Comments on: CMHC mortgages based on posted 5 year rate

By: April 19th effect on presales | Vancouver Condo Info

April 19th effect on presales | Vancouver Condo Info — Mon, 19 Apr 2010 14:34:06 +0000

[...] talked a lot around here about the new rules and how they’ll affect interest rate approvals and how suite income is calculated, but there’s one aspect of the new rules that I [...]

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By: Vic

Vic — Tue, 09 Mar 2010 23:03:44 +0000

As much as I would like to see the Vancouver RE drop like a rock due the new rules inposed by the government, at least I feel better that some potential buyers won't get caught in the buying frenzy and experience financial hell in 5 years time.

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By: patriotzed

patriotzed — Tue, 09 Mar 2010 14:32:53 +0000

@crabman:

IMHO the Efficient Market Theory is total crap. It says that all information available is immediately acted upon by investors, and no investment strategy is better than a coin toss.

You can't have an efficient market if: 1. Bears can't sell short. 2. Bulls can get financing not properly priced for risk (CMHC). The RE market is not efficient because it can't be. That's not a claim that any other market is efficient BTW.

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By: Disbelief

Disbelief — Tue, 09 Mar 2010 07:15:56 +0000

That explains a lot. The bulls are borking each others brains out.

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By: No Longer Looking

No Longer Looking — Tue, 09 Mar 2010 06:58:52 +0000

Or in this case, a systematic attack on a blog. Dave’s multiple personalities are really stinking up this place.

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By: Drachen

Drachen — Tue, 09 Mar 2010 06:09:00 +0000

I should add - Dictionary.com

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By: Drachen

Drachen — Tue, 09 Mar 2010 06:08:11 +0000

@Mark Downs: "bork /bɔrk/ Show Spelled[bawrk] –verb (used with object) to attack (a candidate or public figure) systematically, esp. in the media."

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By: VHB

VHB — Tue, 09 Mar 2010 06:07:06 +0000

Bork you.

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By: Mark Downs

Mark Downs — Tue, 09 Mar 2010 05:54:29 +0000

@bigtimemortgageborker: Just how does one go about borking mortgages anyhow?

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By: Once again

Once again — Tue, 09 Mar 2010 05:49:59 +0000

131 So that means the new rules will have zero effect. Maybe next time bears...so sad

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By: bigtimemortgageborker

bigtimemortgageborker — Tue, 09 Mar 2010 05:32:54 +0000

I'm a big mortgage borker and I talked to my bank reps and they all said that the 5 year discount rate will be used for 5 year terms or greater. Most people get 5 year fixed anyway.

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By: superboomtime

superboomtime — Tue, 09 Mar 2010 05:29:30 +0000

1) Interest rate continue to go DOWN 2) Vancouver condo market continue to BURN RED HOT LIKE FIRE 3) Olympic distraction over buyer back in buying mood What does it all mean? It means it's time for another vancouver boom time. Because remember bears VANCOUVER REAL ESTATE NEVER GO DOWN

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By: scoop

scoop — Tue, 09 Mar 2010 05:19:13 +0000

On the discussion re: 5-year posted vs. 5-year discount, let's look at what the Minister's backgrounder says:

Currently, the interest rate used to determine the mortgage payment for these calculations is either the rate fixed for the term of the mortgage or, in the case of a variable-rate mortgage and mortgages with terms of less than three years, the greater of the contract rate and the prevailing three-year fixed rate. The adjustments to the mortgage framework will require mortgage insurers to ensure that borrowers qualify for their mortgage amount using the greater of the contract rate or the interest rate for a five-year fixed rate mortgage when calculating the GDS and TDS ratios.

Note: (1) it doesn't say that the 5-year rate only applies to terms less than 5 years, (2) while it doesn't say "posted" or "discount" the analogy would seem to be to the three year rate under the existing rules which is the posted rate. It's not conclusive but I would say this lines up better with the release from reknab's bank (no doubt reviewed by their legal department) than the Mortgage Trends blog posting.

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By: arit

arit — Tue, 09 Mar 2010 05:18:41 +0000

Oh tincup, How will I sleep at night after seeing that? What were they thinking? Did they never ever clean that house? My wife wouldn't take it for free (but she is 'a bit special'). Can someone explain to me what is up with the bull attacks? What? Is it too lonely at the open houses? The phone doesn't ring at the agency? If we bears are so deluded, and 'only 37 crazy contrarians', so be it! Go buy three, tell your huzbah to buy three and put your money where your mouth is. What are you doing here? We bears are insignificant, a tiny blip in the radar... Why do you care about us? Go invest in real estate and make sure to take a big fat mortgage before April 19th. Leave us alone to 'cry in our basements'. Don't waste your time here, the boat is sailing, you don't want to miss it. RealEstateNeverGoesDown ThereIsNoLandMakingMachine VancouverIsLandlocked TheRichasiansAreBuying and TheOlympicsAreComing. Best of luck, arit

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By: tincup

tincup — Tue, 09 Mar 2010 04:48:07 +0000

Someone posted this eastvan listing on Garth’s blog. Check out this sweet eastvan estate, only $580k:
http://www.realestateburnaby.c.....viewdetail

What I like best is the dramatic, emotional panning of the camera. All it needs is a soundtrack.

I’d have to ask the listing realtors if it was really necessary to include all those interior shots. How about one shot of the exterior, say “land value only” and leave the rest up to the imagination.

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By: oneangryslav2

oneangryslav2 — Tue, 09 Mar 2010 04:26:48 +0000

@Patrick: You forgot about the opportunity cost of not investing the original down payment (80,000).

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By: bestplaceonmeth

bestplaceonmeth — Tue, 09 Mar 2010 04:24:04 +0000

You know what isn’t “just bear porn”?

Another round of severely BEARISH daily numbers.

Vancouver All Areas*
Attached & Detached
as of:03/08/2010
New Listings – 335
Back On Market Listings – 1
Price Changes – 102
Sold Listings – 63

That’s just the BEAR naked reality.

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By: Purp

Purp — Tue, 09 Mar 2010 03:55:22 +0000

Mark Downs 106 - I should have been more clear, there isn't really a problem with the calculations, just the assumptions. Until we know for sure what the changes are in terms of qualifying interest rates, these crazy calculations are just 'bear porn'.

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By: Purp

Purp — Tue, 09 Mar 2010 03:46:00 +0000

Domus 118 "...Could it be that they are not setting down the rules clearly so that they can play it by the ear? Wait until early April, see how things look, then set the standards for implementation..." -- I was wondering about that as well, pretty shrewd politically if it's true.

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By: Disbelief

Disbelief — Tue, 09 Mar 2010 03:40:38 +0000

Patrick That is the truth plain and simple. Lots of luck trying to convince Dave and other thick skulled bulls on here.

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By: DEFAULT NAME

DEFAULT NAME — Tue, 09 Mar 2010 03:26:14 +0000

@Furlong is Paranoid: Wow a waterfront condo, you must be a real pimp. Your more annoying than the bulls...

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By: logic

logic — Tue, 09 Mar 2010 03:08:51 +0000

or tims donuts?

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By: DEFAULT NAME

DEFAULT NAME — Tue, 09 Mar 2010 03:04:04 +0000

Would those be real donuts or nominal donuts?

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By: domus

domus — Tue, 09 Mar 2010 03:01:05 +0000

Interesting thread, I actually find the discussion about the new rules very helpful. I said it before and I will say it again: until the government (Flaherty) and the CMHC do not clarify the actual implementation of the new rules, there is space for subjective interpretation. Could it be that they are not setting down the rules clearly so that they can play it by the ear? Wait until early April, see how things look, then set the standards for implementation. With this government I would not be surprised. They are masters of spin, but the substance seems to be lacking.

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By: Patrick

Patrick — Tue, 09 Mar 2010 02:56:44 +0000

I see SUPERDUMBBULL is still at it.
Let’s put him down like the antiquated realtor he is.

If house prices keep going up at 6-9 % every year and wages only go up 0-3 % per year within 10 years the discrepancy is 60 % (6% per year x 10 years).
We have already seen 10 years of this disparity from 2000 to now. Are we to assume that the market can handle 10 – 20 more years of this?

I am an owner but I am also a realist and you don’t have to have a PHd in economics to realize that this trend is untenable.
My child attends a private school (1 of the best) here in Vancouver and as you can imagine a good percentage of the students are asian (chinese). I speak with the parents everyday and they all say the same thing.
Vancouver is great for living but terrible for business. They are not investing anymore in Vancouver because they “don’t buy at the top of the market”.

The apartment I purchased in ’98 which I now rent for $2k a month pays the mortgage but if I were to buy it at todays prices I would never be able to cover the mortgage with the rent. It would be a negative cash flow investment. which what one should expect if they are “investing” in the Van real estate market now.

Dumb bull loves to denigrate the non-owners. So lets do the math and see who is wiser in the long run.

Owner: purchase home for $800,000. 10% down. $720,000 mortgage. 5% interest x 30n years is about the amount of the mortgage again $720,000. lets calculate the property taxes paid over the next 40 years @ 2.89% per year again almost the purchase price again. Now lets multiply $720,000k x 3 = $2,160,000

Rent: $2000.00 a month x 12 = $24,000 .00 a year x 30 years = $720,000

Lets not forget that property values go up and they go down. I know because I have owned houses for the last 25 years. Prices went way down in the early ’80′s and agin in the mid ’90′s.

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