Scotiabank ends 2.99 mortgage deal early, more tightening on the way?

Wow, it seems like it was just a few days ago we were talking about newly introduced teaser-level mortgage rates offered by Canadian banks.

… oh, it was just a few days ago.

BMO kicked off the competition and TD, Scotia and CIBC jumped in with competing lowball offers.

Well it looks like Scotiabank blinked first.  Their special offer didn’t even last a week.  Canadian Mortgage Trends is reporting that Scotiabank has pulled their special offer for a 2.99% rate.  Guess we’ll have to wait to see if the other banks will follow.

And speaking of mortgages, Canadian Mortgage Trends also has some interesting analysis of the OSFI recommendations for underwriting practices and how it’s about to lead to mortgages that are a bit tougher to get.

After reading through 18 pages of changes in detail, our immediate reaction was frankly, concern.

That’s not because the guidelines are greatly imprudent. Some are unnecessarily rigid, but most are sound policy.

It’s because OSFI risks tightening too much, too fast.

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rp1
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rp1

It’s still a bubble, and as soon as they start insisting that people either “have money” and/or “pay it off” the market is doomed.

Bullocks
Guest
Bullocks

Did Scotiabank discover that no one applying for the 2.99 mortgage qualified? We’ll never know the exact reasons.
If the stat that 70% of all Canadian households are homeowneres is true, and that most of those “homeowners” are paying mortgages, then the pool of potential new mortgage holders must be drying up pretty fast. I think we are closing in on the defacto top of the market. What did the Mayans say about 2012?

patriotz
Member
Dan McLean
Guest
Dan McLean

The OSFI put out recommendations not requirements. For now they can be ignored by most banks. I wouldn’t think that this is means mortgage tightening is now “too much too fast”. Changes to accommodate the recommendations may take many months thus ameliorating any blow to house price trends.

Having said that, its good news for those of us looking forward to a return to sane house prices in BC.

Clockbike
Member
Clockbike

@patriotz:
Debate opens in 18 minutes according to their timeline. However, the first commend has already been posted

” Good afternoon, everybody. I’m Ian Morfitt from The Globe’s Personal Finance website, and today we’re joined by housing and consumer credit expert Ben Rabidoux, who will answer your questions about Canada’s frothy housing market.
by Ian Morfitt 8:35 AM”

WFT?
Guest
WFT?
WFT?
Guest
WFT?

From Garth Turner’s blog:

Jonathan and his wife entertained some out-of-town friends in downtown Vancouver this past weekend. “We strolled around the False Creek and the Yaletown area before the Canucks game,” he says. “Outside one of the waterfront towers was an agent, so we chatted with him for a minute. The unit he was showing that day had been on the market I think for over 2 years, never lived in, bought at 1.3 million, current price 1.0. He said the owner has a 2.0 million unit in the building next door, same deal never lived in, bought on pure speculation, can’t sell it.”

Patiently Waiting
Member
Patiently Waiting

“It’s looking more and more like Canada’s unofficial one-child policy”

http://www.news1130.com/news/local/article/343197–housing-prices-limit-number-of-kids-couples-can-have-prof

jesse
Member

@Dan McLean: “For now they can be ignored by most banks.”

OSFI puts out guidelines. In practice these guidelines are required by the chartered banks and highly recommended for second-tier lenders. If they choose to disobey OSFI has prerogative to make their lives difficult.

Canada’s banking system didn’t become the envy of the world by politely suggesting proper table manners.

registered
Member
registered

9 jesse Says:“Canada’s banking system didn’t become the envy of the world by politely suggesting proper table manners.”

It was by misrepresenting to the world the true nature of its relationship with the CMHC.

procrustes
Guest
procrustes

@Patiently Waiting:
Normally when someone gets screwed there is a much higher chance of pregnancy, but I guess it’s just different here.

WFT?
Guest
WFT?
Ben Rabidoux on foriegn buyers on the online RE forum at http://www.theglobeandmail.com: WRT foreign investment from China, I have no doubt that this is a factor in key market segments and key areas, but to say they drive the market in places like Vancouver is a bit of a stretch… …Consumer debt burdens are far higher in BC than anywhere else, which argues strongly that this market is not being driven as much by foreign investors as by locals taking on huge debt levels… …that being said, both OSFI and the BoC have said that they are looking into the issue to try to quantify it beyond the abundant anecdotes. I don’t think that it’s a coincidence that on the same day OSFI announced this, significant changes were announced to the Immigrant Investor Program that capped it at 700 (from… Read more »
oneangryslav2
Guest
oneangryslav2

@WFT?:

He said the owner has a 2.0 million unit in the building next door, same deal never lived in, bought on pure speculation, can’t won’t sell it.”

There, fixed it for him.

oneangryslav2
Guest
oneangryslav2

@oneangryslav2: Which begs the question…how long until this guy has to sell? And, when that happens, how much will he be able to get for each of these units?

jesse
Member

@fixie guy: “misrepresenting to the world the true nature of its relationship with the CMHC”

It’s been obvious for years now that the government has been taking on significant liability by guaranteeing loans in the overinflated housing market. Ireland was once viewed favourably, for different reasons, and I doubt most institutional investors think Canada will remain in the lead forever.

Frank
Guest
Frank

@oneangryslav2:

So why is he offering 2.9% four year mortgages?

These guys are playing both ends- sound the warning so they can say they told everyone and yet they add fuel to the fire

Frank
Guest
Frank

Sorry that comment was in reply to the post about the bmo CEO

WFT? Says:
March 21st, 2012 at 9:23 am
CEO of Bank of Montreal says that sykyrocketing housing prices are bound to come down.

http://www.theglobeandmail.com/report-on-business/economy/housing/skyrocketing-house-prices-bound-to-come-down-bmo-head-says/article2375914/

Current score: 17

jesse
Member
Bloomberg: China Developers Set Up Funds as Cash Is Squeezed Amid Curbs Chinese developers are setting up property funds to diversify their sources of revenue as government real-estate curbs have led to a cash shortage… Chinese developers are seeking alternative off-the-balance sheet businesses as credit drained after the government’s two- year efforts to curb speculation in the real-estate market, including higher down payments and mortgage rates, and home purchase restrictions in 40 cities. Relaxing the curbs could cause “chaos” in the market, Premier Wen Jiabao said last week. “Raising money from the private sector opens up options for developers, but it’s a choice out of no choices,” said Albert Lau, Shanghai-based China head and managing director at Savills Plc, citing difficulties developers face to get bank loans and issue bonds. “Funds can join developers as joint venture partners so that… Read more »
patriotz
Member

@Frank:
“So why is he offering 2.9% four year mortgages?”

Because he runs a business and it’s his responsibility to the shareholders to make money. It’s either lend at 2.9% or give the mortgage business to someone else.

Banks like every other business have a responsibility to obey the law and that’s what they are doing. If you don’t like the parameters that the government has established, blame them not the banks.

ReadyToPop
Guest
ReadyToPop

Dan McLean Says:

The OSFI put out recommendations not requirements. For now they can be ignored by most banks. I wouldn’t think that this is means mortgage tightening is now “too much too fast”. Changes to accommodate the recommendations may take many months thus ameliorating any blow to house price trends.

Having said that, its good news for those of us looking forward to a return to sane house prices in BC.

Just to add to your comment…..according to Wikipedia, they report to the Minister of Finance. The same guy who’s going to be delivering something in a few days? Just a casual observation…..RTP

Yalie
Guest
Yalie

@Clockbike:

Good afternoon, everybody. I’m Ian Morfitt from The Globe’s Personal Finance website, and today we’re joined by housing and consumer credit expert Ben Rabidoux, who will answer your questions about Canada’s frothy housing market.

Ben Rabidoux is a housing expert? He’s just some guy with a blog and bunch of fancy “facts” and “statistics”. What does he know about housing? They should have gotten a real housing expert, i.e. someone who can provide honest, objective analysis of where house prices are heading – like a mortgage broker, a developer, a REALTOR(R), or somebody from the CMHC.

Clockbike
Member
Clockbike

@Yalie:
Oh you.

In other news, landlords had better do proper upkeep of their holdings or else face fines:

http://www.theprovince.com/news/Surrey+landlord+slapped+with+115K+fine+becoming+first+face+penalties+under+tenancy/6333299/story.html

Anonymous
Guest
Anonymous

@Yalie:

Or a marketer like Bob Rennie or that Brad J. Lamb douchebag.

Many Franks
Guest

Here’s a decent editorial on the bulk insurance that has been taking CMHC up to its cap so rapidly.

http://opinion.financialpost.com/2012/03/21/risks-of-cmhc-mortgage-cover/

Anonymous
Guest
Anonymous

I havent seen anything on the web about scotia pulling their special other than the one on cmt. Have they really pulled it?

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