Canadians Are Borrowing Against Real Estate At The Fastest Pace Ever

[PornAddict]

Canadians Are Borrowing Against Real Estate At The Fastest Pace Ever

Canadian real estate prices have soared, and so did borrowing against that value.

Our analysis of domestic bank filings from the Office of the Superintendent of Financial Institutions (OSFI) shows that loans secured against property has reached an all-time high. More surprising is the unprecedented rate of growth experienced this year.

Total balance of loans secured a...using-second-mortgages-to- avoid-bankruptcy.

This is a temporary fix that will become much more complicated in the very near future. As interest rates rise to normal levels, the ability to keep making payments becomes harder. Hoyes-Michalos estimates a mild rise in rates could push bankruptcies above 2009 levels.

Increasing equity extraction remains a sleeper threat for Canadian real estate markets. Borrowing against homes increases the chance that a mild shock could impact real estate. This shock could be a correction, recession, or even just higher interest rates. Normal market mechanics have become a threat to the economy, which is pretty disturbing. Bottom line, try not to buy more home than you can afford.

 

[FAST]

This is a recipe for disaster.

2008 ring a bell for anybody here.

 

[PornAddict]

This is a recipe for disaster.

2008 ring a bell for anybody here.

That evil Harper was such a bad guy to push for a balanced budget and reduced spending.

We now have good looking wonder boy with nice hair who like to take selfie( not qualified for PM job) who is busy settling tens of thousands of Muslim in Canada, paid for by your future grand children of course, and then tweet than all illegal immigrant are welcome to Canada ( back track calling them 'irregular immigrants' ) while racking up a 40 billion deficit in his first year after campaigning on a balanced budget.

And now we peal the onion and find out that half the country is on the verge of bankruptcy and are borrowing against their over inflated house values to keep the bill collectors at bay. (more Canadians-have been using-second-mortgages-to- avoid-bankruptcy.
See post #1)

 

[HEYHEY]

This is a recipe for disaster.

2008 ring a bell for anybody here.

It's different here, real estate always goes up in canada, haven't you heard?

 

[dirkd101]

This is what the economist's for the major banks have been saying for the past few years and just recently, during the housing spike, TREB had countered these same economists, saying this isn't a problem.

There are too many households out there with this bad debt, using the equity in their home to buy that new Harley, pay for the yearly vacation an get the latest and greatest electronic gadgets. Not to mention everything their offspring ever wanted, like having another vehicle in the driveway, so that they have their own wheels to use.

 

[rajbabba]

I have borrowed nearly $700k on my HELOC against the inflated value of my home. All invested in dividend paying stocks. A slightly different version of the Smith Manoeuvre. Have built up some nice capital gains. Even with rate hikes, strategy will be cash flow positive every month.

 

[consulted]

I have borrowed nearly $700k on my HELOC against the inflated value of my home. All invested in dividend paying stocks. A slightly different version of the Smith Manoeuvre. Have built up some nice capital gains. Even with rate hikes, strategy will be cash flow positive every month.

And what would be your strategy to deal with a sudden drop in the stock market due to, say, north korea? Has happened before.....

 

[Insidious Von]

And what would be your strategy to deal with a sudden drop in the stock market due to, say, north korea? Has happened before.....

What the strategy - get liquid. I actually made money in 2007 - 09. As Captain Obvious would say speculating on the stock market isn't always rewarding.

As staunch fiscal conservative who's obsessively debt averse, this is old news. Canada's consumer debt problem has been beyond red alert since 2014. I don't get pissed off when the spaccone (show off) in the Maserati SUV cuts me off. In the fullness of time - I'll be drinking his milkshake.

Seriously though, I've told anyone that will listen, if you're going to invest in property, you'll need a 30% down payment. Anything lower than that and your mortgage enslaves you.