The survivor of doubledigit rates
Dave Fisher was caught up in the hype of the housing market in the 1980s. The now 78-year- old engineer had one house, but he wanted something more. One afternoon, unbeknownst to his wife, he decided to plunk down a huge deposit on a dream home in the suburbs (he says she almost divorced him over the decision). The market turned when interest rates climbed, but they eventually paid off their mortgage and still live in the home, which is now worth seven figures.
“I bought this house with a $10,000 deposit in 1981. It was a kind of bonanza before the interest rates went crazy. There were people lined up to buy townhouses all over the place. You could buy one for $30,000 with just $500 down. I was impatient and didn’t want to wait in line. I went further north and I find this development with one- acre lots. They looked beautiful to me so I wrote a cheque. I didn’t have the money in the bank (but) I figured I could get the $10,000 and make a lot of money.
Gradually we started paying the house off. Gradual was okay, but what I didn’t know was the interest rate was not part of the contract. I thought ‘ What the hell, I’ ll get a loan somewhere.’ What happened is the interest rate went to 23 per cent and I was stuck with this house.
I figured, ‘ OK. I’ ll sell the ( first) house.’ But the market was tough because of the interest rates. Somehow I managed to sell my ( first) house for about $ 120,000 to $ 130,000. But this house was $ 280,000 and with extras the mortgage was almost $ 300,000. I had a lot of money to get a mortgage on and nobody would give me one for less than 22.5 per cent. Who has that kind of money? It’s like $ 50,000 in just interest.
I paid for three years. I had jobs at night just to make up the differences but couldn’t do it anymore. I came up with a story that my wife and I were divorcing, she’s taking me to the cleaners. I told them unless the bank lowered the interest rate to 16 per cent, I would walk away and they’d be stuck with it. They agreed and I thought I was in heaven.
Somehow or other, I persevered. As you can see, I survived, but I’m one of the few people. A lot of friends — lots — didn’t and lost their down payments.
I tell people be extremely careful and don’t extend yourself too much because you have no clue of what can happen in the world. Hopefully it never happens again.”
I WAS STUCK
Dave Fisher