Skip to main content

“I am a Canadian, free to speak without fear, free to worship in my own way, free to stand for what I think right, free to oppose what I believe wrong, or free to choose those who shall govern my country. This heritage of freedom I pledge to uphold for myself and all mankind.” ~~ John G. Diefenbaker

YOUR SAY ... comments on, ‘The Conservative Plan on Housing is a Recipe for Disaster – And not very Conservative’


I have read Johns comments on this, and I offer the following comments:

I have been in the real estate industry for 37 years, longer than John was a lawyer and I co-owned and managed the second highest producing real estate office in western Canada so I am quite comfortable in speaking to this. 

In a previous comment, John implied that with this imitative, we were going to crash similar to what happened in the US in 2008 then threw out some stats that were not even relevant to this and to compare us to the US is frankly a joke. 

The reason the US market crashed is because the banks down there would loan you 100% of purchase price to buy a home and then to add insult to injury, you could write off the interest on your mortgage payment on your income tax.  This was a complete joke because every time there was an increase in market values, Americans would refinance their home so they could go buy motor-homes, boats, toys of all shakes because they could write it off.  That is why 80% of Americans will never own their home upon retirement.

John conveniently forgets to tell you the whole story as he only tells you what he wants to tell you, to believe his position.  Now you know why the US market crashed, it was out of control because of poor lending practices. 

In Canada, we have stringent lending guidelines which are developed to help reduce this type of behaviour.  For example, need 5 to 10 % down payment, out of your own pocket to get a mortgage, as well as many other qualifying factors. 

The issue of going back to 30 year amortizations is not something that I would ever suggest people to do.  If, however, this is the only way they can afford it, then it is up to the buyer to make the decision to do this -- or not -- and common sense should apply. 

For example; a $300,000 mortgage at 4% over 25 years would require payments of $1578 per month; the same mortgage over 30 years is $1,426 – a difference of $152 per month -- for the benefit of being able to be able to buy that first home.  That said, I believe if a buyer cannot afford the additional $152 per month, then they should NOT buy that home, period.

The bigger problem is some (many?) millennial's having such high and unrealistic expectations.  They want a new home with a 2-car garage, 2 cars in driveway, and more.  Their unrealistic expectations make them want that ‘perfect’ home for their first home, instead of buying something they can afford and being realistic about it.  Therein lies the problem, not the additional $152 per month.  

As far as stress tests go, this can be argued on both sides. Up front, it helps to reduce anyone getting into trouble, if and when their mortgage comes due -- that is a good thing.  However, to apply the stress test on the renewal of a mortgage is a joke.  If the buyer has proven they can make payments for the term of their loan, and they apply the stress test, technically they may not qualify by definition. 

That does not mean they cannot make the payment, so if bank does not renew based on guidelines, that could put the homeowner onto a very stressful situation that is NOT necessary.  If the homeowner continues to exercise due diligence, and have a clean credit rating, they will continue to make their payments.

John implies the Conservatives are wrong by trying to make housing more affordable, and comparing us to the US, and that is a joke for all the reasons I have mentioned, and more. 

As far as John is concerned, if the Conservatives did nothing, he would blame them for doing nothing.  When they come up with a good plan, he says it is dismal and we will crash like the US.  But ... he conveniently forgets to tell you the whole picture. In his mind the Conservatives are damned if they do and damned if they don’t! 

I personally do not like 30-year mortgages, but I believe the responsibility belongs on the buyer to make sure they are prudent in their buying a home, and that they use common sense in this matter – after all, it is a huge investment. 

Plan properly, use common sense, and you will be as safe as you can be. 

~~~ Ernie Beadle







I have read what you wrote Alan, in response to John, and I would have to say you did a good job.

The point in Scheer lengthening the amortization period is not to expect people to now take 30 years to pay off their house, it is just to lower the payment for the first 5-year term of the mortgage. Then, upon renewal of the term in 5 years, they can choose to shorten the amortization to any time they want -- based on what they can afford.

Plus, there is no reason why they can not make extra payments during the first 5-year term which will effectively shorten the 30-year period as well. 

~~~ Sean Upshaw

Comments

Popular posts from this blog

It seems the call for blood donors is being responded to, however ... “This effort is a marathon, not a sprint” says Canadian Blood Services

A week and a half ago I wrote the commentary ... “ While the national inventory is currently strong, an increase in blood donor cancellations is a warning sign of potential challenges to maintaining a health inventory of blood ” It was written as a result of talk about a potential blood shortage that would occur if people stopped donating due to the COVID-19 virus. It seems the call to Canadians was responded to, however, as I was told this afternoon ... “ T his effort is a marathon, not a sprint ”. As it now stands now, donors are able to attend clinics which are held in Vancouver (2), Victoria, Surrey, and in Kelowna, so I asked if there any plans to re-establish traveling clinics to others communities - for example in Kamloops, Prince George, Prince Rupert, Revelstoke or Cranbrook, and perhaps further north at perhaps Ft. St. John? According to Communications Lead Regional Public Affairs Specialist Marcelo Dominguez, Canadian Blood Services is still on

FEDLSTED -- Rules will have to relax-- the question is how and when

The media has created a fervour over the mathematical models that allegedly help governments predict the future of Coronavirus infections in the general population. Mathematical modelling has limited use and value. We need to understand is that the data available on Coronavirus (COVID-19) infections in Canada is far too small for statistical reliability. The data available for the whole world is useless due to variables in how nations responded to Coronavirus infections. There is no commonality in steps taken to combat virus spread and no similarity in the age demographics of world nations, so the numbers you see on the daily tracking of world infections are not useful in developing a model of infection rates that can be relied on. Mathematical models of the future spread of Coronavirus are better than nothing, but not a whole lot better.  Mathematical models must include assumptions on virus spreads, and various factors involved. As they are used in projections, a small erro

When necessary – and only when necessary – the Family Maintenance Enforcement Program can attach (garnish) wages

Alan Forseth ~~ Kamloops, BC ~~ May 15th Earlier this week (Monday May 13 th ) the BC government announced it would be establishing a new Crown agency to oversee the Family Maintenance Enforcement Program (FMEP).   They indicated that on or before the end of October, the provision of family maintenance services would transition from a contracted service provider, to the newly created Crown agency. Apparently, this was to ensure that family maintenance enforcement services for vulnerable British Columbians continue uninterrupted. Seeing this story, reminded me of a woman ( we’ll call her Mary Brown ) who had email me some time b ack about this very thing, and questions she had about how maintenance enforcement was imposed and enforced. She said to me, “ I’m just curious if you can get any statistics of the homeless men and woman, that have children, that they are paying family maintenance in support of their children”.  “I am not about to sugg

Labels

Show more