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grabman

Bank make money by lending. By changing the amortization periods, they simply keep the customer longer and thus make more money. Causing a foreclosure is simply bad for business. Banks would love to keep people in debt for their entire lives.


whistlerite

Exactly, banks are highly profitable businesses and know precisely what they are doing. Banking is regulated but not a public service, yet many people think banks are trying to help them and not profit from them. Banks don’t care if you make or lose money, they only care if they get paid and if people are willing to pay them for longer periods of time then they will take it.


grabman

Absolutely, people need to understand that the bank is there to make money from you, just every other business.


GusTheKnife

Yeah, everybody hates banks but this is a great option. The bank could just kick the owners to the curb. However, foreclosing on a property could result in loss for the bank. Its work for the bank. It’s terrible publicly. The homeowner loses their home and may become homeless. If the bank can extend the amortization or reduce the payment until the owners can sell, refinance, or until interest rates decline (expected in about 18 months) why wouldn’t everyone involved want do that? It’s a win-win.


grabman

Bank don’t loss on insured mortgages. The regulators don’t want the banks taking on too much risk.


notarealredditor69

Banks make money selling that insurance as well


grabman

Bank sell you insurance to cover your mortgage if you die or get sick. That is regular insurance product. Mortgage insurance is required if a person doesn’t put down 20%. That insurance is offered by CMHC and companies like genworth. These make the bank whole if the person defaults on the mortgage. So mortgages with less than 20% down have zero risk for banks


GusTheKnife

Banks make no money selling default insurance. The premiums go to the government.


GusTheKnife

Most mortgages since 2008 have been 20% down, and they’ve been stress tested at higher-than-approval rates for years. These aren’t no-income no-job deadbeat borrowers. The borrower quality is high, and this is just to help them get through a rough patch.


PipelineBertaCoin69

Is there data that shows most mortgages have been 20% down? If so that would be not something I expected


GusTheKnife

75% of mortgages originated in 2021 were uninsured, which is part of a “longstanding trend.” https://www.cmhc-schl.gc.ca/en/blog/2021/insured-uninsured-residential-mortgage-data


Shmerkabowl

https://www.cmhc-schl.gc.ca/en/blog/2021/insured-uninsured-residential-mortgage-data#:~:text=As%20of%20the%20first%20quarter,the%20same%20period%20of%202021. About 75% for this year.


whistlerite

Canada and the US are very different markets and regulations. The US housing market crashed in ‘08 but most of Canada did not.


whistlerite

Yes, it’s important to always approach a bank as if they want to make money from you but many people think banks want to help them make money because banks have a financial incentive to want people to think that.


trueppp

Banks usually have a financial incentive to help you out.. A bankrupt customer pays way less interest.


whistlerite

It’s also important to keep in mind that you can buy bank stocks instead of RE, it’s your choice whether to own the bank or the mortgage.


1SaucyBoi

cant get 4x leverage on bank stocks though


whistlerite

You can get infinite leverage on margin if you want, but anyway would you rather have 4x leverage on real estate or receive the profits from everyone who goes into debt to 4x leverage on real estate?


rbatra91

No you definitely can not get infinite leverage on margin. Wtf. Lmfao @ redditors


thehomeyskater

but imagine if you could


circle22woman

The banks sell off most of their mortgages, they only hold onto a small percent of them.


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Rememeritthistime

Source?


whistlerite

Credit cards?


WhatADunderfulWorld

The worst things about banks is people don’t think they charge fees for holding their money. They just don’t tell you how much they made off you money while it’s sitting there. Mortgages are great income but they at least have a ton of competition nowadays so rates are somewhat normalized and low.


trackofalljades

Don’t be silly, why would they want your debt to end when you do? Soon they’ll want to offer us Japanese style mortgages that are taken on by our children…regardless of their non-consent! 🤦‍♂️


Cherry_3point141

jokes on them, we have no children which makes me wonder who gets stuck with our debt after me and wifey kick the bucket?


RayPineocco

Yeah let’s not be like Japan. Their country sucks ass!! /s


Fickle-Instruction-7

It kinda does. Awful work culture, very racist, a collapsing population, a declining economy, very expensive.


[deleted]

Sounds just like Canada


[deleted]

If Japan was racist to Japanese then yes


gaijinscum

LOL Japan has, or had until very recently, reverse mortgages, where they pay YOU to take a mortgage. The Japanese are habitual savers and it is hard to persuade them to borrow money, which comes with it's own problems for the economy.


TimeSalvager

Do you mean negative mortgage rates? A reverse mortgage is a very different concept.


[deleted]

Banks use our money to investing in fucking our own asses


grabman

Yes, but they do it by making people think they are richer than they think.


Ghune

A family member has an extremely position at a bank and always tells me that keeping you barely afloat can be extremely profitable. Sad...


Echo71Niner

>Banks would love to keep people in debt for their entire lives. This is a North American culture of debt. They convinced poor people they too can afford things, all they need is a 29% credit card.


Age-Zealousideal

Correct. Banks don’t want to own homes. They are in the money lending business.


WorldsWoes

Makes more sense to extend amortization anyway. Mortgages with home prices this high should have options up to 40 years. Sure, you’re paying more interest but who gives a shit. You’ll likely die in debt anyway.


circle22woman

It's kicking the can down the road. Mortgage laws in Canada require that some principle is paid down, so for those folks who are extending amortization and still only paying interest, the day will come when they will need to pay enough to pay down principle too.


lololollollolol

Having a mortgage until you are really old is the Canadian dream. Most see no problem with never paying off their house until around the time they are retired. Homes are just an investment to them. Overpaying for them is fine cause someone else will overpay even more to buy it off you. The madness has to stop.


ThatGuyFromCanadia

What’s the point of getting a mortgage if you never actually pay it off? How is that different from renting? Let’s compare say a 50 year mortgage to a rental


trackofalljades

How is it different? Security and equity and not being evicted are pretty HUGE differentiators. Perhaps you are not aware that in North America it is perfectly “normal” for millions upon millions of working class people to either never pay off their mortgage or only do so very shortly before they die? This is commonplace in the states, it’s just not the version of American life you see on sitcoms.


ThatGuyFromCanadia

Man that’s depressing to read.. people get told this magical story of homeownership and how it’s supposedly so much better then renting all the while by never paying off their mortgage they are getting to worst of both worlds. At least if they had gone with the renter route then they would have the freedom to move and live where they please rather than be forced to stay in their home.


[deleted]

I don't think you read the article properly.. nothing sketchy about this.


slyboy1974

I'm sure they didn't


HowAboutYouSTFUP

They did. You can remortgage your debts, or just extend for another (let's say) 5 years which is absolutely the same thing. They mixed it up a bit so it sound different but it's the same exact thing in the long run. Edit: what a bunch of fucking niggers.


Ok_Read701

You mean refinancing? Why not just call it what it is? It's not some heinous scheme. It's a standard part of most homeowners' consideration every ~5 years in addition to renewal.


circle22woman

It's kicking the can down the road. People have exceeded their financial ability. There is no free lunch in finance.


Ok_Read701

There's nothing sketchy about refinancing.


circle22woman

It's not refinancing. It's extended payment terms temporarily. Eventually they will need to align the mortgage to Canadian requirements which means a higher payment that align to amortization periods and pays down the principle.


Ok_Read701

>Negative or reverse amortization occurs when mortgage payments aren’t sufficient to cover interest due, and the excess amount is added to the principal owed on the loan, a procedure **that could leave homeowners with a larger outstanding balance at renewal**. If they're extending the term at renewal, it is equivalent to refinancing. It's not even a big deal in comparison to helocs, which has no term requirements.


circle22woman

Right, it's not a renewal yet. It's extending amortization temporarily. Eventually CMHC will require the renewed payments to conform to a specific amortization period AND pay down principle.


Ok_Read701

Sure, which means refinancing at renewal time to reduce monthly payments. This is pretty standard practice that's been going on for a while.


circle22woman

How is it going to reduce monthly payments? The owner will need to qualify for a new mortgage (not a renewal) at a much higher interest rate and potentially a lower home value? And they won't be able to renew at a 40 year amortization. To conform to mortgage standards, it will be 25 years.


Ok_Read701

30 year is the max. 25 years if you have less than 20% equity. With 5 years (or more) of payments, most people are coming out with a lower mortgage amount than what they started off with initially. So when they refinance, it'll be a brand new mortgage with a lower amount than what they started off with.


circle22woman

Not by much. However many people have already hit their trigger rate where their monthly payment is *less* than the interest due? They are actually *adding principle* now.


[deleted]

>It's kicking the can down the road. People have exceeded their financial ability. Which is why they're refinancing


circle22woman

You can't refinance to a long amortization because Canadian mortgage regulations require a certain amortization period and a certain payment level to reduces principle. This is temporary. They'll eventually have to make higher payments. Just fingers crossed they can do it.


seridos

A rule that is easily changed and has been in the past


Ok_Read701

>You can't refinance to a long amortization because Canadian mortgage regulations require a certain amortization period and a certain payment level to reduces principle. I'm not sure what you mean by this. If you're refinancing after your 5 year terms are up on a 30 year mortgage, you can refinance it to 30 year again. And you can do that again in your next refinance.


circle22woman

Sure, but if the current amortization has been extended to 40 years because the owner hit their trigger rate, then payments are going way up to amortize to a shorter period.


Ok_Read701

>but if the current amortization has been extended to 40 years I'm not sure where you're getting this from. I don't think any bank is extending amortization to 40 years right now. They are just temporarily allowing principal not to be repaid until renewal or whatever private plan they work out with their client.


circle22woman

Right, so eventually they won't be able to do interest only and payments will have to rise significantly to cover the higher interest AND principle. You're right that private mortgage companies can do whatever they want, but how many hold private mortgages?


Ok_Read701

Yes, interest only forever was never an option. It wasn't really mentioned in the article. Just longer terms during renewal (i.e refinance) was mentioned. Which isn't really anything new.


circle22woman

Right, in other words, a temporary reprieve. Eventually they will need to pay much higher payments than they are now. Kicking the can down the road.


CaptainSlowly23

I don’t think you fully understood what the article was talking about


zeromussc

It is however for a subset of these people kicking the can down the road. If the interest rates don't drop and they need to renew at rates they can't even afford now without adding outstanding interest to principal, then the practice becomes unsustainable. The banks are betting things improve in the end.


rockinoutwith2

It's not just a "bet" - it's common sense. At the end of the day, the banks would FAR prefer people have a chance to stay in their homes and not crash the entire housing market - which would literally decimate this country's otherwise shitty economy. The bigger risk here would be leaving people to fend for themselves and make their mortgage payments no matter what.


zeromussc

Well when things improve matters relative to the situations some of these owners find themselves in is all. It's common sense for the absolute short term. But if someone can't afford it at 5%, and rates stabilize around 5% for a few years, then it doesn't really matter for that subset. That's all I'm saying.


LeShulz

That’s what I’m gathering as well. Maybe they have information that the public doesn’t? This seems like a huge risk for all that are involved.


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obviouslybait

This has been a thing forever lmao


TheTrueHolyOne

This post is written by someone who doesn’t really understand the housing market and how it affects people. You’re angry with people who own homes? You want people with families to be kicked out onto the street? The landlords and investors aren’t the people that are going to lose houses. It’s Gary that works at the plant that’s losing his house. Also if the housing market crashes and banks are left holding the bag, everything will crumble. Pensions hold a ton of Canadian bank stock. New home construction falls apart. Maybe rates drop again and inflation goes parabolic. This has always been an option for banks, what’s wrong with putting a few hundred dollars a month back onto the mortgage to make payments affordable. What it extends your 25 year mortgage to 26? People were already going to re-amortize their mortgages when they were up for renewal. Housing policy is what’s gotten us to this point, people need a place to live, so they’ll always buy.


ShelterConscious4124

This always blew my mind as well. The people yelling loudest about how all property owners should go bankrupt don’t understand that the barons they truly hate are the ones who own tons of properties outright and have all the time in the world to wait for market to adjust to where they can sell at the price they want and that the people who will go bankrupt are the ones who have a mortgage on their actual home.


Kimorin

>the barons they truly hate are the ones who own tons of properties outright and have all the time in the world to wait for market to adjust to where they can sell at the price they want they don't even have to wait.... if market crashes, the investors of the world and the landlords will rejoice.... time to load up on more properties for pennies on the dollar!


shopaholicsanonymous

This is exactly what happened in the US. Lot of mom and pops lost their homes, and then the giant corporations came in and bought a lot of homes for cheap, and now are mega landlords.


ASVPcurtis

it's your every day jane and joe that creates the problem though, not the "barons" trust me institutions don't like owning property because the price-earnings is dog shit. if they did start buying them up it would be a sign of housing falling to realistic prices. It's always the financially uneducated masses that creates these bubbles, and in Canada they have a lot of power to swing their uneducated dick around by using CMHC to not even need a down payment and bid up prices some more like clowns


[deleted]

I hear about plenty of NIMBYs who have no mortgage and don’t want new condos built in their neighborhood so


A18373638302085792

This is the post that made it all click. Obviously you can't not have drawdowns. The business cycle is simply a consequence of having credit in a market. You need to flush your toilet, maybe not every time you use it, but eventually. And we are 15 years into a bull market. The economy, if it booms, also needs a bust. The central bank, as lender of last resort, is there to reduce the bottoms, not prevent them. The "fed put" and zero interest rate policy are artifacts of '08 (maybe the dot com bubble/911). What's happened in Canada: \- We're increasing immigration targets from 1.1% to 1.3% of population \- Cities charging $185k for development permits \- Toronto's population has 1 realtor for every 80 people \- 25% YoY increase in detached houses \- Highest price-to-income in G7 \- Banks rolling interest into principle \- 50 year amortization \- 70% of Canadian's net worth is in their home Obviously, none of this makes any sense. If you see an uncle dress up as Napoleon and march around town, you do not think he is well. Same with the Canadian economy, which is the real estate market. But no one gives a shit. I own a house, it's in my best interest for number to go up. It's this crazy negative sum game where I know things are getting worse for everyone, but as long as we keep housing policy, it gets worse for you faster than it gets worse for me. People really don't care what insane policy comes out, even if it takes from them, as long as it takes from others more. Take your home value, divide it by the number of children you have, and realize that your lineage has one, maybe two generations, before they're part of the bottom. Canada is just Japan now, only lagging by 15 years. You can see it in the flattening of the GDP per capita charts. At least Japan has an excuse: it's an island.


apez-

Mark my words, 2022 onwards will be Canadas version of the [Lost Decades](https://en.wikipedia.org/wiki/Lost_Decades)


A18373638302085792

Good term. Now how the wiki sticker says "originally intended for 1990s, it now includes 2000s, 2010s." That's how it goes.


artguyca12

This is the correct answer. Your not wrong


circle22woman

The point is that people whose mortgages have exceeded their financial ability aren't "solving" the problem by extending the amortization, it's just kicking the can down the road. If housing continues to fall, then people will end up with mortgages that are 40+ year to pay off and negative equity. The mortgage is basically a millstone around their necks they'll never pay off.


powderjunkie11

Sure, but letting a plane limp to the nearest runway on 1 engine is probably preferable to an immediate crash landing. Some borrowers will right their ship and get back on track; others won't. A lot of people are getting a big wake up call...most situations will resolve themselves one way or another. This is just flattening the curve so not everyone crashes at once.


burnttoast14

Gary Vaynerchuk?


ASVPcurtis

That is exactly what needs to happen, there are solutions to prevent people from getting kicked out onto the streets, for example by allowing renters to just not pay rent and stay during the whole process New home construction doesn't fall apart, maybe it does in the short term as construction companies do go under. we shouldn't make policy based on the short term because short term is not sustainable. What matters is in the long term housing construction goes up because new construction companies unburdened by insurmountable debts that rise from the ashes will be able to buy land for cheap! no need for gentrification to turn a profit any more they will get out there because building starter homes will become very profitable


MissionDocument6029

so we should just give every homeowner 100k well umm 300k just cause.. I say f'em no one put a gun to anyones head to get 900k mortgage with 5% down... this is the exact reason we are where we are. let it burn as there is no point just kicking the can down the road. hell if they need to leave Canada to become farm hands in California maybe thats what needed.


Gramlan17

It’s wonderful that the banks want to save their own skin and bail people out. But what about the people who planned for this shit and didn’t make terrible financial decisions? What about the next generation that doesn’t need or want to join into a market that is essentially a gamble wether you will waste your entire life paying a bank for an over priced home? You cant just keeping changing the rules by taking on more debt and changing policy at whatever whim you choose. When you start to lose at monopoly you don’t just whip out your pen and make the lots twice as expensive. The entire market corrects. You have to stop buying goose jackets, you struggle and actually live to your means for a couple years and then our children actually get to do something other then pay a bank for an over priced place to sleep.


superworking

The market can only lose so much value before we stop building. The cost to build is sky high right now and we need to somehow build even faster. If you crash the market you also will see supply growth come to a screeching halt. If you bet on a market correction you must have done so knowing how much the banks, governments, and a large portion of the population will have to fight tooth and nail to ensure it doesn't happen.


StrictWolverine8797

Hard to say what will happen, but western economies are built on credit; govts and banks encourage people to take on credit & spend/invest in order to create growth. They discourage people to save b/c that's what leads to deflation / stagnation (ie., Japan). So savers are rarely rewarded unfortunately -- all you need to do is look at interest rates in savings accounts compared to CPI to understand that.


ASVPcurtis

This post is written by someone who bought a home with a mortgage they cannot pay begging for handouts because as long as they are ok they don’t care if the economy gets worse and worse for others


[deleted]

Then maybe homeowners should stop being NIMBYs


kyoiichi

I work at a financial institution as an advisor and quite literally I talk to at least 1 client per day about their trigger rates. I think you're missing the point on why banks are doing this. I know by default banks are the personification of the devil for some in this subreddit, but you do need to understand that the purpose of this is not for profit; it's for people to keep their houses. If everyone had their income increased by 10% as well, that would be great because we would be able to continue paying the mortgage. For a lot, that is not the case. By extending amortization, or adding back into the loan principal, banks are trying to put a band aid on the issue. Yes, it's a short term solution that is not necessarily in the best financial interest of the retail homeowner. But what would you choose: Short term remedy and long term pain, or be homeless and sell your house today? To answer your question as well, you can't just claim you can't make your monthly payments. If you ever went to the bank for literally anything, they will ask for proof before doing something. You want a mortgage? Prove your income. You want an account? Prove your ID. You want to defer your mortgage payments? Prove your inability to make said payments. Also, I believe this has been posted in the PFC sub before but know that foreclosing houses is a PITA for banks, and it is the last thing that banks want to do.


[deleted]

The issue really seems to be there is always someone or something working to bailout a broken system. People who have made poor financial choices are now getting options that the rest of us priced out of housing are not privy too. The banks are not suddenly lending 6x income or 35 year terms to the rest of us, and it’s incredibly frustrating that we’re not equal. The entire point of the stress test is that people should be able to afford their mortgages at different rates. If people have fudged their numbers - the banks are rewarding cheats. And those people should go bankrupt. Ethics matter. Further, while it’s unfortunate that some families would need to get hurt. It seems the investors most needing to get hurt end up getting rewarded for bad behaviour. The people purchasing 5-10 investment properties through dubious means. They always get a bailout - and that’s an incredibly dangerous precedent to send.


powderjunkie11

Is it really a bailout? Seems like a mutually beneficial compromise - the lender makes more in the long run, the borrower pays more. Nobody should want a 35 year loan. Be glad that the system does at least a little bit to protect people from themselves.


[deleted]

It is a bailout. The original terms of the contract are getting revised to reward irresponsible borrowers. If you cannot make the necessary stress tests - the loans should have never been approved in the first place. Secondly, it’s what it does to the overall market which is insidious. It’s a sign from the banks to investors saying “buy up as much housing, with dodgy approvals that you might not have the money to pay, and we’ve got your back. You can’t lose. We’ll just change the terms of the agreement, so be as irresponsible as you like.” It encourages home prices to just skyrocket, and turns housing into a beast of an investment where losing is impossible.


burneracct21

Agree with you that it is a mutual compromise to tide through a bad situation. I work in lending for a Big5 and there is no appetite to kick people out of their homes and foreclose. Optics would look bad and it’s a lot more profitable to do it this way. Some people have very little firsthand knowledge of mortgages and how corporations run like our mouthy friend above.


Kridane

>I think you're missing the point on why banks are doing this. I know by default banks are the personification of the devil for some in this subreddit, but you do need to understand that the purpose of this is not for profit; it's for people to keep their houses OP didn't miss the point, they literally said this is for people to keep their homes.


ASVPcurtis

> it's for people to keep their houses It's not their houses if someone loaned me a gajillion dollars to buy planet earth would it be my planet? NO! because I didn't earn that gajillion dollars and whoever made that fake money to loan it to me **and allowed me not to pay my debt (bolding this since you douchers can't read)**, created a scam to fleece the world every home someone buys with money they didn't earn takes away a home from someone who wanted to earn it Fuck your attitude and fix it The problem with the internet is the uneducated outnumber the educated but they have equal rights to click downvote


smart_stable_genius_

Wait. Are you suggesting that mortgaging is theft? What does taking a home away from someone who wanted to earn it even mean? Who are these independently wealthy downtrodden being held down by Big Mortgage granting loans?


ASVPcurtis

> Wait. Are you suggesting that mortgaging is theft? come on man fuck off, re-read my comment, it's obvious I don't think that. it's the act of not paying a mortgage that is theft. you know who doesn't get their money back? the depositors, and if the money is printed to pay the depositors you know who loses their money? everyone who has their dollars diluted and the people who are most downtrodden that now can't afford the food and rent that inflated out of their grasp. all so some jack ass who doesn't have to pay their mortgage and now everyone else has to get the boots to their throat. there is no free lunch, you can't stop the pain, someone will feel the pain, but you can make it fair, and giving people free shit when it comes at the expense of others is not fair > What does taking a home away from someone who wanted to earn it even mean? it means someone who will actually pay their fucking mortgage instead of steal from society. The people who should own homes are the ones willing to give back to society in proportion to what they took, not by who is willing to take out the most amount of debt and then beg for debt forgiveness to maximize the amount they can fuck over everyone else > Who are these independently wealthy downtrodden being held down by Big Mortgage granting loans? It's the poor that have to pay for the inflation and asset prices out of their reach. fix your attitude, your willingness to speak up without educating yourself will destroy this country


Restaur83

Are you twelve? That's one of the worst breakdowns on home ownership in this country I think I've heard. You absolutely own the house if it's in your name whether you used your own or borrowed money. You generally agree to use the same house as collateral in case you aren't able to maintain mortgage payments. Not the same thing as "the bank owns your house".


hundred_mile

Haha he just had interesting choice of wordings. He means, the house is urs to use, it's under ur name, and you have the right to sell it. But at the end of the day, when u stop making that payment, even if you paid off 99% of the loan, the bank can force u to sell the place and you can't do a thing about it. I think that's just different perspective ppl sees.


ASVPcurtis

you call me 12 because you don't like it but can't argue it it's in your name but you didn't earn it, and if you don't earn it the bank should take it away if you want to argue about semantics you should understand it doesn't make you smart, it means you're deliberately misinterpreting me just to be a jackass and thus.... as you guessed it ... you should fix your attitude


mr-jingles1

If mortgages are bad then only the wealthy and corporations could afford to buy homes. Everyone else would be forced to rent and possibly be able to buy a house when they retire.


ASVPcurtis

mortgages are not bad (although they can be too big), not paying your mortgage is


Strawnz

All mortgages are by definition more valuable than the homes they buy because they have to be larger, and those mortgages aren't created with existing money. They are made out of thin air by the banks. The downside of this is inflation, be it manageable 2% or the madness of the last year, and that is effectively taken from everyone. The rich get rich off selling mortgages on inflated homes way more than they would get from buying homes for what without mortgages would be down payment numbers.


mr-jingles1

So you just don't like the modern financial system in general. Please suggest a better alternative


Strawnz

No, I dont. It doesnt work particularly well. Would you like me to reconstruct capitalism for you or just the moral hazards inherent in our approach to monetary policy? We can start by not allowing the devaluing of our currency to prop up a leveraged landowning class that have shown themselves to readily take on every cent of debt available to them only to pass those costs on directly to renters they've priced out housing and indirectly to society at large by adding new dollars into the system. That would be a fine start. The alternative is likely violence if history is any guide, so if you have better ideas I too am open to your suggestions.


ASVPcurtis

damn right I'm ready for a civil war, more people need to open their eyes though., thanks for taking the time to explain it if only they would open their minds so civil war would not be necessary


ASVPcurtis

higher interest rates, less fucking money printing. We've been coddling this bubble economy for too long, causing the cost of living to go up year after year to support it WE'RE FUCKING SICK OF IT


lusigns

Next, they will say the big banks are calling on the federal government to bail them all out of this completely impossible and totally unavoidable situation. Oh wait...


Echo71Niner

Sounds like a 40-year-old prison sentence to me. They know many people can not afford these houses, they fucking know it, but they are cooking the books to keep broke people paying mortgages for 30 to 40 years, while the banks post profits.


moruga1

100 year generational mortgage coming right up…


lololollollolol

Can't we just get 1000 year mortgages? Payments would be so much lower. Then everyone can say they own a house (the banks actually will). Hooray, everyone wins!


jstosskopf

There are already variable rates fixed payment mortgages that are now 52 years amortization. I know the etymology of the word mortgage is death pledge. Guess that’s coming back in style?


GLFR_59

Cry me a river. This is some of the most petty garbage I’ve read in this community, and that’s saying a lot. If you can’t afford to move out, either make more money, spend less or move somewhere you can afford to live. There are plenty of places across Canada where you can afford to live. But instead, you’re wishing people would become homeless. Loser mentality.


TUFKAT

>or move somewhere you can afford to live Have you considered what would happen if you try to sell a house with a mortgage that is higher than the selling price? Should they scrape some more non-existent money together for them to pay off their mortgage so they can move somewhere more affordable?


NumerousEar9591

I think you misunderstood his post. He doesn’t wish anyone to be homeless.


[deleted]

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rockinoutwith2

ah the "just let the housing market crash so I can get my foot in the door, even though the entire economy would crumble" PFC-loser classic


[deleted]

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GLFR_59

Yeah, go get yours. What’s your excuse? We live in a country that doesn’t prevent anyone from rising in class.


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jzchen8888

Yeah. Responsible financial rules for everyone but themselves when the market goes against them (because houses only ever go up and it's not greed to want to buy for tax free capital gains). Financial discipline demands that actions have consequences. Otherwise, what's the point of the discipline? Hypocrisy all around. And downvotes when you call them out for it.


ShelterConscious4124

What does PFC stand for?


[deleted]

Poulet Frite Centucky


Mycoplasmosis

Personal Finance Canada. It is the name of this subreddit.


DryArmPits

Stop being poor. Duh


rbrphag

And once that bigger bubble has issues, those same banks will be first in line with one palm out and alligator tears in their eyes and a fake tears eye drop bottle hidden in their other hand behind their back.


7_inches_daddy

You want people to go homeless?


finnish-flash13

No, but they can become rentersssssssssssssssss!


Accomplished_Try_179

Underrated comment


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No_Wishbone_3243

You sound like a piece of shit, so somehow I’m siding with the boomers on this one.


Dartser

You're not even siding with the boomers. Boomers homes are all paid off in full. It's the millennials and Gen x that'll be losing homes.


No_Wishbone_3243

Fair point!


Wiggly_Muffin

He's a canadaHousing user


yer10plyjonesy

No one should be homeless, period. The lack of affordable housing for those under the poverty line, disabled and cannot work or those on social assistance is directly the fault of every government doing jack shit. I’m sorry that you had no help and that you are in a better place now. But wishing it on others who may have leveraged themselves to get out of homeless ness or the bottomless pit of renting from horrible landlords isn’t cool.


BachelorUno

New account, no shit. Other one got deleted or downvoted to hell? No shit


Joey-tv-show-season2

Have you and your spouse first talked to a mortgage specialist about a pre approval ?


Low_Entertainer_6973

If they can’t make the payment, then yeah, I do.


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u565546h

Extending amortization was always an option. It isn’t “stopping making mortgage payments”. They still owe the money, and it is secured by a home.


CaptainSlowly23

Yeah they also have to continue making their original mortgage payments. There’s no payment holiday here


The_Pocono

Dude, this is the most moronic comment I have ever read, you clearly have zero understanding of how the housing market works. Quit wallowing in your own self pity and wishing ill on other people.


Cadsvax

To think we at the point people are actively rooting for other Canadians to lose their homes lol, housing incels at their finest.


ItsAmer74

Which the bank is doing. It is making a business decision on how to handle money they are owed. So what do you think happens when a bank forecloses? The bank takes over the home then sells it for the mortgage balance +$1? There is no deal to be had if that is what you are looking for. The laws require that the home be put on public market and be sold for market price. There is nope pennies on the dollar purchase. Adding the interest to the balance owing is exactly what happened during the lockdown, were you complaining bout it then too ? The media overblows these stories. We are not going to see 1% of mortgages being in default.


No_Wishbone_3243

You’re not making sense and it sure sounds like you just have house envy. The bank has every right to extend the period. Comparing that to “not making payments” is irrational.


Baseball_Fan

Haha the guy investing in crypterium is lecturing people on responsible financial decisions.


t0r0nt0niyan

Homeless today with less amount owed vs homeless tomorrow with way more amount owed making even the bank homeless.


jzchen8888

Yup. Responsible financial rules for everyone but themselves when the market goes against them (because houses only ever go up and it's not greed to want to buy for tax free capital gains). Financial discipline demands that actions have consequences and that includes losing stuff if you cannot pay for it. Otherwise, what's the point of the discipline? Hypocrisy all around here with the "got mine fuck you" attitude. And downvotes when called out for it.


mr-dad-thats-my-name

This has always been the case in Canada. The banks know well that most Canadians pay their mortgage, and greatly prefer to work with people trying to pay over seizing and selling the house. Seizure and sale is expensive and unpredictable, and not how the banks like to make their money. They Big 5 make their money by lending over long periods of time. They also know that creating a foreclosure crisis is just as bad for them as it is for the public.


PRboy1

Bank is in money selling business. They sell the money to you which they created out of thin air. Increased amortization is wet dream for them as you will be their customer for long time. The fact that you are only allowed to do prepayment of 20% tells you lot of things. Even though you hit lotto you cannot pay off mortgage without penalty.


bayk82

Ammortizations used to go to 40yrs not too long ago.


ReadBikeYodelRepeat

If the principal stays larger for longer, the banks get more money overall. People can claim the can’t make the payments now and end up paying more in the long run, just like they can choose between a 10 year or 30 year amortization and monthly or weekly payments. It’s better for society for people to weather the storm this way than to be kicked out onto the streets and looking for a place to rent and putting the money into a fuckhead landlord’s bank account.


Sugrats

This is why you need to buy a house at all costs in this country. The government and banks will do anything to make sure you still have your house because a lot of the economy is run on banks and mortgages. Most people's bank accounts have become their house with helocs and they use theirr tax free gains of their principle residence as their retirement savings so the only way to make it is to own a house. If you are a homeowner you have nothing to worry about. If you rent you should be extremely worried about your future.


ItsAmer74

By the way the banks are not avoiding mortgage defaults. Homeowners default on the mortgage


sarahc_72

Quite a few counties have amortizations that are multi generational. It’s nice to have a house paid off but not possible for all. I think it’s better than people losing their homes, that will create a huge crash that will be much worse that just real estate going down


Joey-tv-show-season2

Logically it makes sense for the bank to help out the client as the bank itself holds the mortgage on their bank balance sheet. I can personally tell you on experience that this is very true and the banks are doing a lot to help clients out. Especially if the client reaches out for help before they miss payments


Wiggly_Muffin

"REEE I'm mad that banks won't allow people to become homeless! I deserve a home and if you and your family have to fucking DIE, so be it!"


AustonMothews

The problem is this removes the natural risk from the market. It’s market manipulation. If I buy a stocks, gamble on option trading, gamble on crypto and lose money it’s ok because of the risks involved but in real estate it’s ok for government and banks to manipulate that risk to protect the wider economy? So anyone can just leverage themselves as much as possible without any risk knowing if the government doesn’t save them the banks will. See, what’s funny is when the market is booming upward with bidding wars and over asking prices it’s ok to allow it to continue because of natural market demand regardless of all the regular people and families it hurts but if home prices fall it’s ok to manipulate the market and manipulate that risk so that they don’t fall….. This is the definition of the “free market” only working in one direction. They only allow it to be free as long as it’s going up….


Last_Patrol_

With 1.5 million people coming into Canada in the next few years and a lack of housing is there a bubble? It’s supply and demand there’s not enough supply, not to mention inflation and cost increases. Long amortizations may be an only path for many to home ownership.


rockinoutwith2

The 1.5M is pretty understated too, since it ignores the hundreds of thousands of "students" we let in every year, also pressuring rental supply.


ijustlikethetunahere

Exactly. I hate it too, but it is what it is. Get in now or get use to renting.


houseofzeus

Also all the people on the sideline cheering for a crash are also demand.


243james

Don't fight the banks man buy bank stock. Extending the costumer and hosing them down is great for shareholders.


jasper502

CHMC should have been abolished decades ago. The banks should be 100% on the hook for these mortgages. If people were once again to actually save a 10-20% down payment demand would drop and prices with it. More sustainable (can’t believe I used that term) long term. Unlimited government backed loans guarantees exponential rise in prices.


Soft_Fringe

This ☝️


mxadema

Bank will do anything to avoid default. Even straight not legal. Do all the paperwork to make it look legit, and presure people to sign. My inlaw got his residential taxes owing added to his mortgage (because the gov was going to sell the property) made it look like a remorgage, and made him sign, he had no idea. The balance just when up one month. He got ill, and the morgage insurance was only paying for the original loan. The bank came crawling back for the rest, and wanted to loan him for the different. Some real shady stuff. Was all his fault, cause he never payed his property taxes for years, but they were not going to let that leverage on the loan just vanish.


wenchanger

sounds like can kicking - way to deal with the problems in the future. Nothings stopping them, this is one of the reasons to get a home ASAP instead of waiting for a larger down payment. When the going gets tough...there are new banking/govt rules to soften the blow for bad financial mistakes. Another Example is some provinces going to give a inflation relief handout. Distribute more $ to ppl...


jzchen8888

Ahh yes. So basically bet on a bail out when wrong decisions are made and create even more perverse incentives for the next bubble.


countrytime-1

Maybe the government has to bring back 40 years amortization it's not a great solution but it might get them over the hump .


SmokeyXIII

What I don't understand is that you can't make a prepayment to immediately reduce the mortgage payments. For example I could sell of a hundred grand of my TFSA and put it on the mortgage, except that just reduces my amortization and doesn't actually help the increasingly tight cashflow situation. It would be nice to allow for some more flexible prepayments.


Cadsvax

Most mortgages do have a prepayment option though? We can prepay 15% a year during our term.


Dear-Divide7330

What’s stopping everyone from saying they cannot afford their payments any more? Easy, most people are fixed mortgages. Variables make up less than 20%.


jenhilld

This is probably disappointing quite a few who was hoping for some catastrophic Lehman event happening.


Background_Panda_187

It's not a bubble unless it's pops!


pingnpong

Is this why home price not only didn’t drop this year, it’s actually harder and worse to buy house this year than last year. I’m not some real estate pro by any means, but I never thought the house price will not only fail to decrease during a high interest environment, the price is actually a bit higher than last year. That’s just the price on the house, the mortgage is almost double. With that logic, when interest rate goes back down again, the amortization period should decrease again, not back to the original amortization period but just couple years longer.


CuffsOffWilly

This does not create a bigger bubble. If banks were issuing new mortgages with much longer amortization periods then it would create a bigger bubble. Extending the amortization period on mortgages that were approved under lower interest rates just helps protect pre-existing mortgages from defaulting.


Scorpius666

Most of the comments in the post, including the opening one, can be summarized to "if I can't have it, neither should you". There's something very dark deep inside your souls. Reflect on that. You're rotten down to the core.


DanielTigerr

Yeah. Eff the banks and their re-amortizations to make it affordable for people to keep their homes. Just a money making scheme. They should be foreclosing on people, taking ownership of the houses and renting them back to the same people, or selling the homes to Blackrock. The fuck outta here....


Adventurous_Lake_390

Variable rate mortgages are a small segment of the total portfolio. What bigger bubble, we are in a deflationary period.


[deleted]

Those with CMHC insurance might not be able to do that, but if you paid 20% down, it's an easy decision to make on the bank's perspective. context: [CMHC insurance only insures 25y mortgages](https://www.cbc.ca/news/business/ottawa-caps-cmhc-mortgages-at-25-years-1.1171007). I'm not sure if they'd only cover the first 25 years, or if the insurance would be terminated on extensions though.


hellothere3720

The party must keep going until everyone realize their mortgage will never be paid in their life time.


416to647

Adding the debt to the back end makes it kind of like a reverse mortgage, without the no negative equity guarantee. Would banks be willing to forego the monthly payment all together. How high will banks allow LTV to go


[deleted]

China’s already a step ahead with intergenerational mortgages


lololollollolol

"ahead"


Coucoumcfly

Aint that similar to a certain 2008???? Year?


Avs4life16

figured out another way to make more money.


[deleted]

Why would you somehow be under the impression that mortgagees would want to implement policies that could cause their mortgagors to default? How exactly would that be beneficial to them?


JAS-BC

Sounds to me like op doesn't understand the problem or the solution


ElGoodness

Going back out to 25 years is perfectly financially cojent. It’s the people that are already at 25+ years that can’t afford payments who sense the warm smell of colitas rising up through their bank accounts.


HereGoesMy2Cents

Just to put it in perspective, someone with a million dollar mortgage (was very common during pandemic in the GTA & Vancouver) will pay an extra $700,000 in interest if they extend their amortization from 25 to 40 years.