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As one of those people that bought a bubble priced house (rental stock in the town I live in just doesn’t exist for the type of place I wanted) I’m pretty impre

As one of those people that bought a bubble priced house (rental stock in the town I live in just doesn’t exist for the type of place I wanted) I’m pretty impressed with how much Canada can bury its head in the sand about the problem. I think in 4-5 years when all these mortgages get refinanced at (presumably) higher rates some weird shit is going to happen. The root issue as far as I can tell is supply is incredibly poorly managed. When I was living in Vancouver, there was a lot next to us that was waiting for permission for 2 years to build a low rise, mixed use building in an area already zoned for it. Don’t get me started on “historic” homes in dense areas.

jdsully 5y ago
They are stress tested to up to 5.5% interest, so it will take huge moves to cause insolvency. This isn't like the US subprime issue, these borrowers can afford the higher rates.
- refurb 5y ago
  Right, but don’t ignore the knock on effects of housing payments sucking up more cash, reducing consumer spending. And it won’t be fun refinancing at a higher rate and finding out your house is worth less than when you bought it.
  - rapind 5y ago
    I don’t think our government will let interest rates go up. It should have happened a decade ago, but they kept lowering them instead (and watched the bubble grow). It’s political suicide at this point to do it in any meaningful amount.
- rapind 5y ago
  > these borrowers can afford the higher rates. Not at all what I’ve been reading. We have a record high 2.5 trillion in mortgage debt, and a lot of that debt (especially in the last year) is high risk.
  - jdsully 5y ago
    Both banks and credit unions are required to perform the stress test. The biggest source of fraud is likely loans from parents marked as gifts, but it doesn't change the borrowers have to show evidence they can handle 5% interest rates on the mortgage portion.

jdsully 5y ago

They are stress tested to up to 5.5% interest, so it will take huge moves to cause insolvency. This isn't like the US subprime issue, these borrowers can afford the higher rates.

refurb 5y ago
Right, but don’t ignore the knock on effects of housing payments sucking up more cash, reducing consumer spending. And it won’t be fun refinancing at a higher rate and finding out your house is worth less than when you bought it.
- rapind 5y ago
  I don’t think our government will let interest rates go up. It should have happened a decade ago, but they kept lowering them instead (and watched the bubble grow). It’s political suicide at this point to do it in any meaningful amount.
rapind 5y ago
> these borrowers can afford the higher rates. Not at all what I’ve been reading. We have a record high 2.5 trillion in mortgage debt, and a lot of that debt (especially in the last year) is high risk.
- jdsully 5y ago
  Both banks and credit unions are required to perform the stress test. The biggest source of fraud is likely loans from parents marked as gifts, but it doesn't change the borrowers have to show evidence they can handle 5% interest rates on the mortgage portion.