7 ms·

This is wrong on a few levels. 1) as someone who has been on the ground as well, I’ve lost a few offers because I was worried about over paying. On multiple oc

This is wrong on a few levels. 1) as someone who has been on the ground as well, I’ve lost a few offers because I was worried about over paying. On multiple occasions, after seeing what it sold for we thought “damn, we woulda paid another $25K on top to get it had we known.” 2) Canadian banks has a very conservative “stress test” for securing mortgages. This includes qualifying at much higher rates then is being offered. Therefore it isn’t possible to “stretch yourself beyond any reasonable limits”

TimPC 5y ago
It’s still quite possible to stretch yourself. Variable mortgages are common and interest rates are going up at a rapid clip. It’s possible for them to rise further than the stress test numbers. Refinancing in five years may be painful if you got a mortgage at 1.5%, stress tested for 3.5% and refinanced at 5%.
- jejeyyy77 5y ago
  Stress test currently means you need to qualify at 5-6% if you have 20% down. If you are putting less than 20% then the stress test is even higher. I doubt we will see 5-6% interest rates in the next 5 years.
  - noirbot 5y ago
    Tell that to the 5.1% rate a friend of mine just got on a new home purchase with >20% downpayment. I dunno if rates are a lot better in Canada or something, but we're already in 5-6% range in the US for some properties. They had excellent credit too.
    - freeone3000 5y ago
      Rates are better in Canada. 2.3% is within the norm.
    - jejeyyy77 5y ago
      Interest rates are still at 2.5% in Canada. Still a ways off from 5-6%.
    - jdsully 5y ago
      US mortgages are 30yr fixed. In Canada you cannot get a fixed rate for that long and 5 years is the norm - everyone here effectively has an ARM. This is why rates are almost always higher in the US.
ranit 5y ago
> Canadian banks has a very conservative “stress test” ... Therefore it isn’t possible to “stretch yourself beyond any reasonable limits” “stretch yourself beyond any reasonable limits” means that you may not be able to pay your mortgage, it doesn't mean the bank won't offer it to you.
- deleted 5y ago
  [deleted]
- s1artibartfast 5y ago
  The bank won't offer if you can't pay, at least in the US these days. But we have 30 year fixed mortgages, I think Canada is shorter
  - djrogers 5y ago
    The norm in Canada is 30 year term, with a variable rate. It's the second part that can really get you...
    - foldor 5y ago
      30 years hasn't been possible in Canada for several years now (thankfully).
      - throwaway2037 5y ago
        What is normal? It's hard for middle class people to afford normal housing stock in highly advanced countries without 30 years of amortizing debt. Yes, I understand that some countries force you to chain bullet mortgages over ~30 years to achieve a similar effect.
      - s1artibartfast 5y ago
        Why is that a good thing?
    - s1artibartfast 5y ago
bombcar 5y ago
That “damn we would have paid X more” is exactly what it’s designed to encourage - we’re not good at calculating large numbers so once you’ve “made the decision” to pay $500k making a decision to pay $50k more is relatively easy (and seems like nothing). In a normal Dutch auction style situation you’ll pay $1 more than the second highest bidder, which is a bit more fair.
- shuntress 5y ago
  I think you mean a reverse Dutch action. Which is almost a regular auction. In a Dutch auction (regular dutch auction. Not reverse.) there is no second bidder. The price starts too high and drops until the first bidder to decide the price is low enough (as it drops) buys.
brailsafe 5y ago
Seems like you're not talking about over paying, but rather out-bidding someone. It seems like maybe a first offer should establish a baseline price, and everything subsequent should be transparent, or perhaps have a blind expiry on it, so you'd know if your offer was declined before an offer has been accepted
throwaway2037 5y ago
This part: Canadian banks has a very conservative “stress test” for securing mortgages. ... is excellent. More places need it. Please stop gambling on housing as an asset class. The middle class doesn't do it in France, Germany, or Japan. In those places, housing prices are kept _fair_ through clear, transparent planning and a blend of free market and regulation. What the hell is wrong with US/UK/AUS/NZ that allows insane leverage to middle class house buyers that drives up the price of houses? It's all silly to me. (I'm less familiar with how much CAN allows middle class people to gamble on housing.)

TimPC 5y ago

It’s still quite possible to stretch yourself. Variable mortgages are common and interest rates are going up at a rapid clip. It’s possible for them to rise further than the stress test numbers. Refinancing in five years may be painful if you got a mortgage at 1.5%, stress tested for 3.5% and refinanced at 5%.

jejeyyy77 5y ago
Stress test currently means you need to qualify at 5-6% if you have 20% down. If you are putting less than 20% then the stress test is even higher. I doubt we will see 5-6% interest rates in the next 5 years.
- noirbot 5y ago
  Tell that to the 5.1% rate a friend of mine just got on a new home purchase with >20% downpayment. I dunno if rates are a lot better in Canada or something, but we're already in 5-6% range in the US for some properties. They had excellent credit too.
  - freeone3000 5y ago
    Rates are better in Canada. 2.3% is within the norm.
  - jejeyyy77 5y ago
    Interest rates are still at 2.5% in Canada. Still a ways off from 5-6%.
  - jdsully 5y ago
    US mortgages are 30yr fixed. In Canada you cannot get a fixed rate for that long and 5 years is the norm - everyone here effectively has an ARM. This is why rates are almost always higher in the US.

ranit 5y ago

> Canadian banks has a very conservative “stress test” ... Therefore it isn’t possible to “stretch yourself beyond any reasonable limits” “stretch yourself beyond any reasonable limits” means that you may not be able to pay your mortgage, it doesn't mean the bank won't offer it to you.

deleted 5y ago
[deleted]
s1artibartfast 5y ago
The bank won't offer if you can't pay, at least in the US these days. But we have 30 year fixed mortgages, I think Canada is shorter
- djrogers 5y ago
  The norm in Canada is 30 year term, with a variable rate. It's the second part that can really get you...
  - foldor 5y ago
    30 years hasn't been possible in Canada for several years now (thankfully).
    - throwaway2037 5y ago
      What is normal? It's hard for middle class people to afford normal housing stock in highly advanced countries without 30 years of amortizing debt. Yes, I understand that some countries force you to chain bullet mortgages over ~30 years to achieve a similar effect.
    - s1artibartfast 5y ago
      Why is that a good thing?
  - s1artibartfast 5y ago

bombcar 5y ago

That “damn we would have paid X more” is exactly what it’s designed to encourage - we’re not good at calculating large numbers so once you’ve “made the decision” to pay $500k making a decision to pay $50k more is relatively easy (and seems like nothing). In a normal Dutch auction style situation you’ll pay $1 more than the second highest bidder, which is a bit more fair.

shuntress 5y ago
I think you mean a reverse Dutch action. Which is almost a regular auction. In a Dutch auction (regular dutch auction. Not reverse.) there is no second bidder. The price starts too high and drops until the first bidder to decide the price is low enough (as it drops) buys.

brailsafe 5y ago

Seems like you're not talking about over paying, but rather out-bidding someone. It seems like maybe a first offer should establish a baseline price, and everything subsequent should be transparent, or perhaps have a blind expiry on it, so you'd know if your offer was declined before an offer has been accepted

throwaway2037 5y ago

This part: Canadian banks has a very conservative “stress test” for securing mortgages. ... is excellent. More places need it. Please stop gambling on housing as an asset class. The middle class doesn't do it in France, Germany, or Japan. In those places, housing prices are kept _fair_ through clear, transparent planning and a blend of free market and regulation. What the hell is wrong with US/UK/AUS/NZ that allows insane leverage to middle class house buyers that drives up the price of houses? It's all silly to me. (I'm less familiar with how much CAN allows middle class people to gamble on housing.)