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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.

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Subject Views Written By Posted
Nearly half of Canadians come within $200 of bankruptcy: survey 752 Eddie Larry 21-Jan-19 16:26
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 149 drrayeye 21-Jan-19 20:19
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 124 Eddie Larry 21-Jan-19 20:55
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 121 drrayeye 22-Jan-19 03:36
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 119 Archaic 22-Jan-19 16:53
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 115 drrayeye 22-Jan-19 18:26
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 168 Eddie Larry 22-Jan-19 19:00
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 119 drrayeye 23-Jan-19 16:22
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 115 Eddie Larry 23-Jan-19 16:38
Canadian railways ration space as commodity congestion problems worsen 126 Eddie Larry 22-Jan-19 05:35
Fiscally, Canadians are idiots 149 Jock 22-Jan-19 09:02
Re: Fiscally, Canadians are idiots 130 Jock 22-Jan-19 09:06
Re: Fiscally, Canadians are idiots 123 Eddie Larry 22-Jan-19 16:19
within $200... 134 Racho 22-Jan-19 16:22
Re: within $200... 159 Eddie Larry 22-Jan-19 16:31
Higher taxes aren't good for anyone 108 Racho 24-Jan-19 17:14
Re: Higher taxes aren't good for anyone 103 WhoWeird 24-Jan-19 17:34
Re: Higher taxes aren't good for anyone 111 Racho 24-Jan-19 17:43
Re: Higher taxes aren't good for anyone 126 WhoWeird 24-Jan-19 17:54
Re: Higher taxes aren't good for anyone 104 Racho 24-Jan-19 19:20
Re: Higher taxes aren't good for anyone 102 WhoWeird 24-Jan-19 19:29
Re: Higher taxes aren't good for anyone 118 Racho 24-Jan-19 19:31
Re: Higher taxes aren't good for anyone 107 WhoWeird 24-Jan-19 19:33
Re: Higher taxes aren't good for anyone 110 Eddie Larry 24-Jan-19 20:39
Re: Higher taxes aren't good for anyone 114 Racho 25-Jan-19 06:15
Re: Higher taxes aren't good for anyone 106 Eddie Larry 25-Jan-19 15:33
Re: Fiscally, Canadians are idiots 118 Poster Boy 25-Jan-19 05:16
Re: Fiscally, Canadians are idiots 106 Jock 25-Jan-19 05:30
Re: Fiscally, Canadians are idiots 115 Poster Boy 25-Jan-19 05:40
Re: Fiscally, Canadians are idiots 124 Jock 25-Jan-19 07:24
Jock : idiot 118 Poster Boy 25-Jan-19 15:08
Re: Jock : idiot 126 Jock 25-Jan-19 18:05
Re: Jock : idiot 139 Poster Boy 25-Jan-19 19:14
Re: Jock : idiot 118 Jock 25-Jan-19 22:10
Re: Poster Boy : idiot 102 Jock 28-Jan-19 21:10
Re: Poster Boy : idiot 182 Poster Boy 29-Jan-19 02:05
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 130 Archaic 22-Jan-19 16:55
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 136 Eddie Larry 22-Jan-19 18:14
Trudeau on track to become highest spending PM outside of war or recession 115 Eddie Larry 23-Jan-19 18:28
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 145 Notinham 23-Jan-19 21:52
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 179 Eddie Larry 23-Jan-19 22:03
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 121 Jock 24-Jan-19 12:40
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 116 Eddie Larry 24-Jan-19 14:32
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 130 Notinham 24-Jan-19 15:14
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 122 Eddie Larry 24-Jan-19 15:32
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 143 Notinham 24-Jan-19 16:28
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 109 Eddie Larry 24-Jan-19 20:41
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 129 Notinham 25-Jan-19 01:11
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 122 Warwick 25-Jan-19 01:32
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 130 Notinham 25-Jan-19 03:41
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 116 Poster Boy 25-Jan-19 15:21
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 112 Poster Boy 25-Jan-19 16:14
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 108 Eddie Larry 25-Jan-19 17:54
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 116 Poster Boy 25-Jan-19 18:02
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 102 Jock 04-Feb-19 06:03
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 105 Eddie Larry 04-Feb-19 12:36
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 122 Jock 05-Feb-19 07:28
economic reality 98 Warwick 05-Feb-19 19:48
Re: economic reality 95 Eddie Larry 05-Feb-19 23:48
Re: economic reality 88 Jock 06-Feb-19 03:10
Re: economic reality 94 Eddie Larry 06-Feb-19 04:08
Re: economic reality 90 Jock 06-Feb-19 03:14
And here is where the rubber meets the slippery, slippery road 105 Jock 06-Feb-19 22:02
Re: And here is where the rubber meets the slippery, slippery road 159 Jock 08-Feb-19 07:52


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