 3:58 am 29
@Anonymouse: Look at the other side. The bank sells a 5y fixed loan MBS pool and the buyers expect payments for 5 years. If you break early the bank still needs to pay out the pool for 5 years, hence the penalty.
If you want flexibility with an open mortgage the investor prices in that their payments can finish early and you pay a premium rate.
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March 22nd, 2011 at 4:08 am 30
@jesse:
"Look at the other side. The bank sells a 5y fixed loan MBS pool and the buyers expect payments for 5 years. If you break early the bank still needs to pay out the pool for 5 years, hence the penalty. "
I understand that, I already brought up the Interest Rate Differential. But how much would rates have to have changed to make a $30K difference?
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March 22nd, 2011 at 4:10 am 31
@Anonymouse:
It sounds high to me too. Did the guy on the radio explain how this figure was arrived at? In the absence of documentation, we have no idea whether his story is true in the first place.
The guy should just be thankful that this situation has come about now while there are still fools willing to pay a ridiculous price for a condo. One they run out, someone in his position will be facing BK.
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March 22nd, 2011 at 4:21 am 32
@Anonymouse: Maybe they charge 30K because people don't think when they read the contract. It could also be how they are securitizing the loans.
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March 22nd, 2011 at 4:35 am 33
@jesse:
"Maybe they charge 30K because people don’t think when they read the contract."
No, there's a set formula. I'll try and dig it out and rearrange the terms to find out if this story is even plausible.
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March 22nd, 2011 at 4:42 am 34
Ok, so there's an online calculator :
http://www.canadianmortgagetrends.com/canadian_mo…
So for a $400K mortgage with 25 years remaining, with today's rate at 3.95% they'd have needed to take out their mortgage when rates were 7.5% in order to have a $30K penalty.
At 30 years remaining, the rate would have been 7%
At 20 years remaining, 8.5%
Now do any of those dates and rates correspond with historical data?
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March 22nd, 2011 at 4:44 am 35
@Anonymouse: If you don't mind please pull out the formula.
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March 22nd, 2011 at 5:02 am 36
@Anonymouse: from the story
April 2010 was 1 year into 5 year blended rate mortgage at 5.19%. At that time the breakout penalty was cited at $13K
July 2010 the penalty increased to $17K
November 2010 the penalty increased to $34K
So he's gone from 4 year to ~3 year and they want to double his payment penalty. I agree it seems steep. The spread between 3 and 5 year is about 1% and I don't think the slope drastically changed. Maybe they're applying the discounted rate — it looks like he took a mortgage at close to posted rate so maybe the differential is higher. It could also be they're throwing him into a 3 year from a 4 year and it's a step-change.
Still, as much as I sympathize with the fellow, if he's borrowing money without understanding what prepayment penalties mean and how they're calculated, he's in for it. He should be able to calculate the rate himself by going online and plugging in numbers, not calling up Scotia for them to decide his fate. Is the formula explicitly stated in the contract, and are the rates used by Scotia spelled out clearly in the contract, i.e. where can he go to find them, how are they determined, etc.?
Good discussion, BTW, and thanks for your insights — it highlights a major problem with bank lending recently: the back-end automation of mortgage approvals, fee calculations, and appraisals. This is a symptom, once again, of a bigger problem and Mr. Movahed is caught up in it all.
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March 22nd, 2011 at 5:09 am 37
I just re-read the last sentence in that CBC story:
WTF? I'm losing more sympathy by the second. This is a major part of the problem in a nutshell.
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March 22nd, 2011 at 5:09 am 38
@jesse:
The story also mentions it was a blended rate mortgage – I wonder if that's somehow related to the high penalty? I'll try and find the precise formula used, anyway.
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March 22nd, 2011 at 5:16 am 39
Here's the formula given on TD's website :
http://www.tdcanadatrust.com/mortgages/ird_calc.j…
There it is in step B: the current interest rate that we can now charge for a mortgage term offered by us with the term closest to your remaining term. The interest rate will be our posted interest rate for the term minus the most recent discount you received
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March 22nd, 2011 at 5:22 am 40
Miriam-Webster's medical dictionary defines flux as follows.
"flux definition
Pronunciation: /ˈfləks/
Function: n
1 a : a flowing or discharge of fluid from the body especially when excessive or abnormal: as
(1) : diarrhea
(2) : dysentery
b : the matter discharged in a flux
2 : the rate of transfer of fluid, particles, or energy across a given surface"
Sounds about right to me, good title!
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March 22nd, 2011 at 5:31 am 41
@Anonymouse: Yes but it would require about a 1.25% drop in rates for the cited amount to occur.
From the calculator
A = 5.19%
B = (benchmark interest rate on remaining term)
C = A-B
D = $400K
E = 39 months
F = (CDE)/12
The only way he gets that size of penalty is if the 3 year benchmark is 2.5% lower than his 5.19% rate, or 2.69% (ignoring what "blended" means to the calculations). Scotia's posted 3 year rate is 4.35%.
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March 22nd, 2011 at 5:46 am 42
"..he didn’t know he would soon be facing financial hardship."
I think we'll be hearing this line a lot in the years to come. "I tried to flip that condo, but when it didn't sell, I had no idea I would experience financial hardship." or "When I took out that $900k mortgage at 3%, I had no idea that rates would double to 6% and I would experience financial hardship."
I think a lot of people just have no idea of what's to come. Suckers! Soon there will be stories like "My broker never told me rates could go up!" (this from a guy I know who told me that he's safe with his $700k in mortgage debt because his broker told him that rates will NEVER increase, in his 35 year mortgage).
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March 22nd, 2011 at 5:59 am 43
WOOOOO FEDERAL ELECTION!
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March 22nd, 2011 at 6:04 am 44
What on earth was this guy doing paying 5.19% anyways? He must have had some pretty bad credit to have am interest rate like that.
I do admit I find this shocking though, when I sold my place and ended my 5 year a year and a half early I had to pay out 3 months interest and I was pretty pissed about that. I thought it was a fixed 3 month interest penalty for all places. The big banks can go an F#$%^ themselves. They are not as competitive as the smaller places.
In the end though, as others, I don't have a lot of sympathy really. $400k for a crappy shoebox condo is idiocy. If you can't do the time, don't do the crime and RE at these prices is criminal!
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March 22nd, 2011 at 6:08 am 45
@data junkie:
why do you say that?
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March 22nd, 2011 at 6:12 am 46
@data junkie:
WOOOOO! SAME RESULT AS THE LAST 2 ELECTIONS!
Well, at least the Liberals can get rid of Iggy the Human Lizard after the next loss.
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March 22nd, 2011 at 6:15 am 47
@pricedoutfornow: So you don't expect you will ever face the possibility of layoff or pay cut before you pay off your mortgage?
Buying a condo to flip and can't flip is one thing. Stretched to the last dollar to buy a house at current super low interest rate is also asking for trouble. However people buying homes, etc to live in on a reasonable income multiple and then get laid off/pay cut/etc through no fault of their own before their mortgage is up is not reason for you to be joyous and happy at their fate. If you think the only way to buy a house with a mortgage is if you have rock solid job guarantee then only government employees will be able to buy houses. Everyone in the private sectors will just have to rent until they saved enough for pay for a house in cash.
Also don't get started about having 3 months living expenses stored up, emergency savings, etc because even with those you can still encounter financial hardship when you are laid off and/or your skills become obsolete in the recession, you can be out of work for a year or more. Yes you can always go for the lower income lower skilled jobs, but if you were making $60K/year then chances are a $30K/year is not going to help you keep the house you bought. Add in some martial stress/divorce and it's a reciepe for disaster.
Not every homeowner who get into financial trouble is an idiot that deserves to be wiped out. Let's keep some perspective. If you get too happy at other people's misery then don't be too surprised if you suffer the same fate and find everyone taking pleasure in your misery/misfortune.
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March 22nd, 2011 at 6:19 am 48
Look at the ad to the right for Community Savings.
3.65% for 5 yr. That is a great rate. Anyone who is looking at 5 yr money would be crazy to not take 3.65%. I my opinion we will not see rates like this again for many years if ever.
That said, until these low rates start to MEANINGFULLY (Ie: and increase of 2% on a 5 yr.) move up I can't see the orgy of buying slowing down much. I mean how much more free can money get. (Don't say Japan)
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March 22nd, 2011 at 6:24 am 49
#46 Best place on meth Says: "WOOOOO! SAME RESULT AS THE LAST 2 ELECTIONS!"
If that happens we deserve every f'kn thing this country gets. The red Harper attack ads alone should be mandatory IQ tests before entering a voting station. "You think they're great? You need to leave now."
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March 22nd, 2011 at 6:31 am 50
@space889: You forgot one things…nobody forced him to buy the condo and it is considerably cheaper to rent a condo in NV than purchase one.
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March 22nd, 2011 at 6:34 am 51
dear space889,
please lighten up.
thank you.
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March 22nd, 2011 at 6:43 am 52
@jesse:
"A = 5.19%
B = (benchmark interest rate on remaining term)"
That's not quite true,
B = (benchmark interest rate on remaining term MINUS any discount he got to get him the 5.19%)
But there's still something that doesn't quite add up.
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March 22nd, 2011 at 6:43 am 53
@space889:
>>>Not every homeowner who get into financial trouble is an idiot that deserves to be wiped out.<<<
Dear god, enough of your sympathy for all the assholes who overpay for real estate, it's getting tiresome.
There are so many people in the world deserving of sympathy, Japanese and Libyans come to mind right now.
Who else should we cry for, NFL players on strike who are forced to live off the millions they made last year?
This clown is part of the problem, as is every other moron who pays $400K or more for a shoebox, or $800K for a shack in east Van on a mediocre income just because they want to keep up with with all the other idiots who are overpaying for a fucking roof.
Screw him, screw the pathetic whiny OV buyers, screw everyone who thinks they're doing the right thing buying a severely overpriced piece of crap when they could have opted out of this insanity and rented instead.
They all get nothing but scorn and laughter from me as they fail one by one because they all contributed to the disease that plagues this city.
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March 22nd, 2011 at 6:45 am 54
@DaMann: …because all three Opposition parties have announced they will vote against the budget?
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March 22nd, 2011 at 7:00 am 55
@Best place on meth:
The thing that irks me is that while buying an overpriced condo to house your family is one thing, that isn't why many people have bought in the past few years. The people I know who have huge mortgages have this attitude that "I'm going to get rich owning all this real estate! Sucks to be you, renter!!!" These are guys in their 20s and 30s who seem to think that life is a game of monopoly and the more houses, the more mortgage debt, the better. They are the kings and people like me, renters, are just peasants in their empire.
Fine, I will cry for the poor sod who came to Canada as a new immigrant and didn't realize that this is a housing bubble and no, it's not normal to pay $400k for a tiny condo. I will not cry for people who bought into the hype that real estate is the road to riches. It's greed, plain and simple.
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March 22nd, 2011 at 7:07 am 56
@space889: "If you get too happy at other people’s misery…"
Well if you're talking about the guy in the CBC article, his "hardship" was having another child and his wife going on mat leave taking a lower salary from EI. Sorry, when a guy has another child and hasn't considered what's affordable when his wife takes leave and there's another mouth to feed, that's not financial hardship, that's financial idiocy, and the guy's trained as an engineer for crying out loud — idiocy should be no excuse.
I don't think anyone's reveling in this guy's plight. I'm guessing most of the readers here are way more fiscally prudent than he was and have sacrificed their standards of living to do so. Now you ask us to shed a tear. Sorry if I'm all dried up from caring about real tragedies.
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March 22nd, 2011 at 7:32 am 57
@space889:
As a matter of fact, I lost my own job about a year after buying my first house. But I wasn't worried about losing it, because…
Drum roll…
I could have rented it out to cover the mortgage payments and taxes.
.
Wow what a concept, eh? So what follows logically from this?
Don't buy a house or condo if your monthly costs would be higher than renting.
Do you think our engineer friend was capable of figuring this out?
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March 22nd, 2011 at 7:46 am 58
@ # 4 specialfx3000:
My Shoe Shine boy story I've been telling everyone at work since it happened a couple of weeks ago:
I was taking the #10 bus home from Downtown. Female bus driver mid 40s starts talking to another off-duty bus driver. She goes on to tell the off duty driver that she is trying to buy an investment property at Main & Hastings (yes I couldn't believe it myself and I had to think really; Main & Hastings!?). Her rational: "It's an up and coming area and she could flip it for a quick profit. Worse case I rent it out for a few years and sell for a big profit later on." Her words – not mine. You can just sense the how she really crunched those numbers to come up with an investment plan like that.:)
It reminded me of when I was in Vegas with some buddies. We were going through the airport screening on the way home and I started talking to one of the security screeners while waiting in line. She told me she was leaving her job to become a realestate agent. She explained to me that Vegas realestate was 'the place to be because everyone wants to move there'. After we left the screening area I turned to my buddy and said -'That is what a market top looks like- people without any experience in that field explaining why everyone should be in it; this bubble will crash hard' That was the summer of 2005. I don't think I need to tell anyone on this blog how Vegas RE did since then.
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March 22nd, 2011 at 9:29 am 59
Border Kit Required for Visiting the USA for more than a few weeks
When crossing the border it is wise to have a 'border kit'
A border kit consists of:
1. A Copy of your rental agreement or ownership papers for the place you live – a property tax bill is nice
2. A copy of your Provincial driver's licence
3. A copy of your Canadian Passport
4. A copy of your provincial medical plan and the bill or statement showing the address it is sent to
5. A copy of your telephone bill and the address it is sent to.
6. A Copy of car registration and licence and address registered to
7. copies of the assessments for your last three Canadian tax returns including the address they were sent to.
6. letter from your employer stating where you work, etc.
7. A statement about your business, its location and type if self employed.
8. A copy of the front of the telephone book and your current listing page from the book (the three past is really good)..
9. copies of invoices to your address from unions, clubs, banks, credit unions, etc..
10. copies of any membership cards you have such as health club, tennis club, archery club, etc.
11. copies of your doctor or dentist bills and the address
12. anything else you feel is relevant and will show your intent to return to Canada.
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March 22nd, 2011 at 9:54 am 60
@AG Sage: It looks like they take the time remaining on the mortgage, round it to the nearest year, and check the posted rate for that length term. If short term money is much cheaper than longer term money (1 year vs 3, or 2 vs 4), the IRD could be quite large. $30k seems kinda high though, I think the article mentioned he had a 5.2ish% 5 year fixed.
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March 22nd, 2011 at 10:14 am 61
@jesse: Too many people not willing to face the hard facts and admit their income is not sufficient to support their standard of living (including savings and investments to fund retirement, and no, your house is not an investment or a retirement plan).
That is the key to the financial crisis facing the middle class: losing sight of the big picture, and the real goal, sufficient planning and execution to have enough money to last your lifetime.
Personally, I like how so many of our modern clusterfucks can be boiled down to "something for nothing". Something (comfortable retirement) for nothing (living in a house).
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March 22nd, 2011 at 10:22 am 62
Ok people get this:
Last weekend the wife and I decided to go for a drive around the South Surrey area. We saw this really nice lot on which the house had burned down a year or two before. Well, after speaking to the home owner who happened to be there, we decided to make an offer or at least explore the possibility further (yes, I know – yes, I am a bear, my personal circumstances were a bit different in regard to this particular property).
The next morning we went to the city of surrey and pulled up all the information on the land and the bylaws regarding building on it.
It turns out that the land, because it was a narrow piece, would not allow for a typical size home without applying for various exemptions. These exemptions might not be granted. Why the hell would I take on a mortgage, hand over my life savings, for land I am not even sure I can build on? (To clarify, you could build on it but you would have to live in a very narrow house, I guess on the upside you could put a bowling lane in your basement)
A lot of people were interested in the property and I don't think most were taking the time to investigate these facts. This shows the stupidity of the "must buy" buyer. But what really showed the stupidity is the response of the realtor when my wife contacted him. He was totally unaware of what we had dug up, and up until that point he seemed to be sticking to a story that was completely wrong!!! I am assuming that is the story he told the other potential buyers – I can't say for sure, but it was what he told us.
In summary:
1) Realtors, in my opinion and experience are: unintelligent, lazy, and unprofessional people that don't serve a value-added purpose in real-estate transactions anymore.
2) Impulse home buyers are stupid and deserve to be ripped off.
3) The crash of the century is still coming.
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March 22nd, 2011 at 10:30 am 63
Behold the power of the last minute shopper!
Dailies – List | Sold
Vancouver East & West*
New Listings – 85
Back On Market Listings -0
Price Changes -34
Sold Listings – 126
Vancouver All Areas*
New Listings – 288
Back On Market Listings – 7
Price Changes – 101
Sold Listings – 334
*Attached & Detached – Date: 03/22/2011 Time:17:39 Pacific YatterMatters.com:
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March 22nd, 2011 at 10:39 am 64
@Devore:
A house is not a retirement plan, but it is certainly an investment. An investment is any asset that provides (or is expected to provide) a future return. Having a place to live constitutes a return on investment, just as food from a farm or oil from an oil well or electricity from a power plant is a return on investment.
The reason why people were able to predict the US and other housing busts was that they could apply standard investing metrics to RE to prove it was overvalued.
The problem today is that the great majority of the population can't tell the difference between investing and ponzi schemes, and believe that "investing" means "buying something that I know I can sell for a profit".
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March 22nd, 2011 at 11:40 am 65
The numbers tonight are crazy!
As I am in fact a "closet bull", I am going to extrapolate tonights figures as proof that sales will now exceed 7k each month for the foreseeable future.
Based on this meticulous quantitative analysis, I hereby proclaim that the median attached in Vancouver will be $2.72 million by March 2013, and Detached… $11.71 million!
Silly bears! Betcha didn't see that comin'! Keep dwelling in your basements, cuz' this baby is going up forever! blah blah blah blah… we're different here! blah blah blah…
Sorry… always wanted to do that just for kicks.
Seriously though, the sales #'s from today are one for the books! I guess those were all the people like me who do their X-mass shopping at 7:30pm on December 23rd. Trying to cram in a 35yr. loan while wading right into the teeth of the biggest RE crash we may ever see… epitome of the "last of the greater fools".
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March 22nd, 2011 at 11:45 am 66
Silver closed at its highest level in over 31 years at $36.27 up 27 cents. The bankers were trying to keep gold and silver at bay today but failed.
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March 22nd, 2011 at 12:00 pm 67
@Best place on meth:
Holy Shit!
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March 22nd, 2011 at 12:01 pm 68
wow.
sold over listing.
haven't seen this one for a few months.
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March 22nd, 2011 at 12:33 pm 69
I guess Vancity never got the memo:
https://www.vancity.com/MortgagesRenos/CustomFit/…
Who you are:
You currently live in Non Profit housing and are on a low income with no savings. You are ready to make the commitment to own a home, but need a structured plan to help you.
https://www.vancity.com/MortgagesRenos/CustomFit/…
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March 22nd, 2011 at 12:40 pm 70
What is the pizza delivering engineer complaining about? At least he got some of his downpayment back – or so he says. Assuming he is telling the truth about buying in 2006 and just sold recently, there is no way he did not make a profit on his place. I'm thinking he is just another greedy person who is pissed that the bank is taking a big cut of his profits.
Read the fine print dumba$$
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March 22nd, 2011 at 12:45 pm 71
@paulb.:
Relax dude, every single one of those sales took place last week.
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March 22nd, 2011 at 12:48 pm 72
@Best place on meth:
Or more accurately, every single one of those sales took place prior to March 18th.
A few of them are from 2 or 3 weeks ago.
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March 22nd, 2011 at 1:14 pm 73
@HAM Sham:
I've always wanted to meet the guy/gal who paid $1,305 per share for Infospace.com in March, 2000.
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March 22nd, 2011 at 1:15 pm 74
here we go… march 18th has gone by. the greatest fools have now been pre-approved to buy. in 3 months there will be no one left to buy… since 35yr mortgages are kaput, and van is way overpriced, so much so no one will ever get another mortgage approval. patience bears… soon you will be dancing naked in the streets. for now…high 5!
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March 22nd, 2011 at 1:46 pm 75
@lol cats:
"march 18th has gone by. the greatest fools have now been pre-approved to buy. in 3 months there will be no one left to buy"
Pre-approval wasn't sufficient to get a 35yr term after the 18th. You needed to have completed your mortgage application by then.
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March 22nd, 2011 at 1:55 pm 76
so, my question is when do you think we need the price drop?
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March 22nd, 2011 at 4:48 pm 77
Just a reminder that weekly stats from REBGV and FVREB are on Rob Chipman's site: http://www.robchipman.net/
It's pretty nice.
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March 22nd, 2011 at 4:49 pm 78
@vci_sucks: Vancouver is so special, it can maintain sold over listing indefinitely!
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March 22nd, 2011 at 5:14 pm 79
@oneangryslav2:
Nice analogy. My old baseball coach put 50k+ into Nortel @ $108/share around that time. Sad part is, he was 57 at the time and 3 yrs. from retirement. Tried to hit a "home run" on tech… ooops! Now teaches piano 3-4 days/week as part of his retirement plan…
Begs the question… how many people trying to play catch up on their retirement planning are going to get hammered by Van RE. My guess is waaayyyy too many.
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March 22nd, 2011 at 6:01 pm 80
@Devore: Bah! that’s what I get being late to the party.
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March 22nd, 2011 at 11:18 pm 81
@Devore: I would never have conceived that they would compare the longer original term to financing a shorter term when figuring out their "loss". That's pretty punitive and I would say is designed purely to make more money and therefore is begging for some consumer protection laws.
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March 23rd, 2011 at 12:02 am 82
AG Sage Says: "I would say is designed purely to make more money and therefore is begging for some consumer protection laws"
If you lent this guy $400,000 and was expecting a high rate of return, would you let him pay you back early without penalty or would you charge him the $30,000 for breaking his contract?
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March 25th, 2011 at 1:12 am 83
[...] escape? -Low income and no savings? Vancity says buy a house! -Election to kill spring rate hike? -Anecdote on retirement planning through real estate -Shaw lays off 500, 90 in Vancouver -Hot Asian Money will prevent Irving California market collapse [...]
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March 27th, 2011 at 5:06 am 84
[...] at vancouvercondo.info March 22nd, 2011 at 9:37 am- “My neighbours (late 60s, early 70s) have no retirement plan other than the government so [...]
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