fletcher m

I think you and I are on the same wave length, of course negative equity in a housing slump can happen, so can higher interest rates, and they go up at a frightening rate when they start to move, and all the banks are now pressing the rates up. UK base is .5%, the best 5 year fixed you will get is around 3.8% and variable at 4%. The variable will move up soon. Who is to say that Canada rates will not follow suit.

YoshiPal2010

Well, yes I can! Although not a garbage man; only a school caretaker, really ($54,000 per annum, but I can dismantle the school boiler, and have a vague idea on how the ventilation system works -- and have a ticket from SAIT to prove it). Or perhaps you feel that only professional people should be able to buy houses?

el_richo

With the average house price in Vancouver, I imagine many many people have mortgages well above $600k

fletcher m

Not at all, who in their right mind would feel that only professionals should have their own house. I wish you, genuinely, well for the future. High interest rates affect almost everyone, I just hope you are prepared for the 4k per month mortgage when interest rates get to 7%.

I suppose like most things in life, it is your threshold to risk that matters, l just could not commit to a £400k/$600k mortgage. i know I need a home to live in and I will find something that is comfortable, that is within my comfort zone regarding risk.

This proves that for some, Canada is the dream, can't be many caretakers in UK with a £400k house and a mortgage to match. Good luck!

dgagitw

They're worth what someone will pay for them, no more and no less.

dgagitw

I had some interesting conversations at work about house prices recently. One guy has just bought a nice apartment in a building near Yonge & Bloor for around 400K. I have a fair idea what he earns, which is plenty, but not silly money and assumed he'd be struggling a bit to pay the mortgage along with his other expenses (new kid, wife not back at work yet etc). He's paying 2.1% variable on 300K at the moment - i.e. around 600 CAD per month including the repayment part. That's less than his condo fee! Admittedly, he works for a bank so he's getting a super low rate but the standard prime rate with a bit of haggling seems to be only around 3%. Whilst rates stay this low, I don't see prices doing anything other than continuing to rise.

dgagitw

That says it all really. My suspicion is that the majority of people with large variable rate mortgages have never really done any kind risk based assessment of their own situation.

Tony-the-Tigger

The problem now for newcomers to T.O. and Van in particular, is that most of them (family sized) can't afford anywhere decent to live within 1 to 1.5 hour drive from downtown. Either that or they will will be reluctant to contribute a substantial downpayment on their house.

Brit_1

Certainly a wake up call!

I am a 25 and in the stages of purchasing a first time home, saw a few homes I liked and began the process of becoming pre-approved.

75k per year salary.
110k down payment.

I was pre-approved for a 350k mortgage along with down payment (460k) over 30 years (5 years 2.8% VRM, 1500k p/m estimate)

If I was crazy enough to go with these terms, a 3-4% increase would be too much to enjoy life.

Developers in the area are deciding to increase the price of new homes by 12-15k in the space of months which is unsustainable.

I see the comments from Mark Carney this morning which appears to have a lot of younger home owners worried. I am willing to bide time and wait for now but you can see how easy it is for young people to be drawn in!

JamesM

Canadien's are so intelligent. They have ended boom and bust.

fletcher m

But that is fixed for 5 years @2.8%. Wow, 4.5 x salary

With luck you would be earning more in 5 years time and you are likely to ride any bad times with a decent deposit like $110k. Big difference between $350k and $600k though.

I would in many ways like to be young again, but would not like to start a fresh with mortgages. 48 and closin in on retirement.

Almost Canadian

Precisely

MarkG

They're worth what a bank will lend someone to buy them...

fletcher m

My nephew has decided to join the ranks of the property owners, he earns £30k. Building Society will give him £120k with a deposit of 15%. Total purchase power £140k. You don't want to see the hovels you can get for £140k in York. 4.04% for 3 years and then Variable rate of 4.99%, or higher when we get to Jul 15. £576pm then £643 pm. But this is cheaper than renting.

I think it is so tough for the young, the Building Society seem totally uninterested for anyone with lesser deposit. Yet in canada, help yourself to as much as you need. Perhaps i have been unrealistic to those that have to borrow hundreds of thousands to buy in Van or Ont, I still expect a correction, it has to happen. fletch

R I C H

Tougher than the early eighties and nineties when interest rates were 15%+ ? There's never an easy time to get on the property ladder.

The sense of entitlement some young people seem to have saddens me - if they don't have a shiny new car, or the latest gadget to show off they think they're hard done by. Being more frugal in other aspects of life can make the difference between moaning about how hard it is to afford to buy a home and actually making it happen.