Older millennials, adults aged 35 to 44, had debt-to-disposable income ratios around 250 per cent in 2019, while Freestone noted that metric was roughly 150 per cent for the same age group in 1999.
Can confirm we’re sitting around 250% but this is after exercising significant restraint to not take on as much mortgage as the banks would have given us. Everyone I know who bought over the last couple of years went all out and I can’t imagine them being any lower than 300-350%.
Everyone lost their fucking minds and went on bidding spree to buy a house, now the chickens are coming home to roost. I doubt government will be bailing any of these “home owners”
They will those provide financial firms with liquidity so bag holders have someone to sell at a loss.
@sadreality @avidamoeba
Kind of hard to blame the victims here when it’s not their fault successive Canadian gov’ts failed to stop illegal money coming into Canada in the 90’s – which, once washed through BC casinos, went straight into property purchases that started the housing bubble we’re in now.
If we assume people are capable of making rational decisions and participate in a free market, then they absolutely are to blame for taking on ridiculous debt loads. If we assume the opposite, then their actions were the product of the environment. We seem to want to have it both ways. We want people to be free to do whatever they want without (government) intervention when the number’s going up. For example people were really opposed to the introduction of the mortgage stess test. On the other hand we want to absolve people from responsibility and defer to the environment when the number is going down and they’re suffering post their earlier decisions. “Why didn’t someone do something about X, Y or Z which we perceive is the reason of our suffering.”
Personally I do think people’s actions are a lot more a product of the environment than anything else. If you ask me, most people shouldn’t need to participate in asset markets to have a place to live or have income during retirement. They simply can’t compete. But many fellow Canadians don’t feel this way, especially when the number goes up. And so we are where we are. 🥲
That is the failing of economics and social theories, that people will think and behave in a rational way. People don’t think or act rational all the time. I would argue that for many people, we generally act on feelings and emotions.
@avidamoeba
“We want people to be free to do whatever they want without (government) intervention when the number’s going up.”
Who is this “we” you speak of?
The Schrodinger’s “we”.
@avidamoeba
Cats don’t buy houses so they don’t count.
They did this trick in america in 2000s, Canada mostly avoided that fuxkenin
Looks like they are gonna get y’all now.
Buying into a bubble doesn’t make people a victim. Risk was taken and those who were not properly prepared will be fucked.
This is a classic FAFO situation.
With that being said, yeah, big picture all working people getting fucked.
I think the government has been whispering to banks to extend amortizations on variable mortgages. They could play with amortizations of distressed fixed mortgages too upon renewal. Keep people in their properties, paying only interest?
The banks have started doing “infinity mortgages”, in which the lendee only pays the interest and never the principle because of how the interest rats have gone. CTV News did a little primer on infinity mortgages,
When you boil an infinity mortgage down, it sounds like renting since there is no prospect of paying off the principal. Are infinity mortgages here to stay? I don’t know, I do know I won’t have shocked pickachu face when they stay a fixture of the Canadian mortgage market.
It might be the smallest of all evils. Maybe.
Maybe they will do that, maybe it will work. But if they are doing this, i doubt home prices will keep going up. They need low benchmark interest rates to justify current prices.
Agreed. I speculate there’s not much money left to keep the current prices where they are let alone to keep them going up.
I’m not sure it’s a mistake, tbh. It was a shit sandwich any way you sliced it.
Rentals are being sold out from under people often enough that renting anything privately owned is an eviction lottery.
There are no 3BR apartments available, so families mostly want houses, which are largely privately owned.
At the time, mortgages were cheaper than rent, and interest rates had been dropping fairly steadily for 40 years. We can look back with hindsight and say people should have predicted interest rates quadrupling, but I don’t think that’s fair.
Sure, people should have known rates would go up, but that’s what the extra qualification “stress test” was for, right? (Or, I image something like that was a common refrain.)
I’m house poor and overextended, personally, but I’m fortunate enough to be able to work more than full time to pay it. It sucks, but it’s still better than being forced to move my kiddos 4 times in 5 years, like my friend.
Maybe this house will be worth half what we bought it for in a few years, but we gotta live somewhere, and the stability of owning is worth quite a bit.