Mortgage rates on the way up?

[taylor192]

Originally Posted by Carl Johnson

http://www.cmhc-schl.gc.ca/odpub/esu...0_2009_Q02.pdf

If you go to page 30 the MLS average price for Vancouver is we went from 593,767 in 2008 to 516,000 in this year. But look at the drop from 2009 to 2010 only from 516,000 to 504,000 the rate of decline is slowing. The same can be about the average residential resale value on page 25 the decline in housing prices for BC is slowing down and actually predict to trend up in 2010.

Canadian economy will recover, business activities & personal income will pick up again. We came into this recession on budget surpluses and the government has put forward a timely fiscal stimulus which mainly focus on job creation and long term growth prospect. Once people's outlook on the economy starts to change the demand will come back to the market.

http://www40.statcan.gc.ca/l01/cst01/famil107a-eng.htm

Average income in Vancouver for a family (2006): $62,900
Lets consider 3% growth and guess at (2009): $68,700

The income/house price index for new buyers is: 7.5
The percentage of after-tax income spent on housing would be: > 60%.

Other than an influx of wealthy immigrants, or emigration of wealthy Canadians from other province, how is that sustainable? Its not. The Chinese/Indian markets have not recovered to their peaks and eroded a lot of wealth, and Albertans housing boom is nearing a bust. (Did you know BC was the only province with a positive emigration from Alberta for the last few years? Albertans with huge house price increases sold out and moved to comparably priced BC.)

The same thing happened in the early 80s, and this graph shows the housing prices dropped a lot in Vancouver then leveled out for 5 years!
http://howtogetridofyourmortgage.com...1997To2008.jpg

Things to note about this graph:
1. The housing increase in the early 80s was about double
2. The housing fall was > 30%
3. The housing increase this decade was more than double
4. The housing fall has only been 20%

---

Morale of story: don't trust what people in the real estate market tell you. CHMC needs a recovery, cause fewer new buyers are entering the market. Why do you think amortizations were lengthened from 25 to 35 years? or 25% down rule reduced to 20% down? or debt ratios raised?

[johny]

Originally Posted by taylor192

RENT.

Example:
2bd 2bath condo in yaletown: $2200/mn rent

vs

condo price: $600K
mortgage payments (20% down, $480K mortgage @ 4%): $2500/mn
condo fees: $300/mn
taxes (0.6% of $600K): $300/mn
==
owning condo in yaletown: $3100/mn.

in example one, person is spending $2200, with a total loss of 2200 / m.. (basicly being throw into the garbage)

example 2 is spending 3100 with a monthy loss of 300+300 + 900 (interest) = $1500 into the garbage. and $1600 /m going into capital which will gain over time.

how is throwing $2200 into the garbage better the throwing $1500 into the garbage?

unless person B has a POS place and is spending over $700 a month to fix the place. or house prices tank, 2 will come out ahead in the long run.


if the rent was under $1500, then renting would probably be better. (unless housing skyrockets again, then B would make some money)

[taylor192]

Originally Posted by johny

in example one, person is spending $2200, with a total loss of 2200 / m.. (basicly being throw into the garbage)

example 2 is spending 3100 with a monthy loss of 300+300 + 900 (interest) = $1500 into the garbage. and $1600 /m going into capital which will gain over time.

how is throwing $2200 into the garbage better the throwing $1500 into the garbage?

How are you doing your math? The $2500 mortgage payment breaks down into:
$900 principal
$1600 interest

You got it backwards.

And that is with a 4% interest rate, which as of this week is the lowest you can get. Any higher rate makes the math much worse for owning.

You can argue that $900 paid down in principal is equal to the $900 saved renting, yet money in the bank is always worth more than money tied up. Fir instance I threw $10K into investments this year and am up $6K, meanwhile your $900 will be making nothing since house prices will not up for for at least 5 years, and probably still have room to drop.

---

If the Vancouver housing market was better I'd agree with you, owning is better since houses usually appreciate 5% annually. Yet the housing market is in the dumpster with only more pain to come.

[Gt-R R34]

Originally Posted by taylor192

And that is with a 4% interest rate, which as of this week is the lowest you can get. Any higher rate makes the math much worse for owning.

If thats the lowest you can get..... you need a better broker/banker.

[taylor192]

Originally Posted by Gt-R R34

If thats the lowest you can get..... you need a better broker/banker.

Since you're a broker, you can tell us all how many banks are still offering 3.69% and haven't raised rates 0.2-0.6% in the last 2 weeks.

I got 3.78% 2 weeks ago, and rates are up since then.

[johny]

Originally Posted by taylor192

How are you doing your math? The $2500 mortgage payment breaks down into:
$900 principal
$1600 interest

You got it backwards.

I'm avg. it over 25 years I guess. (rent for 25 vs buy for 25) 480k principal over 25 even years would be 1600 a month.

comparing only the first year of buying vs renting probably isn't really fair. (unless you plan on selling after 1 year)

[Gt-R R34]

Originally Posted by taylor192

Since you're a broker, you can tell us all how many banks are still offering 3.69% and haven't raised rates 0.2-0.6% in the last 2 weeks.

I got 3.78% 2 weeks ago, and rates are up since then.

ALL.

Like i told you earlier, the bottom end rates are still good. Hope you got a good banker/broker!

[taylor192]

Originally Posted by johny

I'm avg. it over 25 years I guess. (rent for 25 vs buy for 25) 480k principal over 25 even years would be 1600 a month.

comparing only the first year of buying vs renting probably isn't really fair. (unless you plan on selling after 1 year)

Average it over the first 5.

You;'re right, in the long run you come out ahead, yet for the next 5-10 years house prices here will not go up and you'll be paying little principal down. Might as well rent and ride out the downturn till after the Olympics and see what happens.

[taylor192]

Originally Posted by Gt-R R34

ALL.

Like i told you earlier, the bottom end rates are still good. Hope you got a good banker/broker!

I love how you refuse to post numbers.
What is "bottom end"? fully closed mortgages? No thanks, people who bought into the 3.59% closed mortgage are dumb.

[wouwou]

leave me an address, I am sending you a case of beer Taylor192.

I learnt SO MUCH on Real Estate in lower mainland on this thread I feel like stealing if I am not paying for it lol.

[taylor192]

Originally Posted by wouwou

leave me an address, I am sending you a case of beer Taylor192.

I learnt SO MUCH on Real Estate in lower mainland on this thread I feel like stealing if I am not paying for it lol.

Good to hear dude, glad I could help!

I wish I knew more about the market here, I'm still learning yet am very interested cause I want to buy next year when I feel prices will hit bottom. There'll be some great new buildings finished (not just the Olympic village) with investors looking to offload them.

I learned a lot about the market in Ottawa (I just moved to Vancouver and own a house in Ottawa) from similar local-Ottawa online car forums. Met some guys who drove much nicer cars than me who shared their success stories online, then met them for beers and wings.

Yet do take my advice with a grain of salt. No-one can predict 100% what will happen. Housing prices are up, and it baffles me, I didn't figure there'd still be this many people capable of buying even at these low rates, or willing to buy in the recession. I think its pent up demand from skyrocketing prices fueled by low rates and high availability. Once the initial surge is done and rates go up a bit, IMHO prices will fall again.

I have seen groups of Asians walking around Kits with real estate agents... maybe I'm wrong about wealthy immigration having dried up too.
The lower dollar brought back some of the entertainment industry, which brings back wealthy Americans, yet don't expect that to last with the dollar rising again.
...

Oh there's alot to consider

[wouwou]

^No you are mostly right, but since you are from Ottawa, you are not just used to the Asian culture, especially the Chinese one. We sell firstborns just to buy houses, and if the banks take amrs and/or legs for DP, houses + Disability parking .

I have been watching the market for a condo for some time myself, and your point are quite similar to mine, but yours are more logically based and mine are "feeling" towards the market.

The sole reason why my wife and I haven't buy one is the uncertainty post 2010. God we saw a condo for 347,000 and we almost made an offer right then and there 2 weeks ago. Now that the fixed rate jumped for a bit, so we might as well wait

[johny]

Originally Posted by wouwou

^
The sole reason why my wife and I haven't buy one is the uncertainty post 2010. God we saw a condo for 347,000 and we almost made an offer right then and there 2 weeks ago. Now that the fixed rate jumped for a bit, so we might as well wait

should have locked in a rate at a bank... I have 3.75% locked in till sept (maybe could have done better then that 3 weeks ago when I did it, but it doubt I can get better now) that is a closed mortage (which just means I can't pay off the whole thing at once, I think 15% per year max). I don't know if it was transferable or not. I would hope so.

[taylor192]

Originally Posted by wouwou

^No you are mostly right, but since you are from Ottawa, you are not just used to the Asian culture, especially the Chinese one. We sell firstborns just to buy houses, and if the banks take amrs and/or legs for DP, houses + Disability parking .

LOL crazy!

I am familiar with Indian culture, and know a bit about Asian culture. To me the Asian culture is similar to old world Jewish culture that populated much of the east coast. Jewish families would move over, buy a property, move their relatives over and into the house, save $$$, then buy the property next door and move their relatives into the new house and repeat until they own the entire neighbourhood.

I see the same with Asian cultures, parents that have rooms for the grandparents in the same home, and less pressure for the kids to move out on their own. Its much cheaper to have 3 generations living in 1 big house, than 3 generations living in 3 tiny condos.

[taylor192]

Originally Posted by wouwou

The sole reason why my wife and I haven't buy one is the uncertainty post 2010. God we saw a condo for 347,000 and we almost made an offer right then and there 2 weeks ago.

The uncertainty is worth the wait if you're a gambling man!

I don't see prices going up much further, yet they could go down. Its a gamble to save > 10%, worst case you pay 5% more. We're not going to see the double digit increases of the past few years so its a relatively safe gamble.

[Gt-R R34]

Originally Posted by taylor192

I love how you refuse to post numbers.
What is "bottom end"? fully closed mortgages? No thanks, people who bought into the 3.59% closed mortgage are dumb.

3.6-3.7% for a fix-5 is still easily obtained. Look - i'm not here to argue, a lot of your points are valid, but the point i'm making is, you might not get the best rates - so don't think that is the the lowest rates possible.

You have sound arguments, just don't think you're all high and mighty with your rates. they're good no doubt. Just my point is, rates are going up, bottom end rates are they same. obviously they will change, and you are right they will be going up soon. It just wasn't "NOW" like you said 2 weeks ago.

[taylor192]

Originally Posted by Gt-R R34

3.6-3.7% for a fix-5 is still easily obtained. Look - i'm not here to argue, a lot of your points are valid, but the point i'm making is, you might not get the best rates - so don't think that is the the lowest rates possible.

Of course you're here to argue, cause you won't post numbers:
What's the lowest rate, open mortgage, and with which bank?
Is that with buying down mortgages with points? or without?

The rest of us are posting numbers and have been pre-approved by a variety of lenders, yet you continue to tell us we're wrong. Stop trolling and post some hard numbers, banks and brokers to help us out, or go away.

Lowest rates last I asked were still high 3.7%, you're right, yet they are CLOSED mortgages, which many people would be stupid to take. Its like the 3.59% mortgages that were offered, awesome deal, yet only on closed mortgages.

Any broker recommending a young client a closed mortgage is a broker to avoid.

[winks]

there is nothing wrong getting a closed mortgage imho. especially something like 3.69% for a 5 year if you are planning on staying there for a while. and even if you are not most mortgages (at least where i have banked) are portable and assumable

[taylor192]

Originally Posted by winks

there is nothing wrong getting a closed mortgage imho. especially something like 3.69% for a 5 year if you are planning on staying there for a while. and even if you are not most mortgages (at least where i have banked) are portable and assumable

The closed mortgages I was looking at were not portable or assumable...???

You also neglected where I wrote "young clients". First time buyers, single buyers, condo buyers, ... like many of the people responding in this thread. 5 yrs is a long time if you happen to meet someone, find another job, finances change (after being maxed out to buy in the first place like many people), ... IMHO the extra 0.1-0.2% savings isn't worth the lack of flexibility/mobility.

[SlySi]

Can anyone recommend me a good broker?

[funkychicken]

*mod edit*

No Ads - Pm if you like.

[Gt-R R34]

Originally Posted by taylor192

Of course you're here to argue, cause you won't post numbers:
What's the lowest rate, open mortgage, and with which bank?
Is that with buying down mortgages with points? or without?

The rest of us are posting numbers and have been pre-approved by a variety of lenders, yet you continue to tell us we're wrong. Stop trolling and post some hard numbers, banks and brokers to help us out, or go away.

Lowest rates last I asked were still high 3.7%, you're right, yet they are CLOSED mortgages, which many people would be stupid to take. Its like the 3.59% mortgages that were offered, awesome deal, yet only on closed mortgages.

Any broker recommending a young client a closed mortgage is a broker to avoid.

Originally Posted by taylor192

The closed mortgages I was looking at were not portable or assumable...???

You also neglected where I wrote "young clients". First time buyers, single buyers, condo buyers, ... like many of the people responding in this thread. 5 yrs is a long time if you happen to meet someone, find another job, finances change (after being maxed out to buy in the first place like many people), ... IMHO the extra 0.1-0.2% savings isn't worth the lack of flexibility/mobility.

There's no point for me to argue. You're giving your suggestions, like i've said before you got your points. Some are very valid, but you obviously believe you're right and your methodology is all might and powerful. i've been in the industry for a while. I'll respect your topic and argument.

The only point from the very beginning, I wanted to make from what you said was - Your rate, your broker gives you doesn't mean it necessarily is the best rate.

Thats it from me. I'll be here to mod this topic and thats bout it.

[funkychicken]

^^oops sorry

[taylor192]

Originally Posted by Gt-R R34

The only point from the very beginning, I wanted to make from what you said was - Your rate, your broker gives you doesn't mean it necessarily is the best rate.

Edit: I get it now. No advertising, so its hard to post up a rate from a bank offered by a specific broker. Hmmmmm....

[Carl Johnson]

http://www.bloomberg.com/apps/news?p...d=aeOvAb6DZBNI

well I guess rate won't stay this low for long now