Real Estate

Locked: Five-year fixed mortgage rate in Canada falls to 1.99% for first time

  • Last Updated:
  • Jun 25th, 2020 1:18 pm
53 replies
Newbie
May 7, 2020
6 posts
1 upvote
Good to see fixed rates finally moving too
Deal Fanatic
Oct 7, 2007
7464 posts
3575 upvotes
It's almost like not even having a mortgage. I mean like an interest-free loan.
Deal Fanatic
Feb 22, 2011
7251 posts
7665 upvotes
Toronto
choclover wrote: It's almost like not even having a mortgage. I mean like an interest-free loan.
The crazy thing is if housing just keeps up with inflation you are almost living for free. And housing is the biggest expense in ones life.
Deal Addict
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Jul 8, 2010
1376 posts
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Ontario
mazerbeaner wrote: The crazy thing is if housing just keeps up with inflation you are almost living for free. And housing is the biggest expense in ones life.
Can you please explain how do i live for free? This is the example - Buy property valued at 900k, 20% down.
Member
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Oct 31, 2019
286 posts
310 upvotes
Isostar wrote: Can you please explain how do i live for free? This is the example - Buy property valued at 900k, 20% down.
On paper you'd be making $20k/yr tax free through inflation, which more than offsets property tax and other costs. Of course with a mortgage you're also losing interest payments but that goes down over time as you pay off the principal.
Deal Fanatic
Feb 22, 2011
7251 posts
7665 upvotes
Toronto
Isostar wrote: Can you please explain how do i live for free? This is the example - Buy property valued at 900k, 20% down.
I said if it keeps up with inflation. So even if your $900k property only goes up by 2% per year then you will sell it in 50 years for $2.4 million. This would more than triple your interest expense, and easily cover other expense. You also would have lived without paying rent for 50 years. Which by then could be 5-10x higher than it is today.

This is because 1 the property is leveraged 500% and 2 you only pay interest for the life of the mortgage.
Deal Addict
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Jul 8, 2010
1376 posts
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Ontario
mazerbeaner wrote: I said if it keeps up with inflation. So even if your $900k property only goes up by 2% per year then you will sell it in 50 years for $2.4 million. This would more than triple your interest expense, and easily cover other expense. You also would have lived without paying rent for 50 years. Which by then could be 5-10x higher than it is today.

This is because 1 the property is leveraged 500% and 2 you only pay interest for the life of the mortgage.
So i am living free after 25-30 years? Not tomorrow or next month? Yeah, exactly what you said....
Deal Addict
Dec 4, 2016
1850 posts
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choclover wrote: It's almost like not even having a mortgage. I mean like an interest-free loan.
Maybe in GVA, where property tax and upkeep are small relative to the value of the house. Very different story in Ottawa and rest of Ontario outside GTA.
Deal Fanatic
Feb 22, 2011
7251 posts
7665 upvotes
Toronto
Isostar wrote: So i am living free after 25-30 years? Not tomorrow or next month? Yeah, exactly what you said....
Yea exactly, once you have all the basics covered you start thinking about the future. Given short term fluctuation and high transaction costs you need time.
Deal Fanatic
Nov 24, 2013
6142 posts
2897 upvotes
Kingston, ON
BlueSolstice wrote: Maybe in GVA, where property tax and upkeep are small relative to the value of the house. Very different story in Ottawa and rest of Ontario outside GTA.
Property appreciation has long since spilled out of GTA and into Ottawa and Kingston too. Can’t get a detached house in Kingston under ~$300k now which isn’t much at the GTA scale, but in terms of annualized percentage increase it’s been averaging upwards of 5% per year. Can easily exceed property tax + interest.
Deal Fanatic
Oct 7, 2007
7464 posts
3575 upvotes
BlueSolstice wrote: Maybe in GVA, where property tax and upkeep are small relative to the value of the house. Very different story in Ottawa and rest of Ontario outside GTA.
Not in terms of dollars that need to be paid out. Property taxes are sky high here and maintenance is also not cheap if you have to hire people. I don't think a lot of first time buyers realize how much it costs to actually own a home even if the home was gifted to them. It makes renting look like a bargain given today's pricing for everything. I anticipate some people will be leaving the larger cities the higher taxes get because it is just plain unaffordable. And what do we get for it?
Deal Addict
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Dec 13, 2016
3477 posts
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And Canadian dollar is going down the toilet too.

This is just ripe for second wave of coro..... I mean Chinese investors to swoop the rest of the property for cheap.

I am noticing waterfront condos are being sold for less than 900pswf these days.
Jr. Member
May 31, 2017
105 posts
120 upvotes
BiegeToyota wrote: And Canadian dollar is going down the toilet too.

This is just ripe for second wave of coro..... I mean Chinese investors to swoop the rest of the property for cheap.

I am noticing waterfront condos are being sold for less than 900pswf these days.
The dollar is nearly back to where it was before the pandemic hit. Chinese investors won't care about the dollar that much...right now any that haven't already are just happy to get money out of HK. And I have zero problem with them investing it here. Frankly, the entire "chinese investor" thing is overblown and really doesn't impact much outside of Vancouver and perhaps Markham/Richmond Hill. The real issue is supply, RE Agents and their methods, and large developers sitting on land to control prices vs. build times...at least, that's the case in Ontario.
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Dec 13, 2016
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BatCountry wrote: The real issue is supply, RE Agents and their methods, and large developers sitting on land to control prices vs. build times...at least, that's the case in Ontario.
And the rest of the world

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