0.5% of Home Get Foreclosure Notice
April 29, 2008
– Comments (3)
Amazing, in the last quarter more than 0.5% of homes, 1 in 194, got foreclosure notices in this past quarter.
I worked in the bank through Vancouver's 1980-1982 bubble burst and I saw people lose their home, but my sense is this one quarter is the same as the total we had in that period. People had way more equity and were not mortgaged to the hilt.
As I've stated before, Canada has a far more stable financial system just from the fact that mortgage rates are only guaranteed for a maximum of 5 years, usually. There are some offered at 7 and 10 years but the premium on the rate charge means they aren't used much.
So, when interest rates sky rocketed in the late 70s and early 80s people saw their payments go up a lot when they had to renew their mortgage, but they all elected 1 year terms. Most mortgages were under $50k, indeed, I only remember one mortgage over $50k in the small place I worked. So, people had to rein in spending and saw their mortgage payments go up. In two-three years rates were back to normal and only one year of the rate reset was really hard.
Many people had made extra payments on their mortgage. Indeed, even though there were people really struggling, it was also a period where I saw many people paying off their mortgage on a house, not a condo or townhouse, in their 30s. People had the income to absorb the hit and it eased up fairly quickly.
But then, when I look back at Vancouver's economy from this and I considered my own employment history, all of the financial institutions I worked for went under. A travel agency I worked for went under. A specialty chemical place I worked for went under. None of the businesses I worked for between 1979 and 1986 survived. I didn't really consider how profound that is until very recently. I just knew that I felt very put down a lot for not having a steady employment record.
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