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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 781 Eddie Larry 21-Jan-19 16:26
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 164 drrayeye 21-Jan-19 20:19
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 138 Eddie Larry 21-Jan-19 20:55
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 134 drrayeye 22-Jan-19 03:36
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 133 Archaic 22-Jan-19 16:53
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 129 drrayeye 22-Jan-19 18:26
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 180 Eddie Larry 22-Jan-19 19:00
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 131 drrayeye 23-Jan-19 16:22
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 127 Eddie Larry 23-Jan-19 16:38
Canadian railways ration space as commodity congestion problems worsen 138 Eddie Larry 22-Jan-19 05:35
Fiscally, Canadians are idiots 162 Jock 22-Jan-19 09:02
Re: Fiscally, Canadians are idiots 142 Jock 22-Jan-19 09:06
Re: Fiscally, Canadians are idiots 135 Eddie Larry 22-Jan-19 16:19
within $200... 146 Racho 22-Jan-19 16:22
Re: within $200... 170 Eddie Larry 22-Jan-19 16:31
Higher taxes aren't good for anyone 120 Racho 24-Jan-19 17:14
Re: Higher taxes aren't good for anyone 115 WhoWeird 24-Jan-19 17:34
Re: Higher taxes aren't good for anyone 122 Racho 24-Jan-19 17:43
Re: Higher taxes aren't good for anyone 137 WhoWeird 24-Jan-19 17:54
Re: Higher taxes aren't good for anyone 116 Racho 24-Jan-19 19:20
Re: Higher taxes aren't good for anyone 114 WhoWeird 24-Jan-19 19:29
Re: Higher taxes aren't good for anyone 131 Racho 24-Jan-19 19:31
Re: Higher taxes aren't good for anyone 117 WhoWeird 24-Jan-19 19:33
Re: Higher taxes aren't good for anyone 121 Eddie Larry 24-Jan-19 20:39
Re: Higher taxes aren't good for anyone 127 Racho 25-Jan-19 06:15
Re: Higher taxes aren't good for anyone 120 Eddie Larry 25-Jan-19 15:33
Re: Fiscally, Canadians are idiots 129 PB Bytes 25-Jan-19 05:16
Re: Fiscally, Canadians are idiots 116 Jock 25-Jan-19 05:30
Re: Fiscally, Canadians are idiots 127 PB Bytes 25-Jan-19 05:40
Re: Fiscally, Canadians are idiots 136 Jock 25-Jan-19 07:24
Jock : idiot 133 PB Bytes 25-Jan-19 15:08
Re: Jock : idiot 141 Jock 25-Jan-19 18:05
Re: Jock : idiot 155 PB Bytes 25-Jan-19 19:14
Re: Jock : idiot 130 Jock 25-Jan-19 22:10
Re: Poster Boy : idiot 114 Jock 28-Jan-19 21:10
Re: Poster Boy : idiot 197 PB Bytes 29-Jan-19 02:05
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 141 Archaic 22-Jan-19 16:55
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 148 Eddie Larry 22-Jan-19 18:14
Trudeau on track to become highest spending PM outside of war or recession 127 Eddie Larry 23-Jan-19 18:28
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 162 Notinham 23-Jan-19 21:52
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 192 Eddie Larry 23-Jan-19 22:03
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 132 Jock 24-Jan-19 12:40
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 132 Eddie Larry 24-Jan-19 14:32
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 148 Notinham 24-Jan-19 15:14
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 133 Eddie Larry 24-Jan-19 15:32
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 162 Notinham 24-Jan-19 16:28
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 120 Eddie Larry 24-Jan-19 20:41
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 147 Notinham 25-Jan-19 01:11
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 134 Warwick 25-Jan-19 01:32
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 150 Notinham 25-Jan-19 03:41
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 129 PB Bytes 25-Jan-19 15:21
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 126 PB Bytes 25-Jan-19 16:14
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 119 Eddie Larry 25-Jan-19 17:54
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 128 PB Bytes 25-Jan-19 18:02
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 114 Jock 04-Feb-19 06:03
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 116 Eddie Larry 04-Feb-19 12:36
Re: Nearly half of Canadians come within $200 of bankruptcy: survey 136 Jock 05-Feb-19 07:28
economic reality 111 Warwick 05-Feb-19 19:48
Re: economic reality 106 Eddie Larry 05-Feb-19 23:48
Re: economic reality 102 Jock 06-Feb-19 03:10
Re: economic reality 105 Eddie Larry 06-Feb-19 04:08
Re: economic reality 102 Jock 06-Feb-19 03:14
And here is where the rubber meets the slippery, slippery road 118 Jock 06-Feb-19 22:02
Re: And here is where the rubber meets the slippery, slippery road 174 Jock 08-Feb-19 07:52


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