Mortgage-Geek History

Mortgage-Geek History
The average person if stopped on the street and asked; Are today’s low interest rates driving up house prices? Would likely say ‘yes’.

They would be wrong.

And we can let their lack of understanding pass, after all we can agree that math mostly sucks.

However to ask a Realtor, banker, or your Mortgage Broker this question and get the same answer is another story, for them to say ‘yes’ to this question is a large red flag.

Following are some basic numbers that might surprise you, unless you are a Mortgage Broker.

 

2007

A buyer with 10% Down and a $100,000 annual gross income.

At the time rates were ~4.99% and amortizations were capped at 40 years

Maximum mortgage amount?

~$630,000

 

 

Moving along…

2016

A buyer with 10% Down and a $100,000 annual gross income.

At the time rates were ~2.49% and amortizations were capped at 25 years

Maximum mortgage amount?

~$630,000

 

But then something happened, in response to rising prices and an apparent lack of understanding as to basic math, our Federal Government changed the rules.

And our average person on the street that answered that first question, they were totally cool with things being tightened down, until they went to apply for a mortgage themselves…and found this new reality:

2017

A buyer with 10% Down and a $100,000 annual gross income.

With rates still ~2.49% and amortizations still capped at 25 years.

Maximum mortgage amount?

~$508,500

 

The exact same household with 100,000 annual income, impeccable credit, a 10% down payment was told, in this very competitive market with a 0.27% arrears rate, a group of households that made it through the 2008/9 meltdown just fine, that now, in 2017, they needed to have their purchasing power cut back by ~$121,500.

 

This is what your Federal Government has done for you lately.

If you are unhappy about this take 3 minutes and take action by using this super simple tool to send a message to your MP

Have a great Long Weekend!

Dustan

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