Quote:
Originally Posted by pastarocket
Guys, what is your take on this argument from a friend in terms of the Vancouver housing market?
Long story short, this friend is renting a two bedroom condo in the downtown west end for two grand per month. He is married and has two toddlers.
He figures that IF the Bank of Canada keeps raising the key interest rate this year in order to curb inflation, many homeowners with variable rate mortgages would face foreclosure. Some new homeowners are going to have to sell their houses.
-best chance for him to buy a house? He has a big income as an entrepreneur in his event marketing and film post production business. -would be able to save up for a big down payment even though he is paying rent now to a condo owner.
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I think most variable rate mortgages are fixed payment now so anyone getting boned right now doesn't have to deal with the problem till renewal (or has many years to figure it out). I suspect those who are in trouble when renewal comes will have escape valves that the gov't will put in place to ease the pain (eg. letting them extend the mortgage) - it won't save all of them but it's not going to be some major bloodletting.
I think the people who are really boned are the ones who want to buy a place right now - prices haven't really come down but interest rates mean the "price" has gone up in reality. Either they overpay b/c they need a place right now or they have to wait till the market cools.
I don't see rates staying high (relatively speaking) for that long - up another 1% this year, hold it for a year or two and then it'll come back down 1-1.5% in 2025 which, for most people, will be manageable.