The fallacy of 5%

So I bought a house a couple years ago and I'm slowly but surely paying that sucker down. One of the things I did when I bought was pay the minimum downpayment of 5%. So I ended up shelling out about 15K. If you've never bought a house, or you've never had to pay the minimum, here's what happens.

The banks buy CMHC insurance on any home you buy for less than 25% down. But the truth is the home purchaser is buying it because the bank (who makes billions a year) and will make hundreds of thousands of dollars from your mortgage) is going to fuck you for that amount. For a 5% downpayment, you have to pay 2.75%. Thats over half of your down payment. So basically, all that scrimping and saving you did is cut in half buy a really awesome Canadian agency, who according to their website, is helping you buy a home. And the bank.

So in the end, you end up putting down 2.25%, minus the 1000 or so you'll give a lawyer to print off a boilerplate mortgage contract and spend 15 minutes going over it with you.

So what do you get? Well, nothing. I mean, if you believe their website, you get a lower interest rates and can buy a home sooner. In reality, if there was no CHMC, banks would still lend people money to buy homes, because they earn huge amounts of money.

So you think, cool, the bank is insured so if I can't pay my bills they won't take my home. No, not really. If you can't make your payments, even though the bank is insured, even though they're borrowing money from the government at .25% and lending it to you at over 3%, they'll still foreclose on your house. They're cool like that. So basically they're fucking the people that need help the most.

So, how do we avoid the CMHC? Well, we can't unless we can afford 25% down. Does this system make sense? Nope. Can we fight it. Probably, but people don't realize this is happening until they have to fork over half the money they've saved. By then its pretty much too late.

I'm a naive person just trying to make my way through the world, but to me this feels like the government working for the banks, not the people. The only reasonable and viable answer is to throw rocks at bankers and the leaders of the CMHC. I suggest something palm sized with enough weight to do some damage, but light enough to get some velocity on.