A strategy to beat rising interest rates

RE/Max has released a report saying that the Metro Vancouver real estate market is being driven by first time buyers looking to avoid higher interest rates down the road.  Did we get US style mortgages where you can lock in low rates for the entire mortgage term?  Maybe I haven’t been paying enough attention.

Re/Max said the prospect of higher mortgage rates has prompted many of those determined to get into the market to act in the early part of this year.

It also noted the federal government’s newly implemented conditions for mortgages that reduced the maximum amortization period for government-insured mortgages to 30 from 35 years, and limited the amount people can borrow when refinancing their mortgages to 85 from 90 per cent of the value of their homes.

Led by the Bank of Canada’s relatively low benchmark rate of one per cent, homebuyers continue to enjoy mortgage rates that are low by historical standards. However, it’s not expected to last.

Just this week, most of Canada’s major banks hiked their mortgage rates, with standard five-year, fixed rates moving up 35 basis points to 5.69 percent a year.

Locking in for 5 years on 25-30 year debt because you expect interest rates to rise sounds like an interesting strategy.. Be sure to get as much as you can afford, because by the time you have to renew at a higher rate your income is sure to have risen tremendously right?

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patriotz
Member

Spain's property crash casts a long shadow over a place in the sun

"There is an entire generation of young Spaniards with a millstone round their necks," says Enrique Quemada of One to One Capital Partners, a business consultancy. "They will have to work their whole lives to pay for houses now worth half what they bought them for."

Can't happen here because… it's not sunny!

Keeping An Eye On Th
Guest
Keeping An Eye On Th

"People in Hong Kong often blame buyers from mainland China for pushing up prices. Ironically, mainlanders often blame buyers from Hong Kong for their own property frenzy. At a recent conference at Tsinghua University in Beijing, students complained that their parents had scrimped and saved to send them to university in the city, but now upon graduation they could barely afford to live there."

http://www.economist.com/node/18285595

Anonymous
Guest
Anonymous

what is the average age of the first time home buyer in Van?

i am assuming it's the 25-34 crowd. so when rates were peaking in the 80s they were either:

a) not born

b) in diapers

c) picking their noses and failing at getting past world 8-3 in Super Mario

sure

they could always punch "Paul Volcker" into google but that would be a lot more work than heading down to Home Depot to pick out new granite!

CanuckDownUnder
Member
CanuckDownUnder

Latest Aussie news – the number of home loans issued in February was the lowest monthly total since February 2001.

http://www.smh.com.au/business/home-loans-sink-to

You can definitely feel the changing attitude towards the property market here, especially in the past month or so. The proportion of first time buyers is at a historical low and investors are starting to question the wisdom of borrowing at 8% to purchase an asset yielding 3-4%. With inventories building up a lot of people are starting to wonder where the buyers are going to come from. As most of us here know, they won't come at these current prices.

So who will fall 30% from their peak first, Sydney or Vancouver?

vreaa
Member

@Keeping An Eye On The Pimps: “People in Hong Kong often blame buyers from mainland China for pushing up prices. Ironically, mainlanders often blame buyers from Hong Kong for their own property frenzy."

Recall Jim Chanos saying that the Chinese RE bubble was partly due to money from off-shore, places like Singapore, HK, Sydney, and, yes, Vancouver.

specialfx3000
Member
specialfx3000

Our 2011 Vancouver Olympics excitement continues….

http://www.theglobeandmail.com/news/national/brit

"Helen Lee and her husband bought a place in Vancouver’s Olympic Village back in 2007, it was still being built. But a gold-medal sales pitch compelled the couple to fork out $1.8-million for an 11th-floor, 1,475-square-foot condo… It was going to be our dream home,"

Read the rest of the article for more details of this dream.

Videos are fun too…. here you go.

http://www.cbc.ca/news/canada/british-columbia/st

Now I would be interested to know if this is yet another Realtor or not.

onegreatbiggiantscam
Guest
onegreatbiggiantscam
pricedoutfornow
Guest
pricedoutfornow

"Be sure to get as much as you can afford, because by the time you have to renew at a higher rate your income is sure to have risen tremendously right?"

Of course! Or if you have a rental property/suite and are counting on the rental income to make the mortgage payments, you can definitely double or triple your rents to cover the increased cost! Right? Right? Right?

onegreatbiggiantscam
Guest
onegreatbiggiantscam

I definitely urge people to follow the link where people in China are discussing the property bubble as the most massive in history.

People always ask: when is the vancouver property bubble going to burst you ignorant bears? Unsustainability does not follow a timeline, but it does always end in tears.

http://www.grist.org/cities/2011-03-31-chinas-gho

joycer
Member
joycer
@和谐的房地产泡沫: I agree, that todays FTBs are going to get a heavy dose of reality when rates normalize, but don't forget who's pushing them into home ownership. The age group you just targeted has parents who are convinced that real estate is the best way to financial security. These parents remember the hard times they had when they first bought, having to scrimp and save every penny to make their mortgage payment so they think $1 million is normal and that eventually their kids will overcome those crippling mortgage payments. The big difference of course is that rates fell for 30 years and so homes kept getting more affordable and boomers kept moving up. Under those circumstances you could buy a condo, then a townhouse and move into a detached home over a 10 year period. The interesting thing is… Read more »
Anonymous
Guest
Anonymous

Thanks for the awesome link! onegreatbiggiantscam

http://www.grist.org/cities/20…..ble-of-all

Long live communism! Social unrest and change is definitely coming in China!

chip
Guest
chip

Another example how our immigration policy is completely broken:

"MARKHAM, Ont. — A re-elected Conservative government would offer loans to immigrants so they can get the training they need to have their credentials recognized in Canada, Stephen Harper said Wednesday. Many recent immigrants have trouble getting jobs in the field in which they were educated because their credentials often aren't recognized by professional regulatory bodies."
http://www.vancouversun.com/news/Tories+promise+l

If their credentials, degree or other skills aren't accepted — and usually for a very good reason — here maybe they aren't people who should be accepted for immigration. Just a thought for our oh-so-wise political class.

Patiently Waiting
Member
Patiently Waiting

@specialfx3000:

"Now I would be interested to know if this is yet another Realtor or not."

http://suttoncentrerealty.com/agents.html/al=2933

🙂

biz-biz
Guest
biz-biz

"If their credentials, degree or other skills aren’t accepted — and usually for a very good reason — here maybe they aren’t people who should be accepted for immigration"

No you are wrong. These are artificial barriers that are set up by professional associations. We even have these barriers set up intra provincially so if you are a teacher in one province you cannot teach in another. Or if you are nurse in Vancouver you cannot perform the same job in Ontario. Unbelievable. Pure nonsense. Instead of giving loans they should tear up those barriers. But don’t hold your breath.

Devore
Member
Devore

@vreaa:

Recall Jim Chanos saying that the Chinese RE bubble was partly due to money from off-shore, places like Singapore, HK, Sydney, and, yes, Vancouver.

It's like a giant virtual circle jerk!

registered
Member
registered

@12 chip: Credentials are only half the problem. If the feds really want to help something also needs to be done about references. There's no question in my experience waves of bullshit result when applicants know you can't check them. Sometimes the results are hilarious, like the applicant who claimed trades experience on the 3 Gorges Dam five years before project funding was approved. Or the year almost a third of the applicants listed the same elevator manufacturer as a previous employer.

Best place on meth
Member
Best place on meth

@patriotz:

From that Spain article:

>>>Britain and Spain aren't a million miles apart when it comes to home ownership aspirations.

Both are big on owner-occupation. Spain has one of the highest rates in the whole EU – a whopping 82% – with the rental market concentrated in a few major cities such as Madrid and Barcelona, says the Rics European Housing Review 2011, a major annual study of Europe's property markets.

Tax breaks have encouraged people to invest in housing, though many of these have now been scrapped as part of the recent austerity measures.<<<

It seems that any country where the government promotes home ownership ends up in disaster.

metalhead
Member
metalhead

RE: Foreign credentials.

I don't that much about other areas but I'm a Drilling Eng.

I was working in Lagos, Nigeria around 5 years ago and the HR dep't sent me this resume of this local superstar with a Masters.

I thought great, send him over.

After working with the kid for a week, he wouldn't have even made it as an office services dude back in Calgary!

Beware Nigerian resumes, lol.

specialfx3000
Member
specialfx3000

Say it aint so. The mouse from the Happiest Place on Earth is planning an exodus from the Best Place on Earth before even setting foot here.

Disney Cruise will start sailing out of Vancouver this year but will move to Seattle next year. Sure, Vancouver will still be on it's itinerary but loosing out on being the embarkment/disembarkment port will equate to lots of lost $$$.

http://www.cbc.ca/news/canada/british-columbia/st

registered
Member
registered

18 metalhead: I'm in the same situation now, an employee with industry leading paper credentials but on the ground abilities trumped by BCIT co-ops.

chip
Guest
chip

@biz-biz:

Sorry, there are barriers inter-provincially but this is not the reason for the huge number of 'credentialled' immigrants who don't get hired. I know the head of one of the provincial medical associations, and he told me a couple of years ago that of the doctor immigrants who take the Canadian examinations only about 10% pass the initial exam, let alone the more advanced tests.

Because you have a degree from the U of Shenzhen or College of Karachi doesn't mean you can immediately start work at a Canadian hospital or Albertan oil field.

If local companies could hire these guys, they would. Social activists may not agree but companies are not inherently racist and hire people because it makes good business sense to do so.

chip
Guest
chip

I'm an open borders kind of guy. I would increase immigration if it passed the cost-benefit analysis. But a couple decades ago we got away from letting in people who had a job lined up and decided to embrace socio-cultural reasons for immigration, ie multiculturalism as the new national ethic etc.

The numbers don't lie. New immigrants used to exceed median income and now more than half of new arrivals flounder in poverty.

The economic argument for our current policy is not there.

Anonymous
Guest
Anonymous

@specialfx3000: …..“Helen Lee and her husband bought a place in Vancouver’s Olympic Village back in 2007, it was still being built…….

I've got a tip for Helen: if it looks like a turd, smells like a turd, and tastes like a turd, it's probably an Olympic condo.

chip
Guest
chip

@biz-biz:

And if you think about it, if artificial barriers to employment are the real reason immigrants and others aren't getting hired, depriving the economy of these hordes of talent, it still doesn't address why the govt continues to bring in people who can't get jobs.

A barrier is a barrier, whether regulatory or one of skills. So it makes no sense to leave the supposed barriers in place and wave through thousands of people straight to the soup line.

The new loan policy is idiotic.

vreaa
Member

@Devore: It’s like a giant virtual circle jerk!

Actually, it's more like some kind of giant orgy where the late arrivals get screwed by everybody else.

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