this post was submitted on 09 Jul 2023
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Making mortgages unaffordable for the people buying and sitting on multiple investment properties, because the government refuses to do anything about it.
Yes, just forget about all the regular people who bought homes to live in. They can all fuck off too, because you’re mad at greedy landlords. The issue is more complicated than you think. Most recent homeowners are regular, fiscally response people who decided to buy a home they need to live in, and did so by passing a very stringent stress test, which was how you are supposed to approach buying a home. Now because the government does nothing about inflation, it’s up to the BoC to raise rates because that’s literally the only thing they can do.
And people like you cheering from the sidelines as regular people get thrown under the bus, because you hate greedy property investors
You think higher rates are going to hurt wealthy investors while completely ignoring the fact that they will hurt regular homeowners who live in their homes a LOT more.
I mean, really, all I want is a home to live in, and if that means all the people who overleveraged mortgages to buy up the entire market with no intention of living in them have to put these homes back into the market, I'm game.
It doesn’t work that way. The higher rates are going to negatively affect regular people who did NOT over leverage themselves, and bought homes to live in much more than it will affect wealthy investors.
It will also make it harder for you to buy a home. If prices drop slightly that’s great, but if it’s because interest rates are higher, then it will be just as unaffordable for you since you will still need to borrow most of the money for the home, and the cost of borrowing just doubled, meaning your far less likely to even qualify for a mortgage.
Higher interest rates don’t only affect greedy over leveraged investors.
Regular people are seeing their monthly mortgage payments increase by up to ~40%.
I get it. You’re probably so frustrated at never getting to own a home that you’re fine with seeing this nightmare unfold because all you have to do is cover your eyes to the parts you don’t want to see.
You will never afford a home if rates keep rising either.
Prices need to drop more than slightly to make buying a home feasable, and my partner and I combined make six figures. Rates have been incredibly low over the past decade and it's led to wealthy speculators and companies buying everything up, and it's completely unsustainable. This is correcting things to be closer to where they were historically when housing was affordable.
Yes I understand all of that. My point is that this “correction” isn’t actually going to make it more affordable for you. So far the market is holding quite steadily even as rates have doubled recently.
Unless you’re paying in cash, any price drop due to higher interest rates won’t make it easier for you because you’ll have to pay those higher borrowing rates.
Maybe as millions of regular people come up for renewal over the course of the next few years, and the higher rates force some to sell, you will somehow be able to snap up your dream home in cash, beating out the wealthy who have more than enough cash to compete with you.
Repeat after me: higher rates will not make it more affordable for you. The rich will still have more cash than you and will be far less affected by higher rates, and they will be buying up property in even higher proportions now. Because those of us who aren’t rich still need to borrow, and borrowing rates are much higher now.
I understand how the problem was created and I share your frustration but simply raising rates at this speed is not going to solve the issue of affordability .
Housing is unaffordable along with many other essentials because our governments refuse to adequately tax the rich, leaving them more than enough capital to seize markets and in fact giving them financial tools to avoid taxes which drive up prices.