Global Village :  The Official GrahamHancock.com forums
For good-natured and mutually-respectful discussions of politics and current affairs. Soap-boxing and the promotion of extremist causes motivated by hate will not be tolerated by our moderators. 
Welcome! Log InRegister
Never mind the two hundred bucks: Frostbacks in the major real-estate markets were so moist with house-lust that they bought absolutely as much house as they could possibly service the debt for, during a time of historically low interest rates.

As a proud American citizen you're saying, "What on earth could be wrong with that?" After all, aren't all Canadian mortgages government insured? Sure, the banks are insured--but not the debt-holders.

All Canadian mortgages re-set at least every five years. There's no such thing as a '25-year mortgage'. Sure, it's calculated as though it were being paid over 25 years, but the banks re-set your rates like clockwork.

Let's assume you were a moronic house-horny Frostback. You and your spousesicle made just enough money to pay the nut on a $1.5 million McMansion in Vancouver or Toronto. Then, as RE values rose, you did the Frozen North thing and got a Home Equity Line of Credit, because hey, presto! You're a paper millionaire!

Time passes. Now the Gummint changes mortgage rules because they're suddenly aware that most of the Canadian economy is being driven by speculative RE values and they're in pants-pissing territory, with house-moist Frostmonkeys carrying two trillion dollars in personal debt, or a buck seventy for every buck they earn. Woot!

And suddenly the USA decides inflation is going to be an issue and starts raising rates. Canada's Central Wankers have to raise rates in step or the Canadian Loonie plunges to zero in under a year. So they hike as gingerly as they can, but make no mistake, it's gonna be in lockstep with the Yankee dollarmongers. As rates rise, property values drop, sales slow and RE demand goes way down.

Endgame. Mr. and Mrs Iceballs from Toronto, Calgary or Vangoofer go in to Maple Syrup Savings and Loan to renew.

"Hmm," says The Nice Lady At The Bank, "Your house was originally mortgaged for 1.4 million with your dinky-ass little down payment. You've take out a $500,000 HELOC against the rising value of the home, and made no payments, so your total obligation to the bank is $1.9 million. Sadly, the market has dropped and your house is now worth only $1.1 million. In order for us to re-issue you a mortgage based on the value of the property, you must give us $800,000 right now, or get out of OUR house."

"By the way, your income is no longer enough to pay the new rate, which is 2% higher than previous. With the new government mortgage rule changes, you must also be able to service the debt you take on at a rate a full 2% higher than you're actually signing on for, in order to prevent nasty surprises when you renew in 5 years. So you only qualify for a mortgage of $700,000, and you're gonna need to cough up an extra $400,000 for a total of $1.2 million, or get the fuck out of our house."

Canada is so utterly, utterly screwed. They're going to hit the dirt like a K-T extinction event meteoroid.

Here endeth the lesson on how badly Canada has goofed up. I'll be taking questions in the lobby.



Edited 1 time(s). Last edit at 22-Jan-19 10:34 by Jock.

Options: ReplyQuote


Subject Views Written By Posted
Nearly half of Canadians come within $200 of bankruptcy: survey 670 Eddie Larry 21-Jan-19 16:26
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 96 drrayeye 21-Jan-19 20:19
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 95 Eddie Larry 21-Jan-19 20:55
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 84 drrayeye 22-Jan-19 03:36
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 83 Archaic 22-Jan-19 16:53
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 78 drrayeye 22-Jan-19 18:26
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 109 Eddie Larry 22-Jan-19 19:00
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 72 drrayeye 23-Jan-19 16:22
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 78 Eddie Larry 23-Jan-19 16:38
Canadian railways ration space as commodity congestion problems worsen 86 Eddie Larry 22-Jan-19 05:35
Fiscally, Canadians are idiots 105 Jock 22-Jan-19 09:02
Re: Fiscally, Canadians are idiots 94 Jock 22-Jan-19 09:06
Re: Fiscally, Canadians are idiots 89 Eddie Larry 22-Jan-19 16:19
within $200... 95 Racho 22-Jan-19 16:22
Re: within $200... 105 Eddie Larry 22-Jan-19 16:31
Higher taxes aren't good for anyone 75 Racho 24-Jan-19 17:14
Re: Higher taxes aren't good for anyone 72 WhoWeird 24-Jan-19 17:34
Re: Higher taxes aren't good for anyone 72 Racho 24-Jan-19 17:43
Re: Higher taxes aren't good for anyone 74 WhoWeird 24-Jan-19 17:54
Re: Higher taxes aren't good for anyone 68 Racho 24-Jan-19 19:20
Re: Higher taxes aren't good for anyone 68 WhoWeird 24-Jan-19 19:29
Re: Higher taxes aren't good for anyone 71 Racho 24-Jan-19 19:31
Re: Higher taxes aren't good for anyone 71 WhoWeird 24-Jan-19 19:33
Re: Higher taxes aren't good for anyone 70 Eddie Larry 24-Jan-19 20:39
Re: Higher taxes aren't good for anyone 76 Racho 25-Jan-19 06:15
Re: Higher taxes aren't good for anyone 70 Eddie Larry 25-Jan-19 15:33
Re: Fiscally, Canadians are idiots 82 Poster Boy 25-Jan-19 05:16
Re: Fiscally, Canadians are idiots 73 Jock 25-Jan-19 05:30
Re: Fiscally, Canadians are idiots 78 Poster Boy 25-Jan-19 05:40
Re: Fiscally, Canadians are idiots 75 Jock 25-Jan-19 07:24
Jock : idiot 79 Poster Boy 25-Jan-19 15:08
Re: Jock : idiot 74 Jock 25-Jan-19 18:05
Re: Jock : idiot 86 Poster Boy 25-Jan-19 19:14
Re: Jock : idiot 84 Jock 25-Jan-19 22:10
Re: Poster Boy : idiot 76 Jock 28-Jan-19 21:10
Re: Poster Boy : idiot 130 Poster Boy 29-Jan-19 02:05
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 95 Archaic 22-Jan-19 16:55
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 90 Eddie Larry 22-Jan-19 18:14
Trudeau on track to become highest spending PM outside of war or recession 81 Eddie Larry 23-Jan-19 18:28
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 102 Notinham 23-Jan-19 21:52
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 128 Eddie Larry 23-Jan-19 22:03
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 80 Jock 24-Jan-19 12:40
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 81 Eddie Larry 24-Jan-19 14:32
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 89 Notinham 24-Jan-19 15:14
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 82 Eddie Larry 24-Jan-19 15:32
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 92 Notinham 24-Jan-19 16:28
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 78 Eddie Larry 24-Jan-19 20:41
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 87 Notinham 25-Jan-19 01:11
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 86 Warwick 25-Jan-19 01:32
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 87 Notinham 25-Jan-19 03:41
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 71 Poster Boy 25-Jan-19 15:21
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 73 Poster Boy 25-Jan-19 16:14
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 76 Eddie Larry 25-Jan-19 17:54
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 82 Poster Boy 25-Jan-19 18:02
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 69 Jock 04-Feb-19 06:03
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 70 Eddie Larry 04-Feb-19 12:36
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 71 Jock 05-Feb-19 07:28
economic reality 64 Warwick 05-Feb-19 19:48
Re: economic reality 68 Eddie Larry 05-Feb-19 23:48
Re: economic reality 61 Jock 06-Feb-19 03:10
Re: economic reality 65 Eddie Larry 06-Feb-19 04:08
Re: economic reality 60 Jock 06-Feb-19 03:14
And here is where the rubber meets the slippery, slippery road 70 Jock 06-Feb-19 22:02
Re: And here is where the rubber meets the slippery, slippery road 101 Jock 08-Feb-19 07:52


Sorry, only registered users may post in this forum.