reply on: Increasing Number of Canadian Homeowners Offside \ stacker news ~econ

169 sats \ 12 replies \ @Undisciplined 5 Mar \ parent \ on: Increasing Number of Canadian Homeowners Offside econ

I always forget that outside of the US mortgages tend to be adjustable rate, rather than fixed rate. That's an awful situation to be in.

We're sitting pretty on a big ass mortgage fixed at a historically low rate.

37 sats \ 10 replies \ @grayruby OP 5 Mar

You can still get a fixed rate mortgage with a 30 year ammortization period but the term will be 5 years. So the rate is only fixed for 5 years.

100 sats \ 2 replies \ @Bell_curve 5 Mar

I’m guessing Canada 🇨🇦 doesn’t have an agency like Fannie or Freddie. USA banks sell loans to other banks or Fannie or Freddie after 5 years or less

60 sats \ 0 replies \ @BlokchainB 5 Mar

Fannie Mae balance sheet is laughable

10 sats \ 0 replies \ @grayruby OP 6 Mar

Correct

50 sats \ 6 replies \ @Undisciplined 5 Mar

As opposed to the rate adjusting in real time? That seems like such a crazy long-term contract to me. I assume they don't adjust the principle down when home prices fall, so you're just getting the downside of market swings.

37 sats \ 5 replies \ @grayruby OP 5 Mar

There are variable rate mortgages and fixed rate mortgages. Variable rates fluctuate quarterly or so based on current market rates. Fixed rate mortgages don't change until the end of the term so if you have a 5 year fixed rate mortgage you should have the same rate in year 5 as year 1. Then after 5 years you renew or pay off your mortgage but no one pays it off.

50 sats \ 4 replies \ @Undisciplined 5 Mar

Just another reason to not live in Canada

58 sats \ 3 replies \ @grayruby OP 5 Mar

Here is a screenshot of a rate calculator I used to give you an idea what kind of variance in payments folks with larger mortgages could be looking at compared to when rates were much lower.

This is based off a 1M home in Toronto with a 200k down payment. Average home price in Toronto is around 1.2M so this would actually be a smaller mortgage than what a lot of people have.

If you do not put at least 20% down you also need to buy mortgage insurance. If you put 100k down instead of 200k in this scenario you would pay around 30k in mortgage insurance.

50 sats \ 2 replies \ @Undisciplined 5 Mar

We actually have relatives who got an adjustable rate mortgage in the Seattle area back when rates were at an all-time low. It was quite a shock to them when their monthly payment basically doubled.

The husband always acts like he's smarter than everyone and knows the right way to do everything, so we've gotten some perverse enjoyment out of his mistake.