Home Owners Underwater – BC Mortgage Holders Hang On | Bad Credit Loans

Home Owners Underwater – BC Mortgage Holders Hang On

The writer is a BC Mortgage broker with experience in bad credit mortgage applications.

In the Global and Mail today, Tavia Grant wrote an article on the potential impact of rising interest rates on home mortgage holders.

The smell of not good is in the air. The troubles in Europe, especially now that Greece has been bailed out to the tune of a Trillion Dollars, will have a lasting impact on the long term bonds that drive fixed mortgages.

The article goes on to state that if rates go to 5.25% half a million mortgage holders will be in trouble. Yet the qualifying rate for a five year fixed mortgage is 6.25%; a full point over the under water rate quoted by G&M.

The article goes on to ask the question “Will we see a US style melt down?” The bank statements try to soften the potential impact vis a vis the US experience with the statement by the bank that things never got that lose in Canada.

Yet we see a law suit launched by the Bank of Montreal for approximately 70 million in criminally fraudulent mortgages. What is unsaid and unmeasured by the industry is the extent of fraud for shelter. In this case, criminal charges are rarely brought against individuals who have over stated income and net worth. The truth of the matter is that this practice is routinely done in the industry.

Now we have a qualifying rate that is a full point in excess of the level where mortgage holders are going to run into trouble.

I see rough water ahead.