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mortgage math means crisis looming

It has been widely reported that around two-thirds of the Canadian mortgage market will renew their terms between 2024 and 2026. Half coming in 2024 and 2025.

And they are shitting bricks, these are typically people that took out loans on Million dollar houses, and fixed rate or variable, will have to refi and accept what ever rate is available. Some of these variable rate products that were fixed payment, are paying below the amount of interest owed, which is adding to the principal. When they renew, the lender can ask for higher payments at higher rates, and many just don't have it... Oh but there are lots of jobs... right?

Not if your a mortgage broker, construction worker, or work for Twitter, none of these industries are in hiring mode, and in fact layoffs are happening. Banks have started laying off, as the need for their products wain, and new home applications are down especially in Toronto, our biggest area. Prices are down except for BC, what's with that? Is the east drinking a different flavor of Kool-Aid?

Mortgage defaults to rise

"Delinquency rates are still at record lows. But that’s because most renewals haven’t happened yet. Historically, there is a two-year lag between policy rates and mortgage defaults, meaning we’re in for a steady rise in defaults starting in early 2024."

Sorry to bring you all this bad news... but things don't keep going up forever, although as of late yes, markets are looking good. But wait, check back 2 years... they have done nothing. There has been 0 capital growth in the last 2 years, so explain to me, how you are making so much money in your equity portfolio? Dividends? Yes. GIC's, and now, some bonds are coming back. The predictions are now that interest rates have topped, Canada Bonds, and bonds in general will be the next big play. So where does that leave stocks? We have already seen tech crater, and then come back, but the most volatile, will be the hardest hit. Preferred and Blue Chips will fluctuate, but probably will benefit as the defensive play, who knows.

"Banks have already significantly increased loan-loss provisions in anticipation of rising delinquencies (up $7 billion in the first three quarters of 2023, from $3.2 billion over the whole of 2022)"

Ah, do they know something we don't? yes they do, they have the money, they make the money, and they keep the money. But they are going to lose a lot of money, and they know it, so don't expect your Royal Bank Stock to skyrocket in the next year.

I really need advertise the blog. I am cataloging about 3-4 stories a day to reflect on, and just don't have the time to add my 2 cents. GetOver60 is not just about bad news, its about how to survive. Next we will talk about some techniques to get thru this.

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