TD: mortgage rules should be stricter

The CEO of TD bank has said in an interview that he thinks the government should make mortgage rules stricter.

Mr. Clark believes cutting the maximum length on federally insured mortgages to 25 years, from 30 years, would be a good step to slow rising household debt, which hit a new record this week, surpassing that of the United States and Britain.

“If you thought the Canadian economy was strong enough to take another adjustment, then we would say take the 30 [year amortization limit] down to 25 and get this back to where it originally was,” Mr. Clark told The Globe and Mail.

“It’s hard to know whether the economy can take another crank like that,” he said, referring to Ottawa’s last round of changes. “But my own gut would tell me that it may turn out that we do have the absorption capacity.”

Now why would a bank that spends tonnes of money on advertising mortgages and essentially makes risk-free income on insured mortgages want the government to tighten up the rules? Could they be seeing consumer debt levels starting to pose a risk to uninsured loans?

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Manna from heaven

Patiently Waiting.

His comments regarding the "neighbourhood" struck me as well.

Anonymous

@space889:

jesus christ

now our schools suck – make up your minds

ill write my MP now – 12 hours of violin starting tomorrow, or else the dunce cap!

http://www.ministryoftofu.com/2011/10/underachiev

healthy!

fixie guy

64 Devore Says: "What’s so historically unique about salespeople driving sales…"

Lol, you think realtors are causing this bubble? Haven't been paying much attention I see.

You've made your position clear: evil buyers and realtors, no responsibility of the CMHC and federal government policy. Bizarre, but clear.

Makaya

@Patiently Waiting:

"Not to make light of a horrible situation but can't help but smile at the bong in on the shelf behind the woman."

LMAO!!!

Patiently Waiting

COV takes West End slumlord to court.

http://www.cbc.ca/news/canada/british-columbia/st

Patiently Waiting

Interesting comments about the East Van street where yesterday's shooting occured:

Mr. Brick, a resident of Bruce Street for 44 years, said he didn’t know Ms. Vu personally, and that the family kept to themselves.

Over the years, he said the neighbourhood has become less of a community. “We’ve got no neighbours here,” he said. “So don’t use the word ‘neighbour,’ this is just a ‘hood’.”

He said people do not much talk to each other on the street. “They all hibernate when they come home from work and don’t come out again. There’s no street hockey even any more.”

http://www.theglobeandmail.com/news/national/brit

Patiently Waiting

Creeper Victoria landlord videotaped a young female tenant for three years, and sold the images online. Now she's suing the bastard who is a provincial government bureaucrat.

http://www.theprovince.com/news/UVic+student+sues

http://www.courthousenews.com/2011/12/15/42263.ht

"She seeks damages for breach of privacy, the return of $15,725 in rent, and an injunction restraining Mitchell from possessing, watching or distributing the clandestine videos.

She is represented by Samantha P. Simpon of North Shore Law.

Calls to Mitchell's government phone line were not answered and an email to his government email address was immediately returned stating: "I am on Leave until further notice."

How much money can she get for breach of privacy? Here's hoping she has him over a barrel.

Anonymouse

@patriotz:

They're not spending 70% of pretax income, because that would be ALL of their post-tax income. Zero for utilities, property taxes, and food. Nobody is going that, and no bank would qualify anybody for a mortgage that consumed 100% of their take-home pay.

Anonymous

"All of today’s posts seem to have the subtext that the boom is over. Is that what everyone in fact thinks?"

every day is like this in the zoo. what else is new?

rp1

@WFT?: "All of today’s posts seem to have the subtext that the boom is over. Is that what everyone in fact thinks?"

No. I'm pretty sure the government will print enough money to confuse everyone. They sure as hell have no other way to pay for things.

Devore

@fixie guy:

And presumably coupled to that the banks, government institutions and real estate industries that created this historically unique situation, enabling and actively encouraging buyers to participate in the whole boondoggle, are off the hook?

What's so historically unique about salespeople driving sales and governments surreptitiously collecting revenue?

Devore

@fixie guy: Those two sentences are unrelated. People are doing what they’ve always done, our friendly feds bank on it. People, again as a group, take the path of least resistance, and follow the herd. Doesn't mean individuals have to. Your parents were idiots for not studying Case, Shiller and Schiff before buying your childhood home? As a matter of fact, yes. What do you suggest they do before they make an $800,000 purchase? Consult a salesperson? It is not a stretch to say people spend more time researching their next smartphone than their next residence (renting OR buying). Some of it surely has to do with the availability of impartial, unbiased third party research and information on the real estate market. The vast majority of readily available information is gussied up glossy brochure-ware. But if anything, that should raise… Read more »

fixie guy

39 patriotz Says: "Well maybe in Winnipeg. BC, Alberta, and Toronto have all seen major busts – just as bad as the current US bust – since 1980. Not exactly ancient history."

Toronto is the only one with that claim to fame and 1981 is ancient history. What's happening across Canada today in a graph derived from Sauder's real price data below:

http://img855.imageshack.us/img855/8412/suadercdn

WFT?

All of today's posts seem to have the subtext that the boom is over. Is that what everyone in fact thinks?

Eddie

@Burbs Boy:

Don't worry, there will be no bailout for Canadian homeowners. They will either keep paying or claim bankruptcy.

The banks will be the ones getting the bailout, and it will cost more money than this country has ever seen…

Meh

@MM: I just stumbled across it so all I can say is it looks like an improvement. Hopefully, it will be featured to generate more discussion.

jesse

@Troll: "amort change will have a slight moderating effect on prices but little effect on the number of potential borrowers, while the DP change will knock a whole slew of potential customers right out of the market."

25 year would have a larger impact on the low ratio loans, which is where it looks like a big part of the problem lies.

There are a few other things that can be done, including geographic-based measures — not loaning as much into markets that are obviously overheated and will likely drop by double-digit percentages in the years ahead. I think banks are poised to increase their capital buffers on residential loans to comply with new risk management guidelines, if they haven't already.

patriotz

@Troll:

"“Letting the market sort things out itself is the preferable option because it is so difficult to tweak one element of public policy,” said Phil Soper, chief executive of Royal LePage Real Estate Services, adding CREA’s statistics show the market is already correcting."

What a complete jackass. Letting the market sort things out means that the government would stop insuring mortgages altogether.

But the "free market" means something different for the RE industry than for everyone else.

Burbs Boy

well… I don't post often.. but c'mon! You are spending, what?, 1/2 million dollars to buy a house in the lower mainland (give or take)? A HALF A MILLION DOLLARS!!! And you just don't have "time" to look into what could happen, what options you have, worst case/best case scenarios? If you are that lazy or stupid then you deserve to lose everything you have. NO BAILOUT for homeowners if/when this market crashes to the ground. No one has been bailing me out as prices rose for most of the last 5 years. If you trust what sales people or the elected government talking heads are saying then you are stupid… period. Parasites like that would sell their grandmothers down the road for a buck and they prey upon the Stupid (and there is no shortage of the Stupid). NEVER… Read more »

space889

Seems like the most vocal posters on here have a really low opinion of recent home buyers and can't wait to relish in their personal downfall and ruin as house prices tumble, interest rate goes up, and other adverse economic factors that will force these buyers into personal bankruptcies, etc.

Personal responsibility should not be avoided or abolished but when you are up against an army of high paid, highly trained, and highly intelligent experts whose sole purpose is to convince, pursuade, manipulate you to do something, I think we need to give the average person the benefit of doubt and some sympathies, especially given the total lack of proper financial education in school and the general sad state of education system.

Troll

Housing Industry Shy on New Rules http://business.financialpost.com/2011/12/15/hous… “We are in for a natural cyclical correction due to an overshooting on home prices,” said Mr. Soper. That said, the industry seems ready for another round of measures aimed at cooling off the housing market and the preferred option is a drop in the allowable length of amortization. The effect of that would be to increase monthly payments for consumers and ultimately qualify for a smaller loan. What the industry doesn’t seem to want under any circumstances is an increase in the minimum down payment for anyone buying with mortgage default insurance which is backed by the federal government. And there it is, which may what what Mr. Clark thinking as well. If the govt is going to mess with mortgages, the amort change will have a slight moderating effect on prices… Read more »

patriotz

@DEFAULT NAMEe:

"Because the people who are buying houses aren’t earning average or median incomes"

Plenty of them are, but they're trading up or down from properties they bought years ago.

Homework assignment: are present house prices sustainable if only people who first bought years ago can buy?

Troll

@fixie guy: You’re arguing however every home buyer since ~2005 had a new obligation ‘as an adult’ to ignore generations of Canadian housing market stability, the assurances of their banks, government, families, friends and media and, unlike everyone before them, faced with the risk of forever losing the ability to afford, spontaneously undertake a self-taught primer on economics, deficits and how assets react to liquidity before taking on the basic life step of buying a home. And presumably coupled to that the banks, government institutions and real estate industries that created this historically unique situation, enabling and actively encouraging buyers to participate in the whole boondoggle, are off the hook? blah blah blah, don't make it so complicated. Your friendly neighbor to the south smoked and died of cancer. Flaherty and Carney have told you repeatedly to stop smoking, since… Read more »

MM

@Meh: summary/commentary would be great!

I only skimmed quickly, but it appears stratas will have to get their act together regarding planning/funding, does it cover all of them (even little self managed townhouse stratas) and what's the timescale?

I suspect some places will become unsellable once they are forced to disclose necessary vs planned/funded maintenance.