EXgeMMy
Active Member
I know tons.
I'm in my late 20's so most of my friends have been out of school 5-6 years..
On a side note 51% BEFORE tax for home expenses? Yikes.
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I know tons.
I'm older, and I know a lot of professionals.I'm in my late 20's so most of my friends have been out of school 5-6 years..
For getting a mortgage, it's more like 40% for a total debt service ratio (TDS), or 32% for gross debt service ratio (GDS). It sounds like what you're talking about is GDS. A bank will not give you a mortgage that would cause a GDS of 51%.On a side note 51% BEFORE tax for home expenses? Yikes.
I'm older, and I know a lot of professionals.
For getting a mortgage, it's more like 40% for a total debt service ratio (TDS), or 32% for gross debt service ratio (GDS). It sounds like what you're talking about is GDS. A bank will not give you a mortgage that would cause a GDS of 51%.
http://www.lendingmax.ca/artman/gross-debt-and-total-debt-service-ratio.php
Having low interest rates isn't massaging the numbers. Assuming the maximum amortization period, the lower the interest rates, the lower the monthly payments. It's basic math. The TDS and GDS ratios still apply.they have and they do by 'massaging' the numbers b/c of low interest rates.
how else do you think people are getting these massive mortgages and able to buy 5.8x income with 20% dp ?!?
That article specifically states that Ontario still gets over half of all new Canadian immigrants.http://www.theglobeandmail.com/news...ompts-funding-cut-from-ottawa/article2250589/
So much for the population growth argument to sustain prices.
Having low interest rates isn't massaging the numbers. Assuming the maximum amortization period, the lower the interest rates, the lower the monthly payments. It's basic math. The TDS and GDS ratios still apply.
I think too many people are confusing that 90% number from Vancouver with TDS and GDS ratios. What that number means is that home prices are moving far beyond the reach of the typical Vancouverite, not that Vancouverites are somehow getting mortgages with 90% TDS or GDS ratios.
I don't know many couples who make 150K min and have 20% down.
It's all anecdoctal but in my personal experience I gotta concur with Eug. My cohort is pushing 30 and we're 100 percent yuppies, generally 110-140k household income - I'm very nosy )) so of the 11 I know that have bought houses since 2009 (and willingly divulged costs/payments), only one put down less than 20% (and they likely exceed the average income range.) Two people who are making 120k total can save 25-30 grand annually relatively sweat free if they don't have a tonne of student debt, pay middling rent and live reasonably.
Again, caveat, totally anecdotal, influenced by profession and age and class and education and all that...of course, there definitely are people at the margins pushing the limits of what they can afford - absolutely - but this notion that everyone is buying 500k lofts or 600k semis with only 40 or 60 k down is not always reality
Jeff, nobody here claims "everyone is buying 500K lofts or 600k semis with only 40 or 60 k down". You don't need "everyone" in order to have a bubble. What matters is the size of that marginal batch who are fully leveraged: 15-20% is more than enough to create quite a panic and bubble burst. With our debt load per capita at historic levels it is safe to assume that significant portion of our pupulation carries huge debt. Since you like anecdotal stories: I am tax accountant and have some insight in both corporate and personal finances of fairly significant # of taxpayers. Trust me, there is a lot of people with huge mortgages and other loans compared to their income. Not "everyone" in Iceland, Spain, USA, etc. was fully mortgaged ... but there was enough of them to cause bubble bursts.
Believe me, I get that ... nothing in my post contradicts anything you posted there so I'm not sure why you're responding directly to me with the above post. The question is how large is the marginal batch and how indebted are they - something none of us fully know. What people read in the papers, see on tv and read on the internet are a variety of very absolutist and increasingly defensive viewpoints from *both* extremes backed up by numbers about as carefully selected as a potato for a bag of potato chips. Just like it's easy to get the idea that all is a-ok hunky dory (if one wants to), it's also easy to get the idea that a big chunk of buyers are in that marginal batch, like the original poster who was implying that anyone under 30 buying a place is likely to have to overleverage. They may all be fools, who knows, but they're not all marginal.