CMHC takes responsibility for all mortgages?
Apparently it’s not just the typical less than 20% down mortgage that the CMHC insures. They’re currently almost at their government mandated limit of $600 billion in default insurance because banks are buying up insurance to cover even low ratio loans (ie greater than 20% equity). This removes all risk from the lender, so why wouldn’t they do it? I didn’t even know this was permitted.
Normally, every 3-5 years as the mortgage market grows, CMHC has asked for, and received, approval from parliament to raise this limit. It was last raised by $150 billion in 2008.
Now media frenzy has politicians scurrying to offload mortgage risk from the government back to the private sector. (The government guarantees CMHC’s liabilities, so public concern is certainly understandable.)
As a result, many question whether CMHC will get its $600 billion limit raised anytime soon.
Here’s some reaction on that:
TD Bank economist Sonya Gulati tells CBC that not increasing the limit “may serve to tighten the housing market.”
RBC economist Robert Hogue told Global News that increasing the limit “…would be, policywise, a very delicate balance to strike.”
The Post quoted an unnamed industry source as saying: “…What will the government do, not increase (CMHC’s) limit? This could kill the entire housing market.”
Read the full article here.
This post was submitted by Scott.
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February 3rd, 2012 at 9:53 am
my original comment was for the above. Just wondering on source of info is all.
thanks
February 3rd, 2012 at 9:52 am
@GVREB:
where is this info from? The numbers and write up are very different from the real esate board of vancouver post. I personally agree with the above but am curious.
cheers
February 2nd, 2012 at 1:37 am
@DEFAULT NAME: Well, I challenge you to show an example of where he's recommending buying bank shares. When it comes to banks, he's all about the preferred shares, which will do just fine.
February 1st, 2012 at 11:36 pm
Garth Turner is da bomb man! That guy is like a genius…like Einstein or Rain Man…Big hero of mine. I'm not gay but I'd fool around with Garth if ya know what I mean!
February 1st, 2012 at 11:14 pm
@patriotz: "The taxpayers have a least an order of magnitude more exposure than all the lenders put together, so the laugh is on us unfortunately."
So compound it by buying shares directly in the lender?
Kind of like saying may as well smoke because I am exposed to other cancer causing agents anyway.
February 1st, 2012 at 6:44 pm
@DEFAULT NAME:
The taxpayers have a least an order of magnitude more exposure than all the lenders put together, so the laugh is on us unfortunately.
February 1st, 2012 at 4:00 pm
@Anonymous: Re Garths latest…
From Garth's blog referring to Vancouver's imminent collapse: "Just imagine the exposure major lenders have in that city."
Imagine if you are an investor in those lenders as you have recommended people do with their money. Too funny.
February 1st, 2012 at 3:58 pm
@DEFAULT NAME:
Them's fightin words!
February 1st, 2012 at 3:19 pm
@ZRH2YVR:
Oops, missed your initial prediction post earlier today.
Thanks for the entry!
(I assume "VRI = Van West & Richmond)
http://s14.postimage.org/s69431jq9/VCI_Contest.jp…
40 minutes left!
February 1st, 2012 at 3:17 pm
http://www.canada.com/business/Under+used+labour+…
A couple of very interesting comments in the link posted previously by Jumping in.
FirstLine (CIBC) is one of the biggest lenders and they are now not lending to 13% of the Canadian workforce (self employed) and will not give out more than $1 million. Imagine trying to buy a house in Vancouver and being capped at $1 million for a mortgage and having to prove income to support it? Good luck. If others follow suite this alone will be devastating to the housing market. CIBC has typically been the riskiest lender out there. My bet is all banks will do the same otherwise be viewed as taking too much risk which could hurt the stock prices.
This next quote we should take note of. A former Bank of Canada Economist calling for a 25% decline. That is average across Canada. Vancouver will obviously be much harder hit. Remember the US is down about 33% so far but some areas such as Miami and Vegas (similar to Vancouver with no real economy) are down way more and still falling.
February 1st, 2012 at 3:14 pm
Damn..$200,000 house in Kits with 8% interest is like $1700.00 a month! What kind of crash is this?! Ya still gotta be one of them 1%!
February 1st, 2012 at 2:52 pm
@VMD – I thought I posted earlier. However, here's my info.
I suppose the HPI forecast I would say is REBGV wide,
June HPI – a decrease of 3.7%
December HPI a decrease of 11.4%
June SFH – Decrease 4.7%
Dec SFH – Decrease 15.5%
Jun VRI SFH – Decrease 5.5%
Dec VRI SFH – Decrease 18%
Jun BBY SFH – Decrease 2.5%
Dec BBY SFH – Deccrease 7.5%
—
Wow – Richmond down 18% could be interesting.
February 1st, 2012 at 2:49 pm
@jesse:
Doesn't concern me either way. This trend is irreversible and while we all want prices to plunge quickly, given how low rates are, we may see a slow attrition and deterioration for well over a year before the real panic sets in.
One thing is for certain, the uptrend is finished.
February 1st, 2012 at 2:38 pm
2012 VCI Price Prediction Contest entry ends in just over an hour!
Adding in the 4 "non-hardcore" HPI-only predictions submitted today, we have the 9 contestants.
The 9 contestants' predictions for HPI Averages at:
Jun 30, 2012: -2.3% (Most bullish: Jesse @ +2.9%; Most bearish: BC Reader @ -6%)
Dec 31, 2012: -8.8% (Most bullish: The Ant @ -2.8%; Most bearish: Guy Smiley @ -14.6%)
Last-minute entries welcome!
http://s7.postimage.org/cxxipa063/VCI.jpg
February 1st, 2012 at 2:38 pm
@Nero: I don't know much about it but I would expect that listings take priority over sales. Look it's one day, it's plausible that they had to stop short today for other reasons. I just don't want y'all to be disappointed again, it makes me
February 1st, 2012 at 2:25 pm
@jesse:
as in human error? But it didn't happen last Feb 1st..
Plus today is mid-week, not even a Monday or Friday…
We'll see tomorrow… maybe the sales-entry monkey did get sick today (but the listings-entry monkey didn't) ; )
February 1st, 2012 at 2:23 pm
Didn't seem to have a problem entering listings.
February 1st, 2012 at 2:19 pm
@Tony: I think it's just a matter of sales not being entered. I expect a big sales day tomorrow. But hey you never know!
February 1st, 2012 at 2:18 pm
@lol cats: I rent a kick-ass condo in Yaletown at 60% cost of owning and I put $6K per month into savings…sure, sign me up for another 5-10 yrs!
February 1st, 2012 at 2:16 pm
Check out Garth's latest post.
Stick a fork in Vancouver, because it is done.
February 1st, 2012 at 2:00 pm
Hey guys vote me up will ya…friggin realtors are voting me down.All them realtors are gonna be down at the soup kitchen! Ha Ha.Hey when's the Crash party?…can't wait to meet all you guys..feels good to be part of The Group you know.
February 1st, 2012 at 1:57 pm
@Weiner: why don't you just go and get a life?
February 1st, 2012 at 1:56 pm
@conrad
It does not matter. It is all about psychology at this point.
February 1st, 2012 at 1:52 pm
Technical issues down at the board today, will be over 200 sales going through tomorrow…
February 1st, 2012 at 1:50 pm
Weiner. Your buddy at Diary Queen already has a house with three illegal suites to help cover the mortgage that he soon won't be able to cover, eh?
February 1st, 2012 at 1:33 pm
What do you guys think 80% drop? I figure 80% at least…this is great..My buddy that works at Dairy Queen figures he'll be able to get a house as well. Man..just great.Thanks Guys!
February 1st, 2012 at 1:21 pm
Under-used labour, pending housing bubble, problems for Canada: panel
Read more: http://www.canada.com/business/Under+used+labour+…
February 1st, 2012 at 1:18 pm
Yeah Crash coming!…I really like Kits Beach. Do you think houses on the water there will get down to $100,000? This is freakin awesome.Me a waiter getting a place in Kits! Can't wait!
February 1st, 2012 at 1:17 pm
@Tony: Triple the sales, you still get roughly 1/3 sold versus listed. Still significantly to the downside for this time of year, particularly given current balmy weather conditions and early CNY. A few more days even remotely close to today, and we've been flushed, the only remaining question being how far down the drain we'll go.
February 1st, 2012 at 1:17 pm
It's gunna be real fun telling everyone I know I was right
February 1st, 2012 at 1:14 pm
http://www.moneyville.ca/article/1125067–mortgag…
Mortgage pullback hints of housing crisis in Canada
February 1st, 2012 at 1:02 pm
Thanks Jesse.
Todays sales must be incorrect or an error. Realtors not entering their sales. Thoughts?
February 1st, 2012 at 12:47 pm
@Tony: Feb 2010 dailies:
sales listings sell/newlist
210 350 60%
147 267 55%
104 267 39%
104 246 42%
93 283 33%
182 227 80%
204 326 63%
81 262 31%
121 281 43%
198 322 61%
153 311 49%
219 287 76%
166 280 59%
116 270 43%
178 297 60%
209 290 72%
172 255 67%
137 280 49%
142 242 59%
204 305 67%
Previous sales volume
1999 1634
2000 1634
2001 1781
2002 3008
2003 2760
2004 3066
2005 3068
2006 2941
2007 2859
2008 2676
2009 1480
2010 2350
2011 3097
February 1st, 2012 at 12:42 pm
Excellent work GVREB!
I am posting it everywhere I can, just for fun…
February 1st, 2012 at 12:36 pm
Another Real Estate puff piece on the (CBC) National tonight. Ian Hanomansing – you should be ashamed of yourself……my respect for the CBC is waning.
February 1st, 2012 at 12:16 pm
@lol cats: You really don't understand the nature of the RE market here in Vancouver, do you?!? It is because I choose not to buy an $800,000 moldy shack in Hastings Sunrise, that I am able to live in a nice heritage-style house in the Commercial Drive area.
February 1st, 2012 at 12:07 pm
GVREB – fucking hilarious…I thought that was real until about 2/3rds down – awesome post!!!!!
One for the scrapbook/highlight reel.
RJ
February 1st, 2012 at 12:06 pm
Holy Fuck Batman.
It's here.
Finally.