Author Topic: Canada's crazy Mortgage Ads  (Read 5209 times)

RealCanadianSavings

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Canada's crazy Mortgage Ads
« on: May 03, 2014, 02:52:44 PM »
I was boggled this morning by the following advertisements from a few of the banks in Canada. Here Canadians are in (probably) the biggest property bubble currently on the planet and yet you see ads like this:

Struggling to come up with a 5% down payment? no worries, we'll front you 2.5% so all you need to do is pony up the other 2.5%
https://www.youtube.com/watch?v=XBl5MfA3QiU

Or this trio of ads complete with scare tactics, guilt and social norms (from RBC, one of Canada's big 5). The first one is the best, imho.
https://www.youtube.com/watch?v=ghOnb-eMbLU
https://www.youtube.com/watch?v=wxcK9Uc0Ujs
https://www.youtube.com/watch?v=6BN_viz2oFI

Anyways, I had a good laugh (and am also floored) so I thought I'd pass it on.

seanc0x0

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Re: Canada's crazy Mortgage Ads
« Reply #1 on: May 04, 2014, 11:22:42 AM »
Those are pretty awful.

It's like we got smug after escaping the 2008 crisis with minimal effects on our banking system, then went and started doing exactly what got the US in trouble. Maybe the banks are looking to skim profits from questionable behaviour then get their very own bailout, who knows.

Yesterday morning, I had to go downtown and my usual route was closed for repairs. It's along the river and is quite pleasant, and the alternate route is a high-speed, high-capacity arterial road which I hadn't been down in a long time.  There are a number of billboards along there, and the vast majority are either advertising mortgages, home builders, and real-estate agencies.  We're definitely in a bubble here, and I hope the pop doesn't plunge us back into economic recession. I'm not particularly optimistic, though.

RealCanadianSavings

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Re: Canada's crazy Mortgage Ads
« Reply #2 on: May 04, 2014, 12:37:09 PM »
I keep telling my friends and family to cash out, but they just have the blinders on. My sister just "moved up the ladder" selling a smallish SFH for a mega home with a bigger mortgage. Meanwhile they laugh at my Moustachian ways - renting and building my stache.

I don't think that most Canadians realize that 20% of our GDP is linked to housing. I found this gem comparing Canada to the US (though it's a year old now):

"Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S." http://www.bloomberg.com/news/2013-02-27/canada-losing-debt-halo-as-bull-market-housing-peaks-with-carney.html

going2ER

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Re: Canada's crazy Mortgage Ads
« Reply #3 on: May 05, 2014, 11:49:09 AM »
In the specific area I am in housing prices haven't increased dramatically. You can still get a decent home for under $100K. However, in making fun of banks and mortgages, here is part of an email I received at work, I don't work for a bank, but this bank is connected to my workplace:

With a 5 year locked in rate of 2.99% or with 100% financing available, your dream home may be closer than you think.

I did not even know that you could get 100% financing in Canada.

seanc0x0

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Re: Canada's crazy Mortgage Ads
« Reply #4 on: May 05, 2014, 01:21:38 PM »
I keep telling my friends and family to cash out, but they just have the blinders on. My sister just "moved up the ladder" selling a smallish SFH for a mega home with a bigger mortgage. Meanwhile they laugh at my Moustachian ways - renting and building my stache.

Let them laugh, I say!  We've got a house that we bought from my father-in-law just before he passed away, and we got it for a really good price as it was my wife's inheritance (we had to pay out her 2 siblings, though). I think I'd balk at paying full price for a home up here right now.

Quote
I don't think that most Canadians realize that 20% of our GDP is linked to housing. I found this gem comparing Canada to the US (though it's a year old now):

"Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S." http://www.bloomberg.com/news/2013-02-27/canada-losing-debt-halo-as-bull-market-housing-peaks-with-carney.html

That's actually quite scary to me. I'd wager Saskatoon is right up there percentage wise with TO, the growth rate is insane right now.

RealCanadianSavings

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Re: Canada's crazy Mortgage Ads
« Reply #5 on: May 05, 2014, 10:00:09 PM »
Quote
I don't think that most Canadians realize that 20% of our GDP is linked to housing. I found this gem comparing Canada to the US (though it's a year old now):

"Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S." http://www.bloomberg.com/news/2013-02-27/canada-losing-debt-halo-as-bull-market-housing-peaks-with-carney.html

That's actually quite scary to me. I'd wager Saskatoon is right up there percentage wise with TO, the growth rate is insane right now.

It is scary. And the debt as well. Collectively Canadians owe 14% of our GDP in HELOC debt.
http://www.macleans.ca/economy/money-economy/living-beyond-our-means/

I heard that builders are flocking to Saskatoon, but that it's growing fast too.

GuitarStv

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Re: Canada's crazy Mortgage Ads
« Reply #6 on: May 08, 2014, 06:26:44 AM »
When we bought our house many years ago the bank pre-approved my wife and me for 1.2 million dollars.  At the time we made a combined about 95k a year.  We had a good laugh about that amount as we were looking at homes under 1/3 of that price.

Having lived in Toronto for quite a while now, I think that cries about the housing market being overvalued here are a little overblown.  Maybe for condos. . . but there are a limited number of detached homes here, and we have a large influx of people moving in every year.  I'm certainly not selling my modestly (for Toronto) priced home and trading up, but I honestly don't see a housing crash on the horizon any time soon . . . and I'm usually pessimistic about these things.

skunkfunk

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Re: Canada's crazy Mortgage Ads
« Reply #7 on: May 08, 2014, 07:54:47 AM »
Quote
I don't think that most Canadians realize that 20% of our GDP is linked to housing. I found this gem comparing Canada to the US (though it's a year old now):

"Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S." http://www.bloomberg.com/news/2013-02-27/canada-losing-debt-halo-as-bull-market-housing-peaks-with-carney.html

That's actually quite scary to me. I'd wager Saskatoon is right up there percentage wise with TO, the growth rate is insane right now.

It is scary. And the debt as well. Collectively Canadians owe 14% of our GDP in HELOC debt.
http://www.macleans.ca/economy/money-economy/living-beyond-our-means/

I heard that builders are flocking to Saskatoon, but that it's growing fast too.

14%??!! What are the rates on a Canadian HELOC? Is this as insane as I think it is?

Khao

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Re: Canada's crazy Mortgage Ads
« Reply #8 on: May 08, 2014, 09:03:06 AM »
Canada's market is extremely scary. If anyone here reads Garth Turner at Greater Fool you would be screaming SELL SELL SELL.

I own a condo in Montreal and bought it only two years ago, fml. I love it and want to live in it and don't see it as an investment, but it still crushes me when I ask myself if I should sell right now and go back to renting to cash in. I don't think Montreal is a crazy overpriced market but it might only be my emotions talking. Lucky for me, I bought something that's small, cheap and that my gf and I could afford even on one salary. Plus we have savings and are still trying to reduce our expenses. I still always have that little voice in the back of my head asking if I should sell or not and it's really annoying.

GuitarStv

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Re: Canada's crazy Mortgage Ads
« Reply #9 on: May 08, 2014, 09:24:54 AM »
Canada's market is extremely scary. If anyone here reads Garth Turner at Greater Fool you would be screaming SELL SELL SELL.

I own a condo in Montreal and bought it only two years ago, fml. I love it and want to live in it and don't see it as an investment, but it still crushes me when I ask myself if I should sell right now and go back to renting to cash in. I don't think Montreal is a crazy overpriced market but it might only be my emotions talking. Lucky for me, I bought something that's small, cheap and that my gf and I could afford even on one salary. Plus we have savings and are still trying to reduce our expenses. I still always have that little voice in the back of my head asking if I should sell or not and it's really annoying.

Best to take Garth Turner's advice with a grain of salt . . . he's the same guy who was advising that people in Vancouver need to sell their homes in order to avoid the imminent and unstoppable market collapse . . . in 1998.  He also was a real big fan of the Canadian tech bubble right before it burst.  Anyone listening to him would have lost a lot of money.
« Last Edit: May 08, 2014, 09:32:46 AM by GuitarStv »

Prairie Stash

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Re: Canada's crazy Mortgage Ads
« Reply #10 on: May 08, 2014, 09:28:01 AM »
I was told it was crazy to buy in 2007.  Then I was told to sell in 2009. Then again in 2010-2014.  Now my house is almost paid off; it would be if I wasn't busy investing instead of paying off the 3% mortgage....All in Canada of course.

I laughed at the doomsayers then, now I have a house. Don't be too smug when you compare your rent to owning. I agree everyone's situation is different, however it's tough to say you're better off than a paid for house even if the market crashes.

seanc0x0

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Re: Canada's crazy Mortgage Ads
« Reply #11 on: May 08, 2014, 09:55:58 AM »
Quote
I don't think that most Canadians realize that 20% of our GDP is linked to housing. I found this gem comparing Canada to the US (though it's a year old now):

"Meantime, the share of GDP linked to housing, including construction and renovation, soared to more than 20 percent. A similar U.S. measure peaked at 18 percent in 2005. Canada’s share of construction jobs in total employment was 7.3 percent in January, above the 4.3 percent in the U.S." http://www.bloomberg.com/news/2013-02-27/canada-losing-debt-halo-as-bull-market-housing-peaks-with-carney.html

That's actually quite scary to me. I'd wager Saskatoon is right up there percentage wise with TO, the growth rate is insane right now.

It is scary. And the debt as well. Collectively Canadians owe 14% of our GDP in HELOC debt.
http://www.macleans.ca/economy/money-economy/living-beyond-our-means/

I heard that builders are flocking to Saskatoon, but that it's growing fast too.

14%??!! What are the rates on a Canadian HELOC? Is this as insane as I think it is?

Mine is 4%, but unused. It's there for if my finances have a SHTF moment, which is thankfully becoming less likely over time.

totoro

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Re: Canada's crazy Mortgage Ads
« Reply #12 on: May 08, 2014, 10:05:00 AM »
If you read Garth Turner you need to do your homework and not rely on his self-promoting articles. 

His blog sets him up as an authority, yet he has been consistently wrong in his predictions for many many years.  Also, it isn't writing as far as I'm concerned, I would call it a sales pitch for his financial services and his books. He removes dissenting opinions from his comment section, even those by well-respected folks like Ben Rabidoux and makes personal attacks on those who disagree with his opinions.

That said, real estate does not rise in a straight line and prices will stall or drop generally after a period of higher than expected inflation I believer can expect prices to stall or dip.

Fonzico

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Re: Canada's crazy Mortgage Ads
« Reply #13 on: May 08, 2014, 10:05:40 AM »
Re: Ads
I like the one where the couple finds the perfect house, and then has this little gem of a conversation:
Him: We could get another dog.
Her: ...a baby.
Him: Like a puppy? You mean like a baby dog?

Bahaha! I giggle every time. Poor dude.

Canada is trying to crack down a bit on high ratio mortgages, but yeah, things have been a little wacky for a bit now. I'm not in one of those bubble-y areas, but would probably be looking at $250,000 for a small, modest home. But we've only just started saving for a downpayment, so that's still a ways away, and it's hard to say how things will change before then - we might consider moving to a LOC area by that time.

But I've had a couple friends buy their first houses in the last year, and I know both only put 5% down. No thanks!

Self-employed-swami

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Re: Canada's crazy Mortgage Ads
« Reply #14 on: May 08, 2014, 10:06:31 AM »
In the specific area I am in housing prices haven't increased dramatically. You can still get a decent home for under $100K. However, in making fun of banks and mortgages, here is part of an email I received at work, I don't work for a bank, but this bank is connected to my workplace:

With a 5 year locked in rate of 2.99% or with 100% financing available, your dream home may be closer than you think.

I did not even know that you could get 100% financing in Canada.

You can't get CMHC insured 100% financing, but you can get private lending for whatever people are willing to agree to.

Khao

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Re: Canada's crazy Mortgage Ads
« Reply #15 on: May 08, 2014, 10:34:49 AM »
You can't get CMHC insured 100% financing, but you can get private lending for whatever people are willing to agree to.

Oh you can get CMHC insured 100% financing in Montreal easily with this : http://www.accescondos.org/en/home/

I know, my condo is one of those (it was a pre-mustachian error)

Self-employed-swami

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Re: Canada's crazy Mortgage Ads
« Reply #16 on: May 08, 2014, 10:37:18 AM »
Hmmm.  Interesting.

aclarridge

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Re: Canada's crazy Mortgage Ads
« Reply #17 on: May 08, 2014, 12:51:07 PM »
I rent a downtown Toronto condo. No plans to buy anything in the near future. The way I see it, the only scenario where I'd look stupid in 5 years is if houses continue to increase in value at about 6% a year. That would put the average price of a detached house at what, 965k*(1.06)^5~1.3 mil? Hard to see it happening, especially if rates are even 1-2% higher, or the economy stalls, or lending standards change, etc.

I see less downside potential in my portfolio, so that's where all my money goes.

Is anybody else annoyed that as taxpayers, we could probably be on the hook in some way for any catastrophic losses that may happen over at the CMHC? I really wish govt. mortgage insurance didn't exist...what's wrong with the bank requiring good credit and 25% down, and taking the default risk on themselves? That's what the bank is there for.

RealCanadianSavings

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Re: Canada's crazy Mortgage Ads
« Reply #18 on: May 08, 2014, 10:55:04 PM »
Chances are that the same thing that happened in Vancouver will happen in Toronto. As houses got close to 1 million, they started to stall. It's a big leap for home buyers to go from CMHC insurance (only on properties below 1 million) to having at least 20% down. So, in Vancouver, sales over 1 million are lagging in almost all neighborhoods.

It's fairly easy to get around the CMHC rules for 5% down. A bunch of credit unions offer it up front with cash back mortgages or some other "trick", but you can also finance the 5% through a line of credit, or even put it on your visa!