The most recent mortgage rule change that has yanked the welcome mat from underneath first time home buyers has put the spotlight on Posted Mortgage Interest Rates.
The Posted Mortgage Interest Rates used to serve just two purposes.
Number one is the banks use the posted mortgage interest rate to rip off Canadians that pay off the mortgage before the term is over.
Number two is the banks use smoke and mirrors to fool Canadians into thinking the bank is giving them a break from the posted mortgage interest rate.
The banks have the full blessing of the Government of Canada to keep the interest rate rip off scam going. The banks want Canadians to believe that the Posted Mortgage Interest Rates are what they normally loan mortgage money at. That’s as phoney as a three-dollar coin. It’s a mythical number the banks use to create confusion and rip off Canadians because NO ONE pays the Posted Mortgage Rate.
Rip Off number one is the Payout Penalty Scam run by the banks and sanctioned by the Government. Life happens and people sometimes have to move or they might win the lottery and want to pay off their home. Whenever someone chooses to pay off their mortgage debt early the banks cry foul and impose a Pay Out Penalty based on the bank supposedly lending that same money at the Mythical Posted Mortgage Rate. The difference can be so high that it forces people to be held hostage to a house that no longer works for them. Or suck it up and get Posted Mortgage Rate Ripped Off by the Banks.
Rip Off number two is the Discount Mortgage Rate Scam run by the banks and sanctioned by the Government. The banks want us to believe that everybody pays the Posted Mortgage Rates except us. We are special and the banks are going to give us a Discount off the Posted Mortgage Rates. The Big Problem with that is nobody pays posted rates. Nobody has paid posted rates since the internet pulled back the curtain on that bank scam.
Now the Mythical Posted Mortgage Rate is being used by the Government to Stress Test borrowers that have a low down-payment. So instead of qualifying for the Actual Mortgage Interest Rate that you will be paying monthly, you must qualify at the Artificial Posted Mortgage Rate that nobody ever pays.
This new rule based on the false rate banks use to penalize and trick Canadians with is now being used by the Government to keep a Dream Home for a lot of Canadians just a Dream. It’s creating forced density as families double up, staying with in-laws longer than planned.
The Government wants you to be ready for interest rate hikes in your mortgage. At the current rate of approximately 2.5% the banks get about 45 cents of every dollar of your mortgage payment with the rest going against the principal. At the phoney posted rated of 4.64% the banks would get about 70 cents of every dollar of your mortgage payment with 30 cents going to the principal.
If actual mortgage rates do go up to 4.65% which is what the Government and banks seem to be setting us up for, it would be a transfer of wealth from Canadians to banks. Twenty-Five cents on the dollar that used to go towards paying off the original principal of your mortgage would instead go to the banks as pure profit.
25% of every mortgage payment in the country would go to the banks
instead of reducing the household debt of ordinary Canadians.
And reducing the debt of ordinary Canadians is what the Government says they want and why they came out with this new Stress Test Rule that uses the Mythical Posted Mortgage Rate.
Posted Mortgage Rates are a Rip Off used by the banks to penalize and trick Canadians and is now used by the Government to lower Government Backed Insured Mortgage Debt.
This will not decrease ordinary overall Canadians debt. It will decrease the amount of debt they have that is 100% backed by the government, but overall debt will still be there.
Posted Mortgage Rate Rip Off now has three scams used against ordinary Canadians.