Banks May Force Homeowners to Re-Qualify for Mortgages at End of Every Term
For 4 years I’ve been saying the same things. It ain’t rocket science. You don’t need to be a Nobel Laureate in literature, and yes you may even spell stuff funny in English. But it doesn’t change the simple message.
You have a bubble caused by a massive worldwide credit bubble. Composed of 3 fundamental variables.
Loan terms that have been excessive to the repayment ability of the borrower.
Finance that has been too easily available for borrowers.
Record low interest rates.
That has caused the perfect conditions for ridiculous speculation, which has spun, in particular Vancouver property prices into ridiculous prices.
For some time we have heard that they won’t raise interest rates and therefore the bubble wont pop. That ignores the other two issues.
So what have we seen so far.
Loan Terms: We have seen the 0/40 mortgages disappear, then the 5/35 disappear. Now we are back to 5/30. Anybody for 10% down /25 year mortgages?
Easy credit disappearing: As we can see from above, the free money that has flowed in the past is now drying up! Now you have to prove that you can repay the loan.None of this - if things go bad ill just sell it. No! They have lent you the money and they want you to pay it all back.
And if you can’t requalify, well you’ll be forced to sell! And that’s even if you haven’t missed a payment.
And that’s before they get to interest rates.
If you’re smart you’ll get out now. You will probably never ever have the chance to get the single biggest pay day of your life then right now, even as the market is starting to slide.
Because as this baby slides - she's going a long way down and a long way past where ETB bought in at.
Geezer: "What if somebody listened to Taipan and doesnt buy".
Well, they will thank their lucky stars, that they arent one of the thousands of miserable souls who cant sell their properties in 2013!