Comments on: Weekend Reading – July 11, 2008

By: AndyBuck

AndyBuck — Mon, 14 Jul 2008 14:26:51 +0000

The real kicker with US mortgages is that they were allowed to include the estimated appreciation in your home’s value as part of the formula for the mortgage. At least, this is what I understand from what I have read and heard. This allowed lenders to lend money to people that otherwise would not have been able to afford a home in a certain area. As soon as the bubble burst though, and home prices sunk, suddenly no one could afford their mortgage anymore because this significant chunk of the asset had been removed.

Also, lenders were not required to verify income or assets of the applicants.

Thankfully, the mortgage industry is more tightly controlled in Canada. I, for one, am very happy that they have increased the requirements for a mortgage in Canada. I feel this will begin to make things reasonable again. I would love for them to reduce it to a minimum 10% down and maximum 25 year amortization. Who wants to mortgage 35 or 40 years of their life away? That puts you in your 60’s (if you purchase in your 20’s) before you have any hope of getting out of debt. Just brutal.

By: FrugalTrader

FrugalTrader — Fri, 11 Jul 2008 21:38:28 +0000

newbie, basically a bunch of people bought expensive houses with teaser rate mortgages. As the mortgage rates correct back to normal, those homeowners are finding that they can’t afford the new payment. Thus, a bunch of houses are going for sale/forced sale creating a major buyers market with few buyers.

By: newbie

newbie — Fri, 11 Jul 2008 20:53:48 +0000

I’ve been a little out of the world concentrating on working from home and my new family, so I have to ask what is going on in the housing market in the states ? Excuse my ignorance. (Other than lack of time I avoid the news because I have a hard time distancing myself, and gave up on CNN after Bush got in the last time. ) I think I heard something about a lot of foreclosures and a cross border shopping for houses.

It’s also the first I’ve heard about less than five percent down.. so I guess I didn’t miss much there. (-:

By: Canadian Capitalist

Canadian Capitalist — Fri, 11 Jul 2008 13:38:47 +0000

Thanks for the link. Cheers!

By: FrugalTrader

FrugalTrader — Fri, 11 Jul 2008 13:26:32 +0000

Chuck, afaik, the WIFI functionality will remain intact. Which means that you can get free data providing that you are in any (open) wifi hot spot.

I’m with you on the CMHC changes. I wonder if these new rules will cool the real estate market even further.

By: Chuck

Chuck — Fri, 11 Jul 2008 13:21:09 +0000

One thing I’m curious to know about the iPhone. Did rogers shut off the iPhone’s ability to use free wifi or even the wifi in my house?

I’m totally in favour of the changes that CMHC made. Longer amortizations help prop up houseing prices. If standard 25 yr mortgages were the only product out there housing prices here (Toronto) would be much more in control.

By: WhereDoesAllMyMoneyGo.com

WhereDoesAllMyMoneyGo.com — Fri, 11 Jul 2008 12:45:58 +0000

Thanks for the link FT – have a great weekend!