TrickyRicky
Senior Member
"which is why i asked, does anyone know one single person who took a 40 year mortgage who actually intends to take that much time to pay it off?"
Intention is one thing but we have no idea because pretty well no one has ever (domestically) paid off a 40 year mortgage in Canada. I would also take people's intentions with a grain of salt. Debt and consumption beyond one's means are this era's taboo subjects. People will relate to you intimate details of their personal lives but on the subject of debt people don't ask, don't tell and lie. The question is why were the majority of new home buyers taking 40-year mortgages? Gei, I don't believe it is because they are weighing the cost benefit of a forced structured versus flexible personally guided principle re-payment scheme. They were getting 40-year mortgages because they couldn't afford to buy any other way. So now we have a chunk of buyers who can only just afford monthly payments with a 40-year mortgage travelling into a headwind of inflation, falling real estate prices, rising property taxes, rising utility costs, tightening credit conditions and potential job losses. Now consider that the average Canadian saves nothing, lacks the fiscal discipline to come up with a 25% down payment, and has seen their real income growth stagnate for decades.
Intention is one thing but we have no idea because pretty well no one has ever (domestically) paid off a 40 year mortgage in Canada. I would also take people's intentions with a grain of salt. Debt and consumption beyond one's means are this era's taboo subjects. People will relate to you intimate details of their personal lives but on the subject of debt people don't ask, don't tell and lie. The question is why were the majority of new home buyers taking 40-year mortgages? Gei, I don't believe it is because they are weighing the cost benefit of a forced structured versus flexible personally guided principle re-payment scheme. They were getting 40-year mortgages because they couldn't afford to buy any other way. So now we have a chunk of buyers who can only just afford monthly payments with a 40-year mortgage travelling into a headwind of inflation, falling real estate prices, rising property taxes, rising utility costs, tightening credit conditions and potential job losses. Now consider that the average Canadian saves nothing, lacks the fiscal discipline to come up with a 25% down payment, and has seen their real income growth stagnate for decades.