If you live in Vancouver then you know about the Province newspaper. Thats the handy small tabloid-sized daily paper with headlines like ‘DEADLY KILLER KILLS MAN DEAD’ and ‘WET T-SHIRT CONTEST ENDS BADLY’ as opposed to the other local canwest paper (the Vancouver Sun) that uses more multi-sylabic words, i.e. ‘CATASTROPHE SEEN AS DISASTER LOOMS’.
Anyways, my point is that the Province has always been there for us simple folk. It was the paper to turn to when you wanted to find out what Jessica Simpson is wearing and whats on tv tonight. You could also often find heart-warming stories about 23 year old real-estate investors and which new condo developement they are lining up to buy in.
The one thing you would never find in the Province newspaper was articles like this:
Canada Mortgage and Housing Corp. recently announced moves that critics say will drive many homebuyers to the poor house, as it were, and could leave Canadian taxpayers on the hook.
CMHC is offering mortgage insurance for interest-only loans and on amortizations of up to 35 years, while also scrapping the typical $165 application fee on high-ratio loan products for people with a down payment of less than 25 per cent.
With an interest-only loan, a borrower can pay interest only for the first 10 years, then pay both interest and principal.
Payments are initially low, but since the loan must still be paid off within the original amortization period, payments balloon as the principal starts being paid down, even more if interest rates rise.
That’s right, ladies and gentlemen – I am very sad to report that the Province newspaper has joined the dark side of real-estate negativity, and it gets worse. Much worse:
If a person spends 10 years paying down only interest, he or she saves nothing if the value of the house doesn’t appreciate during that period.
In fact, many people are now buying at the top of a housing boom, particularly in Western Canada, and face the likelihood of selling after the market has cooled off.
Said the Edmonton firm Hendrickson Financial in a recent commentary: “When home prices begin declining, homeowners who have recently purchased with 100-per-cent financing will have to come to terms with owing more than their home is worth.”
That’s when you get people walking away from their homes — when they have no equity to lose and can start all over with a cheaper house that will require smaller payments.
Can you BELIEVE it?!? The TOP of a housing boom?!? Walking away from their homes?!? What is with these people?!? What makes them so cranky that they feel the need to ruin our party? Is it jealousy? Some sort of new-found intellectual ellitism?
I don’t know about you, but I intend to write a strongly worded letter of complaint to the editor. It will be brief. It will contain my own ‘facts’ and ‘figures’, but one thing that it will NOT have is words with more than two syllables.