BMO cuts rates “great time to buy”

The ‘increasingly wobbly’ Canadian housing market is getting a boost from the Bank of Montreal with a mortgage rate cut and aggressive news release.

“It’s a great time to buy a home,” Martin Nel, a senior BMO official, said in news release announcing the change. He added that people who take advantage of the offer will benefit.

“If ever there was a time to buy, it is now,” Mr. Nel said.

The move which takes effect Thursday brings the bank’s key five-year rate to 3.59%, down from 3.79%, making it one of the lowest five-year rates ever offered by a Canadian bank, says industry newsletter Canadian Mortgage Trends.

But some experts are already scratching their heads because of the aggressive tone of the announcement as well as the timing, given the recent spate of warnings about the uncertain state of the market, including one earlier this week from the Canadian Centre for Policy alternatives predicting an imminent collapse.

When the big banks make mortgage rate changes they generally just disclose the new numbers without commenting on housing market conditions. If pressed, bank officials are usually quick to explain that the change in these consumer lending rates are merely a function of fluctuations in their own borrowing costs.

“It’s a bit puzzling to me,” John Andrew, a professor at Queen’s University’s School of Urban and Regional Planning, said of the BMO announcement. “Perhaps they are concerned that the number of new customers will fall off precipitously.”

And why would they care about a drop off in new customers?  Ah, here it is later in the article:

The housing market is important to the banks because residential mortgages make up the single biggest asset class on their balance sheets.

There are nearly $1-trillion of home loans outstanding, according to the Bank of Canada, about half of which is held by the chartered banks.

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realpaul
realpaul
10 years ago

Debt just got a little more expensive as the real world of treasury auctions is not a happy place to be these days.

http://www.financialpost.com/news/Treasuries+gett

How long can governments keep buying their own paper????

Meanwhile the double dip in housing is here……even give away money programs can't turn back the tide. The Canadian government can't afford anymore giveaways for sure….. I know there has been some anecdotal information that banks are shying away from HELOCS and telling prospective buyers to seek alternative lenders…is it a quiet revulsion of even the slightest risk that has them turning away the CHMC fees they would recieve for passing along the 95% mortgage app????

http://www.financialpost.com/news/housing+double+

All is not well in the real world……you wouldn't know that by listening to the pimps…good thing you've got a brain eh?

kaiser solce
kaiser solce
10 years ago

Watch out Rennie, noticed Simon Coutts on Global again, he had trouble selling bikes and fixing flats but now has his eye on being the new condo king!

Proof that if at first you don't succeed you can always be a real estate salesman.

realpaul
realpaul
10 years ago

Its hilarious to have read through the pimps fully coordinated press of the past few days that they think that if they all bellow about 'how everythings going to be OK' that this bullshit can stop the ship of fools from crashing. The numbers supporting the negative trend are heavily against them, the economy is against them, the circumstances are against them…but they seem to think that if they all pull together and get you and I to look the other way that nothing bad can happen…..'because they say so'…….too funny. How will they disguise all the underwater owners of the past six months…in three months time…these stats are obviously growing….will they dream up another excuse by then?….is this campaign all about buying time for the whores to extricate themselves????????….before the complete collapse tumbles down mainstreet. The lies and false… Read more »

Peter Pan
10 years ago

@specialfx3000: Isn't an agent supposed to disclose they are also the owner of the property being sold?

VHB
VHB
10 years ago

@Anonymous: Yup. Take it for what it is–a linear projection. And note, this is a projection not a prediction.

Anonymous
Anonymous
10 years ago

“August stats are out! Here is a summary of the total dollar and percent benchmark price changes since the April peak:.."

Nice numbers. I am curious.. anyone know what the MOM percent change is in the benchmarks? The stats release always mentions YOY changes.

JR
JR
10 years ago

@Anonymous: VHB is just doing some interesting math. Math that ought to interest supposed economists like Tsur. It isn't of interest to him, however, because our Scandinavian friend would rather shill for the real estate industry than tell the truth. He does not want to be associated with having caused a stampede, which he knows damn well the truth, out of his mouth, would cause.

Anonymous
Anonymous
10 years ago

@VHB:

Projecting September stats from a whole 2 days? Hmm.

Devore
Devore
10 years ago

@Anonymous:

They hardly ever print any bad news about Vancouver RE! And even if they did, we would not know it, because papers that actually do count are all in mandarin and cantonese!!!

Oh, those clever Chinese! First gun powder, now newspapers that speak to you! No wonder they're taking over the world.

coastal
coastal
10 years ago

@Boombust: Michael Campbell does not allow anyone to say negative stuff about BC real estate, family rules. He's the biggest joke on the investment scene here. When has Garth Turner ever been on his show ? Never,case closed. Only Ozzie the pumper is allowed on with his so called hot properties in tim-buk-two where your car gets the tires stolen on a weekly basis.

Best place on meth
Best place on meth
10 years ago

This unit at King Edward Village just sold for $420K, a sizable haircut off the asking price of $469K.

http://www.mls.ca/propertyDetails.aspx?propertyId

The other Village people will not be pleased, especially this guy

http://www.mls.ca/propertyDetails.aspx?propertyId

This guy

http://www.mls.ca/propertyDetails.aspx?propertyId

And this guy

http://www.mls.ca/propertyDetails.aspx?propertyId

logic
logic
10 years ago
brainsail
brainsail
10 years ago

ts562rs

I think I have an answer that will lead to closure on this subject. The difference between property tax rates and the different states is simply a correlation between median house prices and household income. Compare CA and TX on this interactive map.

http://articles.moneycentral.msn.com/Taxes/Advice

CA has a median house price of $467K vs. TX at $127K. CA has a median household income of $82K vs. TX at $64K. The percentage of household income applied to property taxes is the same for both states at 3.5%. This is I believe to be an apples to apples comparison except for the state income tax issues.

Sorry this subject has nothing to do with Vancouver.

Boombust
Boombust
10 years ago

Am I missing something?

It's a co-op, isn't it?

Patiently Waiting
Patiently Waiting
10 years ago

BAM there you go speculators BAM

http://vancouver.en.craigslist.ca/bnc/apa/1933473

LOL The real value of Vancouver housing.

anonymous123
anonymous123
10 years ago

Found an interesting deal, if anyone has a thing for recreational property.

MLS 105793 (Summerland)

Property is in foreclosure (whoohoo!more to come I'm sure!) $85k, a spacious 378sq feet (bring your family-uh ya!) and you can only use it 180 days a year (mostly in the winter). Oh you have to cough up strata fees of over $200/month, property taxes of about $2000 and realtor warns "Current financials do not offer cash flow. Monthly fees of $264/month are payable and currently not covered by any income."

Interesting that this property hasn't been snapped up by "investors"-sign of the times?? Also, similar units NOT in foreclosure are listed for $159k+….good luck with that…there are at least 20 units in the same complex for sale.

Okanagan=Florida North

Anonymous
Anonymous
10 years ago

@Best place on meth: what a clown. Nice fro too.

Boombust
Boombust
10 years ago

Silly me. It's 489K.

Boombust
Boombust
10 years ago

This in today…

"Awesome 3 bedroom rancher w/walkout daylight basement in a quiet C-D-S location. Upstairs feats 3 bdrm, incl large master bdrm w/3 pc ensuite, cozy wood fireplace, large deck overlooking fully fenced yard which backs onto Poco trail & mini-greenbelt. Downstairs you will love the self-contained 1 bedroom basement suite, w/separate entry, shared laundry & lots of recent upgrades. Also included in the asking price is a $20,000 decorating allowance to cover cost of some needed upgrades, contact your realtor for more info."

Hmm…a suite in the basement AND 20K kicked in for paint and what-not.

This would have had an initial list price FAR HIGHER a few short months ago.

SSB? Comments?

Boombust
Boombust
10 years ago

Not a bad start.

14 new listings today alone from my VOW auto-update.

Boombust
Boombust
10 years ago

"Naturally, nobody at Global asked him why neither of these events happened 4 years ago in the U.S."

And, naturally, they trotted out that a-hole, Michael Campbell, with pursed lip and furrowed brow, talking to Deb Hope on Global's early News about what terrific shape this province is in.

HOWEVER, according to some who listened to Bill Good's show yesterday re: local RE, most call-ins were decidedly downbeat about RE prospects here depite a "talker-upper" guest.

So, I suppose Campbell and his a-hole friends can try all they like, but they're not going to reverse a trend in motion.

Best place on meth
Best place on meth
10 years ago

More discussion on the news tonight about a "possible bubble" and who do they trot out again to correct that silly notion?

That's right, Dch. Sommerville.

According to him there is no chance of real estate collapsing unless one of these events takes place:

1. A massive rise in interest rates.

2. A collapse of Western economies.

Naturally, nobody at Global asked him why neither of these events happened 4 years ago in the U.S. or 20 years ago in Japan.

chip
chip
10 years ago

@ts562rs:

Ignore the unfriendly posters here. While I'm not sure about your reasoning regarding San Fran prices and property tax, you provide a fresh perspective.

I have thought about moving to both San Fran and Austin. I decided against the latter because it's too isolated from my social networks and will put off the former until the state works through their fiscal problems. Though this might never happen.

realpaul
realpaul
10 years ago

Bwahahahahahahahahahahahahahahahahahaa…..Little Lord Puff & Stuff wooing the Chinese to build factories in Vancouver…..thats too funny…oh my sides hurt. A competative factory wage in Beijing that builds that crap that we find in a Wallmart is a shade under $300 CDN per month. Oh and might I add…..we ran out of land in Vancouver decades ago according to the most recent expert analysis from our friend Tsur Somerville. Commom sense talk about why this can never happen in Canada goes something like this: http://fullcomment.nationalpost.com/2010/09/01/ad… The truth is the Miss Moonbeam and the Vision Weasels are going on a slop bucket junket. The Chinese secret service will have him measured before he lands and the bum boys will be a knockin' on the hotel room door for little Lord G-Man Mayor of Never never land. We know who's going to get greased… Read more »

realpaul
realpaul
10 years ago

Bwahahahahahahahahahahahahahahahahahaa…..Little Lord Puff & Stuff wooing the Chinese to build factories in Vancouver…..thats too funny…oh my sides hurt. A competative factory wage in Beijing that builds that crap that we find in a Wallmart is a shade under $300 CDN per month. Oh and might I add…..we ran out of land in Vancouver decades ago according to the most recent expert analysis from our friend Tsur Somerville. Commom sense talk about why this can never happen in Canada goes something like this: http://fullcomment.nationalpost.com/2010/09/01/ad… The truth is the Miss Moonbeam and the Vision Weasels are going on a slo bucket junket. The Chinese secret service will have him measured before he lands and the bum boys will be a knockin' on the hotel room door for little Lord G-Man Mayor of Never never land. We know who's going to get greased… Read more »