• ☆ Yσɠƚԋσʂ ☆@lemmy.mlOP
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        1 year ago

        Having signed up for 6.1%, you’ve presumably budgeted so that you can actually pay it going forward at that rate. The problem for people who signed up at around 2% is that they budgeted to pay at that rate. And since a lot of people have no savings, they can’t afford a large rate increase now. So, when mortgage renewals start coming up, a lot of people are gonna end up being insolvent.

    • SokathHisEyesOpen@lemmy.ml
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      1 year ago

      Why on earth would anyone sign an ARM when rates were lower than at any previous point in history?

        • SokathHisEyesOpen@lemmy.ml
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          1 year ago

          Wow, that’s ridiculous! So you have no idea what your mortgage is going to be from semi-decade to the next. Fucking crazy.

          • cheery_coffee@lemmy.ca
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            1 year ago

            It’s great at keeping banks from collapsing, but terrible for the consumer.

            But now we’re at the point where something has to give and the government is desperately trying to force the banks to not increase payments by increasing amortization periods, keeping cash on hand, and increasing their insurance…

        • Funderpants @lemmy.ca
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          1 year ago

          You are screwed for sure if you shopped at the top of your approval range in one of the hotter high value markets or immediately ate up the rest of your GDS/TDS with truck/SUV loans, renovations or other expenses. However, There will be Canadians who are in a position to handle a rate increase from 2.3% to 6% or so, when their renewals come up.

          • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOP
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            1 year ago

            The context here is that over half the population is 200 bucks away from not being able to make ends meet. So, clearly lots of people will not be able to handle large increases in mortgage payments. Meanwhile, those who do will be pushed further to the margins.

            • cheery_coffee@lemmy.ca
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              1 year ago

              The mortgage stress test should have helped with this, but I also think banks took advantage of locking people into obscene debt that they realistically shouldn’t have been able to do. The evidence of that is new private mortgage insurance that all the banks favoured because the CMHC thought too many buyers were too risky.

              Banks also took on a lot of correlated debt by turning a blind eye to buyers using leveraged assets to secure additional mortgages. Correlated debt is bad, it’s the thing that turns your risk analysis models into piles of dog shit.

        • SokathHisEyesOpen@lemmy.ml
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          1 year ago

          We don’t have to renew in the USA. Someone else explained the way they work in Canada and yeesh! That’s hella lame.