Amid higher rates for longer, Canada’s mortgage structure is exacerbating payment shocks: Desjardins
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- Опубліковано 15 тра 2024
- As higher for longer interest rates weigh on Canadians in the housing market Jimmy Jean, Vice-President and Chief Economist at Desjardins says its time to take a look at 10-year mortgage terms. He says longer renewal terms can help alleviate payment shocks for Canadians, but it has to start with an overhaul of our prepayments legislation and improvements to our mortgage securitization ecosystem.
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This guy just wants to prop up home prices.
Whenever I hear him, I start thinking I should be shorting Desjardins stock. He might be so keen on lower rates and "innovative" financing because his bank is at risk of finding itself with too many non-performing loans.
House prices even at covid ultra low interest rates, did not move in many areas in Canada. The places where they mooned were in locations close to the US boarder that have geographical limitations to how many places they can build. Why not try movie a couples hundred kms north and stop whining.
Canada is the biggest country in the world, your beef is with the lack of supply, development, artificial landlocked areas (greenbelt), not with fixed mortgage rates and duration. Attacking the demand and home owner options is not the way to tackle pricing
What would fix these payment shocks is smaller mortgages and lower house prices, but no banker is going to advocate for that.
I think we are fucked hard in Canada. In the Usa, during Covid they were telling people to sign 2% for 30 years mortgage. Can you imagine! Over there you can get a fixed rate 30 years mortgage and sign it when the interests rates are super low then you set for life! He you sign like maximum 5 years and the 10 years are so damn horrible rates nobody would sign them....
The US is one of the very few countries that have 30 year fixed rate mortgages. And it's because it's subsidized by the government.
Gross. This type of thinking is why we are where we are. US has 30 year mortgages, but houses are half the price. Houses prices are a burden to our economy and society as a whole
Only jealous renters say that. Unless you own, you don't have a real home. With renting You only have a place you shelter at hoping the property owner will keep it affordable for you. You have no family home to leave your kids, your kids will have no fond memories of that family home they grew up in, you really have nothing to show for a lifetime of work.
@@bdegrdsridiculous and spoken like someone who is banking on a single asset. As long as you have a mortgage you don’t truly own that home. You are a renter too, you just don’t realize you are renting the bank’s money and renting the land from the government.
@bdegrds you really think it makes sense to work 65 hours a week and not be able to afford to go on vacations or play sports with your kids, just so you have an asset to leave then when you croak? Doesn't sounds like a great way of raising a family.
@@tylerrobdavisyou don’t have to work 65 hours if you’re buying within your means, unfortunately it’s the case only since the current coalition of clowns took power that nothing is affordable. People who bought within their budget before pandemic are doing just fine. I feel for new buyers during pandemic.
Nothing prevents people from taking a 10 years term. Today Desjardins offers 10y at 5.84%. Who will be willing to lock that rate for 10 years? It is wishful thinking that longer terms will fix the current issue.
I hope they are punshed, home prices are off the chart...this unnecessary. People need to stop spending so much on homes.
Canadian acceptance of getting ripped off and unbridled house-lust is truly to blame here.
Too much money chasing the home market.
How about the government stop tampering with markets by financial repression/QE
The problem with ten years mortgages is you’re penalized when you want to sell your house before the term ends.
Which would further reduce commoditization of the housing market..
Quality mortgages? Lol. I recommend watching mortgage fraud documentary recently released by cbc marketplace.
People knew the risks of buying a bunch of sticks (a home) for a million dollars at record low interest rates. They knew rates could rise and gambled, now time to pay the piper.
I love how this is even a discussion. Banks will bend you over no matter what we try.
try removing Bank of Canada as the people who government Finance. As we all know, Banking (CRA : tax police) are the people who Governs Canada. If Canada wants to not be FASCIST anymore, maybe GOvernment of Canada should get some Businessmen as PM. We got a Drama teacher as PM and a FInance minister who's a REPORTER>>>> WTH????
The banks are handing out GIC's at 5.5% for a year. They wouldn't be offering that if they thought rates were going to come down anytime soon. This interest rate is the new normal, or higher. You would also have to keep the house you bought for ten years or will be paying extreme penalties if you sell before renewal.
Already available.
There should be NO penalties when people collapse their mortgages early! These fees are out of control.
nobody can predict the future. this lesson we are about to learn may teach us to pay closer attention to the quality of people we elect to spend our tax money
This guy and Ottawa is confusing the term of "AFFORDABLE HOUSING"
5 year terms are way too short to plan around. In the United States they have 30 year terms which is way to long because then the banks take on too much risk. I think 7 years would be optimal.
As soon as B of C cuts, inflation in Canada spikes, and the Canadian dollar tanks.
What happened to rate cut promises? This lured in more buyers to prop up the failing real estate market.
Canada is backwards compared to the USA when it comes to mortgage fixed rates. That being said, it’s the governments fault for why homes are so expensive. Poor policy choices and unrestrictive government spending causing a doubling of the money supply in two years. Allowing 5% downpayment and CHMC insurance is a mistake, it causes inflationary pressure by increasing demand.
If interest rates go up.....house prices go down but not for 1st home owners or if your living in your home...if so they will help you. If you got several homes ....trying topay them off......no bank will help you.
Canadians can feel confident that rates will remain this low for a very long time.
Have you checked out the costs of a ten year mortgage?
1:05 Absolutely yes we do need 30 year fixed..
Rates are going up baby!
Just get ride of compounding interest. It theft anyways
The term needs to be like the U.S.25 yrs. Term & amortization.
You will probably need government subsidies to make it work with an affordable interest rate. Banks really only have 30 year fixed rate mortgages because the government can back those loans.
Wow the stat that only 25% of mortgages is shocking to me. Either majority of mortgage holders are investors or anyone who doesn't have at least 20% down wouldn't be able to make the mortgage payments anyway.
Image the pre payout for that
$150,000 penalty sir 😂
increase the term just to mask the price gouging on interest. Instead of increasing the term why not Greedy banks and therir crooked CEO who make millions each year and give their employes pennies for work take the cut and drop mortgae interest
His job is probably on the line, especially if we enter a recession. His company will lay him off first due to his bloated high salary
In the US they have fixed interest rate for up to 20 years.
The Banks here want to fleece you every five years.
It’s too late to lock in for longer now. If we could lock in back in 2020 for 10/30 years would have been nice. That ship has sailed
agree that we need longer term in canada, but dont renew now
Of course it’s the government’s fault that house prices are so high in Canada, They changed the tax system to market value while allowing the values to double and triple.Instead of paying property tax on $40000 to $100000 your now taxed on a home built 25 35 45 etc years ago that cost $20000 to $60000 to build and are now selling for $500000 to$1000000 or more and property taxed based on the new values not the real value. Ever meet a poor politician 😅
Canada doesn’t have a housing crisis. Only desirable areas like Vancouver and Toronto are expensive. Canada is full of affordable cities that people have overlooked.
Winnipeg is still very affordable compared to Vancouver. You can still buy a brand new 3 bedroom 2 bathroom townhome for under 500k. Leaves you plenty of money for a nice SUV for the cold winters.
False, this used to be the case. The contagion spread to everywhere. Small rural towns have new homes listed for a million loonies now.
500k at 7% interest is really high for housing costs, considering that homes a decade ago were half or even less than that at a lower interest rate. 500k is not affordable for two people at a median Canadian wage.
We need this deleveraging cycle to continue for the economy to reach equilibrium. It will take a miracle out of this planet earth for the folks who find themselves into a negatively amortized mortgage to recover from it. Borrowers with overleveraged loans simply cannot recover from this, specially, when their mortgage loan is growing by the day with both interest and principle going up and up. We cannot hold the economy hostage due to this mortgage mess. Like 2008, this will need to crash due to the same reason such as overleveraging, high household debt, speculation, fraud in the system among others. Short term pain for long term gain.
The Canadian dollar is very weak compared to the US. If they cut rates it will be the new Peso. Even if they don’t cut rates, the US dollar will continue to rise, as inflation in Canada keeps going higher. They need to let rates go to wherever they want, naturally. The B of C needs to stop interfering by printing more money - they just make things worse.
Lower Canadian dollar equals more inflation. And with Trudeaus tax hikes, all investment is heading to the USA. The Canadian government and B of C, did a fantastic job at destroying the economy. The print print and print and then tax everyone to death.
Its a buyers market, put up with a high mortgage rate for a year, it will go down, then you end up with a home 100-200k cheaper then at is peak.
Just hold… we’re 4x immigration from 2019 levels… hold just hold 💎💎💎 and we will 🚀 with the shelter squeeze
No one's coming any more bro
You are going to be in a rude awakening when you find out most of those immigrants are temporary.
@@John.F_Kennedy you know there not leaving right.. this is a postnationalism country .. we won't kick them out and hopefully we can chain immigrate their families
@@John.F_Kennedy COPE you know those temporary forgive workers don’t leave and never intend to leave. It’s just a pathway to citizenship via Tim Hortons so it takes a little longer.
Boohoo!
Let me make you laugh.
Royce Mendes, Jimmy Jean, Desjardins 😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂