Sales of previously occupied U.S. homes in September fell for the fourth month in a row, grinding to their slowest pace in more than a decade as prospective homebuyers grapple with surging mortgage rates and a near historic-low level of properties on the market.
In Canada you have to refinance every 5 years (rarely you may be able to do 10)
Coming up pretty quick where there probably won't be any sub 5% plans anywhere.
That's insane. So if folks buy something they can afford, then the market goes to shit, inflation takes off, and the government uses interest rates to reign it in; it then victimizes all those folks who bought homes they could absolutely afford, but now can't because the rates of their loans changed underneath them!?
That's barbaric.
Same in UK. Going from <2% to >5‰ has been a kick in the teeth.
However you buy knowing this is the case and you should financially plan for an eventuality of double or triple rates, which I did.
It might sound barbaric, but when people were getting a dropped rate on a new deal every 2 years for over a decade, I didn't hear any complaints. The scale rises and falls on both sides!
We have those too. You can get a fixed rate or flexible rate. The flexible is always a little lower than a fixed due to the nature of it. Everyone in the US sensed rates were near the bottom though, and refinanced to fixed 3% two years ago.
Ah interesting. You only ever hear about whole term fixed rates here, with regards to US.
It is very interesting, I had no idea fixed rates are only a thing here. I couldn't afford my current house if rates went up. That's why a lot of first time buyers become house poor. They are willing to stretch their finances to get an expensive first house, knowing that their income will increase over time decreasing the cost of their house comparitively. It's also why the existing housing market supply is essentially gone in the US. Everyone with a fixed 3% will never sell. It's as close to a free loan as it gets. Inflation is already shrinking what I owe in comparison to present day value by more than my interest rate. There is zero reason to sell my house, even if I couldn't afford it for some reason, it makes more sense to rent it out to keep this loan.
Yeah, we have something called a stress test where even if the rates are 3% you can only get a mortgage if they feel you can still be okay with the payments if the rates go up, but we passed that point awhile ago already. So even if people passed the stress test they may not be able to afford what the rates are now.
That's insane. We have fixed rates that are exactly that, fixed. And mine, and all of the US that's owned for more than 2 years, is fixed at around 3%. That's a big part of why these particular metrics are what they are; the number of houses being sold. Price aside, it makes no sense to get rid of that loan.