Debt slavery - The new normal.

Houses are over priced and banks are doing thier part to hold the prices. Second largest contry with no land shortage, with lumber in backward and the prices are like in manhattan island. A concrete basement, stick frame , vinyl siding, insulation and drywall, plumbing, electrical, Hvac , asphalt shingles should not cost this much. Millions of hard working Canadians are sucked into this bubble.

I think they just described renting.

Don’t worry, the Mortage will balance itself

investors and banks are the only winner in Canada rest of the Canadians have always suffered

Negative amortization = technical default. So the default rate is actually a lot higher than reported.

Banks: no one can do worse than the subprime mortgage crisis. Also banks: hold my beer....

isn't negative mortgage just another way of saying you're in default?

This is the debt society we’ve built and encouraged

defaults in disguise

It's called Rent from the Bank

It is basic math ..why this people dont get it?... you picked the wrong mortgage type..if you cant pay sell while prices are high and downgrade

So lemme get this straight. First they raise rates to fight inflation, and now they will lower rates to fight inflation?

This sounds like what some say about student loans.. they've made all payments and the amount goes up (not confirmed). True the best way is to make up the difference in principal, but not all can afford it. Payments on a $200K 30-year loan at 4% are $955/mo, at 6% they're $1199, and 8% $1468. I don't know about Canadian interest rates, but it REALLY would have been good to lock in below 5% for 30-year fixed - I don't know how much could have been saved with a lower variable rate. I hope they get it sorted out for people. I'm glad I got my first house in 1986 ($132K w/20% down = $105K at 7% fixed.. payments $700..though I just checked what that is in today's dollars.. is $1961, which I couldn't afford).

Sounds to me like banks gave loans they shouldnt have. Thats what it sounds like. Blame the banks not the consumers.

Home Prices (Asset/Debt Bubbles) MUST be DEFLATED by at least 50% to 75% (an average of 66%) to ease the Inflation, Affordability, Cost-of-Living, and Housing crises in Canada, If home prices do NOT go down significantly, there will be SERIOUS and DEVASTATING Social, Economic, Political, and Security Challenges for Canada in the years ahead. "Home" is a "Life's basic Necessity" and not an "Investment Commodity". Investing in real estate should be banned once and for all. Criminal gangs, Organized crimes, Mafias, International Drug Cartels, and Money Launderers have heavily invested in Canadian Real Estate and infiltrated the CREA, mortgage brokerage firms, the Cities and Towns Councils, Provincial entities (BCLC, BC Casinos, BC Assessment, and Green Belt scandal in Ontario) to buy favors.

Own nothing, be happy!!!! LOLOLOL

The problem is this system we allow ourselves to accept.

Will someone think of the poor bankers? How are they going to put food on their table?

When someone extends their amortizations, they do the rest of Canadian's a disservice by keeping inflation higher and interest rates higher. Thanks. Banks love it though, a bailout at the expense of the middle class.

Variable rates become the holders problem, fixed are the banks. Still with the 5 year system everyone is basically variable rate. Wish I’d just paid the exit fees during the massive interest rate drop and locked in for 10 years. Not sure what I was thinking that things would get lower than 2%.

Whatever happened to homes as opposed to houses.

CBC news, Thank you for not censoring your funders this time by disabling comments. Sincerely, Canadian Public

Don't worry be happy. Sunny ways people. Just dont think about monetary policy. I'm sure that mortgage lenders aren't. Right?

Two things: Variable rate mortgages can be a trap. They are great when inflation and interest rates are stable or declining. In a rising inflation and/or interest rate environment, what seemed like a good idea can turn on you with a vengeance. The best solution is to increase your mortgage payment (if you can) to cover the interest gap and ride it out. You won't be building any equity, but you won't be getting deeper in debt either. This is not a new phenomenon. In 1985 we had a short period of steep interest rate increases (can't recall what the reason was) but mortgage rates hit 22%. What the smart banks did at the time was limit the mortgage payments to interest only. That lasted for about 6 months while the financial markets sorted themselves out. Rates eventually declined to normal. The problem we're facing is the reshoring of a lot of US industry that migrated to Asia (China being the biggie) in the 90s and 2000s. COVID severely disrupted the complex and extended supply chains for these industries and coupled with the rise in labour costs in China gave them a serious wake-up call to the risks they faced. Shortening the supply chain and reliable, stable labour is now a critical driver. But reshoring is EXPENSIVE (capital intensive) which drives up the demand for capital and thus interest rates. Add to that a tight US labour market = wage inflation and we have a big chunk of what's driving the inflation in the NA economies and the drive by the Fed to supress inflation. The problem is that the reshoring process is going to take years to complete (there's a lot of industrial infrastructure the needs to be built from scratch) so we have at least another two to three year of this interest and inflation volatility to live with. We'll se how effective the Fed is at getting inflation under control, and KEEPING it under control ... the jury's still out on that one.

That shouldn't be allowed.

We have one of these fixed payment variable rate mortgages. At least with our bank it comes with a trigger rate. Which will readjust your rate if our payments are digressing too far from the amortization schedule. We've been fortunate enough to be able to pay enough to lump sum upfront, which knocks down our principal earlier and actually accelerate our amortization. But for those who aren't doing that... the shock will come when they renew. But yes... variable rate was definitely a regret.

CRAZY!! The end is nigh! I thought this would be like 5-10% of mortgages....

I have BMO (in America) for a car loan and a credit card. It is the most F'd up backwards bank I have ever dealt with... Their phone app is horrible and does NOT SHOW LATE payments (car loan is for my daughter on her car) NOR does it APPLY PAYMENTS (whether done on app as bank to bank transfer OR from my savings AT BMO until the next "Mon-Fri" business day... so if it's made Saturday morning or even Friday night after banking hours, it's not applied until Monday. 😡😡😡 I've gone into local branches to find out what's going on, and have had to spend 30-45 minutes as they had to call multiple other places to figure out what is going on. That is NOT how a bank should be run!

Doesn't the USA allow it's people to 'write-off' the interest payment on there mortgage in income tax? If you switch banks to get a better mortgage rate, then your amortization period is back up to 30 years again. There should be a better way to borrow on a house. This amortization band scheme is a constant nightmare for home owners for most of their lives. Try to move your mortgage and you pay thousands of dollars in a penalty.

Keep voting For JT

20% is way, way too high and the new rules will favour lenders and will lead to even more Canadians, sounds like at least 20%, being disqualified from owning a home. It's disgusting.

WHY DOES THE GOVERNMENT MAKE IT ILLEGAL TO GIVE LOANS THAT HAVE THE SAME INTEREST FOR THE LIFE OF THE LOAN????

I think they call that insolvency.

Wait till they go to renewal and need to bring it back to the original amortization. These people will be destroyed!

This is what happen when lalaland replace common sense. I will not be surprised if most of those folks are people who over leveraged themselves. A classic 2008 style mortgage meltdown. But no one wants to admit it. Negative amortization is a fancy word for default. Not sure how long those 3 banks will be able to maintain those loans in parallel with the high rate environment. This is very scary stuff for the economy.

A minimum of $ 125 of payments ought to be applied to the principle regardless of interest amount.

Thanks Justin!

There is more than one way to pay your mortgage. Pay additional payments against the mortgage. most mortgage allow you to pay at least 20% of the total amount annually of a lump sum amount.

When your neighbour loses house it’s a recession. When you lose your house it’s a depression .

He looks like he's been waiting years to throw this in the faces of those who disagreed with him lol

Great news. keep hiking rates ..!!! Best way people to learn debt slavery. Don't borrow more than you can pay...!!! It's not a trap dude. It's being NOT financially being responsible ...!!!! something is going to hit the fan..!!!!

Maybe next time choose a fixed rate.

House prices also go down and have many times over the years. Do people not know their history?

Very predatory. Of course the banks don’t mind. It’s a secured, perpetual, increasing revenue stream.

Why aren’t mortgages interest long term when a property is bought instead of 3-5 year’s mortgage renewal. Its not a good economic model

BMO is the place I had good and bad experiences. Recently rather very bad. Canadian banks do not need to compete for customers, it is actually opposite, the customers and clients beg Canadian banks for services. No wonder it is like that, since five big cats devided the whole country into their territories and do not need to compete. Somethind unimaginable in Europe or in US

We had supply chain issues that, if anything, required investment to sort the mess out. Instead, we stupidly applied high interest rates and now have an actual recession.

The main reason people over invest in properties is they believe massive immigrants will make the property prices and rents always go up. So who is the culprit for this?

With higher interest rates, we need more immigration to to adjust the home prices.

Yes interest rates were at all time lows. What did they think rates was gonna go even lower? They should of locked in at the lowest rate at that time. Not gambling on their future by living the high life. With surpluses cash to spend. When rates were low they should have made extra money on mortgage. I had a 30 yr mortgage when I bought in April 2014 now it’s down to 12 yrs left. I should be mortgage free by April 2026.

I have 0 sympathy for the people that this is happening to. Taking a variable is a gamble no matter what. 1 out of 5 shows how many thought that taking the lowest interest rates was a sure bet and they lost. Yes, I do have a mortgage and renewed shortly before the rates started shooting sky high. I also heard stories of mortgages at rates of 13.5% (very early in my lifetime). Getting a mortgage is easy, getting the right one is something else. Banks love when you mess up and chose the wrong one where they can cash in. You folks are blaming Trudeau for it, but not pointing fingers at he poor products that were sold to you. Nor that these people blame themselves for not having shopped around to get a product that would fit their needs and capacity. No, easier to blame the PM who, tried to help people.

Is short term better for the banks than foreclosure I guess. But I mean people, you got to start selling! Give it up, you can't drive it up forever. Sell!

Never, Never, Never take out a variable rate mortgage with a fixed payment.. That's just a trap. Not sure why people do this...

It feels nice to have no debt and 70k invested in equities. No education and a paid off truck too.

All of these economists and analysts always forget about inflation. My mortgage was $200,000 two years ago and the last two year has seen a total of about 10 % inflation. This means my mortgage is effectively only $180,000 , in 2021 dollars. I have had inflation reduce my mortgage but $20,000. Even at 2% inflation , if you are getting wage increases, to keep up with inflation , it is decreasing your mortgage every year. At 2% my mortgage would be decreasing about $4,000 per year , even if I did not pay of a cent of it in nominal terms.

Indentured servitude for life just to buy a home lol

I make about 350k annually and even my mortgage is in negative amortization. Canada is dying fast

Not to worry too much. Once the mortgage comes to renewal you wont qualify and will foreclose.

Here’s the deal, the banks themselves in the formulation should be looked at by the government, and by that I mean a real government, and made, where does the equitable for the banks, as well as the homeowner, instead of being only equitable for the banks.

Debt servitude, your home becomes your debt prison cell.

How is rate hike helping Canadians? The inflation is staying high.

i live in canada im poor disabled.. whats a house?? send a diagram

Cut up credit cards folks. The stress from the debt and interest is not worth it. Making the minimum payment will get you nowhere just more interest debt.

He is a lucky guy, Just pay $1133 per month, he can live in a house. Many people have to pay more for rent to live in a small place.

Oh yes, lets print a bunch of money and give it to everyone with very little checking. Now we're suffering the terrible consequences

the banks won't refiance at the end of the 5yr term

These banks are greedy...simple...they make half a million on interests say for a 700K condo.

No its not called, " rent". It sounds crazy

Thinking it was a mis-print is very telling.

Didn’t know that Canadian banks are so risk tolerant. Variable rates with capped payments? That’s a suicidal loan product. Obviously, that mortgage client needs to double his monthly payments to keep making progress. Meanwhile, time to short some Canadian banks. They are going to be absolutely crushed in the coming year.

47 years? And renting was tooted a bad idea, wow.

These are defaults people. Affordability is beyond the Red Alert zone. Why is media talking this issue down as though it's just a new normal?? This is the END

The answer is simple. You basically can't afford the home anymore. See it and buy a smaller/cheaper one. Payoff the mortgage ASAP.

Incredibly sad

This happens when you buy real estate properties as investment in a way more than your paycheck can afford & colorful marketing by Realtors. 😢 As Warrent Buffet says, Buy only what you need the most ! A beautiful home where you can live in peace is much better than owning 3-4 investment properties.

still cheaper then rent for now. unfortunately a lot of people will get crushed this time around. I will probably be upside down 100k but still better then renting and would just drive some used cars for 3-4 years and get it back into balance.

wow,, who could have seen this coming?

Or you sell if the value of your home dwarfs your mortgage

Holy I know some friends with variable

Our “ housing bubble “ is just like the whole country, all it takes is one “ prick “ to screw everything up.

OCT. 7

YES!!!!! It’s happening! The crash is EMINENT!!! 🤣

LOL how is this country allowing just zombie mortgages, what's the end game

Banks are just legal loan sharks now. Wait and who has shown record profits over the last few years. I’ll give you a hint. Starts with bends in S

But the banks are still making profits what a system

i did not even know there was a fixed rate variable. I don't believe Scotiabank has this,and it does not seem like a very good idea.

That is what happens when you print money without matching productivity

Just wait until prices crash 50-60%!

Well wait for more rate hikes to come I heard 5 reductions this year made me laugh that 2.9 inflation rate was highly manipulated by reduction in air travel down 13.5%

interest rate is plain theft.

Mortgage Backed Securities anyone? No Freeland, nooo!!

I’m paying 2700 interest only

Debt slavery?

Its the banks that are getting richer

I am trapped same way! My mortgage is 60 plus year. 5.97$ going to my principal My mortgage interest about 1 k and amout to payoff is less than 200k.

This has become absurd.

"Justin more debt" ....sounds about right

Snowballing your debt. Since the banks are allowing unlimited amortization.

Foreclosures coming..... bankruptcy. Then 2009 bank crash.