Rich people more likely to default on mortgages: report
Not, uh, not the best week to be well-off here in North America.
Yesterday, we passed along info in this space that ousted CEOs were having a pickle of a time finding new work, slugging through an executive job market that didn’t care much for their pedigrees or résumés.
Today? We turn to housing. It’s no breaking news that it’s been a tough stretch for mortgages – first for the working class, then the middle class – but the rich were largely able to insulate themselves from such defaults. Liquid assets and the initial job security of white-collar occupations provided refuge from much of the downturn.
Of course, “cyclical” is a nasty term during the recession – it means no one is safe. The affluent, long without the economic pressures facing the rest of the world, are no longer safe.
The New York Times reports that the wealthy among us are defaulting on their mortgages at a rate that “greatly exceeds the rest of the population.”
According to the paper, more than one in seven U.S. homeowners with home loans exceeding $1 million have defaulted on their mortgages. That figure is in stark contrast to the one in 12 sub-million-dollar loans that are defaulted on by the rest of the United States.
“I’ve never seen the wealthy hit like this before,” a real estate source told the Times. “They made their plans based on the best of all possible scenarios – that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”
Indeed, while American defaulters are in “denial” about losing their homes, notes the Times, what are conditions like for the wealthy here, north of the border?
Certainly, there are fewer million dollar homes in Canada – a country with an average home price of about $343,000, according to the Canadian Real Estate Association (CREA) – yet how have the rich Canucks responded to their pricey mortgage responsibilities in rough economic times?
Similar data isn’t immediately available for wealthy Canadian mortgage defaults, but several industry sources told me today that the same problems for million dollar-plus loans “certainly” weren’t as prevalent in Canada as they are in the States.
There may be many reasons for this, surely: the subprime crisis not hitting us nearly as hard as the U.S., or mortgage insurance being a “pillar” of Canada’s strong housing market, according to the Montreal Gazette.
Until we hear for sure, though, we won’t know one way or the other. So, we turn to anecdotal evidence.
Canadians: have you seen more For Sale signs up on plush estates these days, or is this the U.S.’ problem and not ours?
By Jason Buckland, MSN Money
Posted by: Al | Jul 20, 2021 3:24:34 AM
Call me crazy but if you have a mortgage, I wouldn't concider you rich, not in my books. Any idiot
can do a payment plan.
Rich people don't have debts. Do you think Bill Gates has a car loan and a mortgage? no, it's only losers who carry debt.
Posted by: Leah Desgagne | Jul 20, 2021 2:25:59 PM
Aaah, what people fail to understand about being rich, is that its not how much money you HAVE, its how much you have saved up to be able to qualify and purchase a home in excess of $1mil - so haters, understand that!
Now the difference in the Canadian home purchase system, to the USA, is down payment, credit history, job security, home value, qualification (proof of job history to back your purchase or the banks can do without your measly few dollars of interest).
Down pmt is min 5% to those who show decent job history (not just any job, but a career with salary growth history, like fields of Engineering, finance, medical, marketing, etc) So if you're a seasonal labourer, chances are you you have to have $250k in your bank account (20% deposit and property transfer taxes,extras etc) and a job paying you and spouse $170k for the last 3 years. Because of our immigration policy (excess of 210000 new immigrants a year) and demand for housing, rental rates are higher, so if you cannot afford your mortgage, rent a cheaper place and rent out your primary residence.
If you can barely qualify for a mortgage here, banks do not give it to you anyway. and then raise the rates on you after 2 years, they never have, and they don;t seem to have that in the works, hence they're still here.
Bottom line, if you want to buy and live here, you have to be able to afford to do that or else gripe constantly and rent and I guarantee you that once you live here and enjoy or no-gun policy and multicultural society, you'll bit the bullet and save to be able to get into the market.
Posted by: May Robertson | Jul 21, 2021 1:18:59 PM
To Leah,
It's a lot easier to get a mortgage, no matter your occupation ( profession or trade ) with CMHC, Genworth or the old AIG now owned by the Ontario's Teachers' Pension fund. All you need is 5% downpayment, and some lenders have Cash Back programs allowing for even less albeit at a slightly higher rate. Lenders are a whole lot more approachable these days, and competition for business is keen; and I say this as a mortgage broker.
The reason that we won't have the data that the US market has is that our market has held up so far and theirs have suffered a dramatic collapse in general. For more details you could go to economist Robert Shiller's site www.irrationalexuberance.com. We have plenty enough of million dollar properties in Vancouver, B.C., and I'm sure in the major centres back east too.
Al,
You have a point there. Being highly leveraged does not mean being really rich. It is Net Worth that counts.
Posted by: Vancouver Mortgage Brokers | Jul 22, 2021 9:00:47 PM
I agree with you May. Richness is measured by net worth. Although, rich people have the rights if they want to get a mortgage.
Posted by: Zionist media control | Jul 23, 2021 9:02:48 AM
More BS from the jews at MSN. Look up the Bankruptcy Trustees in your city, almost all are jews as are their RICH clients that file for bankruptcy and keep millions in real estate and in the only country they have any loyalty toward, Israel
Posted by: Zionist media control | Jul 23, 2021 9:18:33 AM
And if you can't afford the interest rates, thank the jews that invented USURY and control the banks.
Posted by: Dr J. Steed | Jul 23, 2021 10:54:38 PM
I am filthy rich and I have NEVER defaulted on a mortgage or laon, PERIOD! What a bunch of CRAP you are reporting!