Days of ultra-cheap money coming to an end

..At least that’s what Mark Carney and other Bank of Canada officials have said according to this article, yet they’re refraining from being more specific.

Meanwhile the Organization for Economic and Co-operative Development (OECD) is urging Canada to start raising interest rates in the fall and keep on raising them to stop an inflating housing bubble and reign in inflation.

The OECD, a high-powered economic research group backed by contributions from its 34 rich country members, offers a scenario: An increase in the benchmark rate of a quarter of a percentage point in the autumn, and similar increases each quarter through to the end of next year, leaving the benchmark overnight target at 2.25 per cent.

That still would be low by historical standards, yet, according to the OECD, likely a big enough increase to cause prospective homeowners to think twice before buying at current inflated prices. However, the OECD’s recommendation comes with a risk.

The Federal Reserve Board has made a conditional pledge to leave U.S. rates extremely low until the end of 2014. Following the OECD’s path could create an unprecedented spread between Canadian and U.S. interest rates, which would put upward pressure on a Canadian dollar that many say already is too strong.

Oh, and the OECD made this same recommendation a year ago and was ignored. So I wonder how Carney intends to bring the days of ultra-cheap money to an end?

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jesse
Member
3 years 11 months ago
Turkey
Guest
Turkey
3 years 11 months ago
I think the expression “bat-sh*t insane” is over-used and should be reserved for special occasions. On a completely unrelated note, our friends at cmhc-class-action.com have removed their blog, but posted some tidbits showing how wronged they were. To wit: In our affidavits, we were careful to make the first line a denial that were were anything other than a natural Man and a natural Woman, (not Person), we expected the Judge to take notice of this, but it was ignored. No Court has jurisdiction over Men and Women as they are the creators of courts and governments. The created cannot… Read more »
Anonymous
Guest
Anonymous
3 years 11 months ago

@Turkey: Ah. Well that clarifies things. Clearly this housing bubble is literally driving some people crazy.

Anonymous
Guest
Anonymous
3 years 11 months ago

@Turkey: LOL…that is gold. This city is filled with people like that, that will refuse to accept responsibility for being wiped out by the pending crash. The entitlement types are going to take a serious beating.

Turkey
Guest
Turkey
3 years 11 months ago

@Turkey: Also, they’ve scrubbed the judge’s remarks at cmhc-class-action.com. You can find them here. Some tidbits:

I find that this action, as commenced by the plaintiffs, is designed to annoy and to force the defendants to expend resources coming to court, rather than to advance a legitimate cause of action. Counsel for CMHC seeks an award of special costs.

Parties should not be discouraged from litigating legitimate actions. Here, the plaintiffs’ allegations were utterly and obviously without merit.

fred
Guest
fred
3 years 11 months ago

@Anonymous: impending crash? are you another vreaa in the making?
but you are right for one thing “The entitlement types are going to take a serious beating”. they have taken a serious beating; but they didnt learn the lessons, they keep blogging all day!

Anonymous
Guest
Anonymous
3 years 11 months ago

can anyone tell me what the last selling price was for ph7 108 west Cordova street, Woodwards building

thanks in advance

What dah
Guest
What dah
3 years 11 months ago

Re:Hikes, Carney does not have the balls. I will believe it when I see it.

jesse
Member
3 years 11 months ago

What would be interesting is how the Bank of Canada would change its outlook if it included commodity price drops among its “downside risks”.

Regardless I don’t think runaway inflation is a problem; if nothing else the Conservatives will see to that via policies weakening employee wage terms.

real_professional
Member
3 years 11 months ago

Home Price Index by National Bank will be published sooner!!!

“Montreal, May 23, 2012 – National Bank and Teranet are pleased to announce that the Teranet – National Bank House Price Index™ will now provide a more timely indication of the housing market. The index will be published a full month sooner, no later than 30 days after the transaction month. “

jumpin in
Guest
jumpin in
3 years 11 months ago

I think the market is turning.
Many price reductions in my sector.
More and more SFH below 1 million West of Main…
But prices are still too sticky to my taste 😉
I cannot wait for the fun to begin.

Simple
Guest
Simple
3 years 11 months ago

Quiet today. Is everyone resting up for the 19K party or what?

moses
Guest
moses
3 years 11 months ago

As a bear, I’m most pleased about the number of price changes. I assume that people are acting on the advice of their realtors.

In my view the realtors are the key to the drop. Volume, not price, is what matters to a realtor so the longer sales stay flat the more nervous the realtors get. This thing will crash when the realtors collectively switch their propaganda from “Buy now or be priced out forever!” to “Sell now or never realize a profit!”

patriotz
Member
3 years 11 months ago

@moses:
It’s not a switch per se, the latter is what they tell the sellers and the former is what they tell the buyers.

Or as the NAR put it succinctly, “It’s a great time to buy or sell a home”.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!
3 years 11 months ago

Is inventory still tracking lock step with May 2010?

Patiently Waiting
Member
Patiently Waiting
3 years 11 months ago

Here’s why many don’t consider psychology as hard science:

http://www.news1130.com/news/local/article/365722–many-young-people-living-jobless-ambition-free-lives

So what is Canada’s real unemployment rate?

Patiently Waiting
Member
Patiently Waiting
3 years 11 months ago

OK it appears Patriotz was right:

http://www.news1130.com/news/national/article/365647–ndp-worries-about-proposed-mortgage-changes

NDP joins the horde of pandering populists.

Makaya
Member
Makaya
3 years 11 months ago
@Patiently Waiting: Some interesting comments from your article: “Wow, this would be a terrible change, and totally unfair. Payment history is all that should be considered. I don’t have a mortgage any more but certainly sympathize with those who do, who would be incredibly stressed every time they had to requalify. It also would mean everyone goes for the longest term possible, to avoid this review. How ridiculous is that idea? At renewal the banks already update your profile, but allowing them to kill your mortgage so easily? No way.” “don’t do that we have been paying our mortgage every… Read more »
N
Guest
N
3 years 11 months ago

@Makaya:

What I don’t get is why the banks or the CMHC would want to re-qualify someone. If the person fails to re-qualify, then the bank has to foreclose. Why would they do that when the person is paying? Considering that the money has already been lent, what is advantage to insisting on re-qualification?

patriotz
Member
3 years 11 months ago
@Patiently Waiting: Forcing people to requalify upon renewal of an insured mortgage would result in more foreclosures and hurt the balance sheets of both the banks and CMHC (at least in the short term). It really doesn’t make much sense economically or politically and I don’t see the federal government allowing this change notwithstanding what the NDP thinks. As for uninsured mortgages it’s up to the banks what they want to do. There’s also the category of mortgages which move from uninsured to requiring insurance due to a drop in equity and thus would have to meet CMHC qualifications. But… Read more »
Yalie
Guest
Yalie
3 years 11 months ago

I actually think the NDP is right this time. As much as I think the mortgage rules need to be tightened, this is not the way to do it.

Canada will have enough trouble in the coming years with people defaulting on their underwater homes; why add to the problem by including people who are otherwise willing to keep making their payments?

Anonymous
Guest
Anonymous
3 years 11 months ago

If I was a bank, and given the current economic climate, I’d rather foreclose earlier rather than later in the burst cycle. Foreclosing earlier may provide opportunities to mitigate losses by unloading foreclosed properties to unsuspecting idiots who don’t realize what’s happening. That would be more challenging the longer the cycle lasts (although, Vancouver does seem to have a rather unending supply of idiots to draw from). Bob Renni would be out of work if Vancouver runs out of idiots.

mac
Guest
mac
3 years 11 months ago

@Turkey: Thank you. Thank you very much. I take 100% credit for shutting the guy down. I ranted and raved at him and dogged him in every calmly-composed response he made to any other poster under the name of FedUpwithU. But the guy is still out there posting on a money advisor site that he had to shut the blog down because no one understood the point he was trying to make. And, oh, yes, how he was like Mahatma Gandhi, the flower seller in Tunisia, the Russians at Stalingrad. I kid not:

http://www.canadian-money-advisor.ca/threadview/2232.html

boogeybear
Guest
boogeybear
3 years 11 months ago
Perhaps there are just too many home owners in Canada and the re-qualifying rule is to bring the level of home ownership back to historical norms and thereby stabilize the market. Cull the weaklings, so the herd can stay strong. I never read how long the person has before topping up their mortgage, maybe there could be an intervention period in order to put the home owner under a course that won’t lead to foreclosure. Maybe a 12 month extension to allow a home owner to reduce their expenses or for credit counselling. Stop thinking of this as being a… Read more »
Patiently Waiting
Member
Patiently Waiting
3 years 11 months ago

“Foreclosing earlier may provide opportunities to mitigate losses by unloading foreclosed properties to unsuspecting idiot”

Yep, it speeds the inevitable. You’d have millions of Canadians sacrificing everything to save a “hopeless cause” mortgage. Hurry them into foreclosure and bankruptcy, and let the healing begin.

I guess now I’m tired of waiting for this shit to end 😛

jesse
Member
3 years 11 months ago
What I don’t get with this requalification sh!tshow is that if I run a business and go to the bank for a loan they will look at my sales to determine what rate they will lend to me. I go in one year and my sales are in the pooper, the bank will not lend to me with as favourable terms. How to avoid this? Take out a loan that matches the duration of the asset. Maybe I’m thick in the head but the easiest way to avoid requalification risk is to avoid requalifying altogether by duration matching. Read: get… Read more »
Anonymous
Guest
Anonymous
3 years 11 months ago

Any government that enacted such rules would find themselves out at the next election. If they were to do so they’d probably grandfather existing mortgages. Politicians generally know on which side their bread is buttered, and wouldn’t take any action that could be directly attributed to thousands losing their homes.

boogeybear
Guest
boogeybear
3 years 11 months ago

For the typical Canadian, the re-qualifying requirement is of no concern and probably would have little to no exposure in any election. Besides, Flaherty is distancing himself from CMHC. Hell, he might even sell CMHC to Genworth and come out a hero.

I’m just glad I’m not a recent home buyer. Anyway you look at it, recent home buyers are road kill.

s
Guest
s
3 years 11 months ago
Just speculating like everyone else. I think with CMHC under OSFI, they have to care about the vulnerability of CMHC and how it ties in with the banks. If foreclosures start happening later in the process where more and more people can’t afford to pay their monthly payments that would cause problems for CMHC and the banks as they try to collect or foreclose in a severely downward market. By making sure people can still afford to make payments, when mortgages come up for renewal, they can weed out the people who can’t afford their payments ahead of time, mitigating… Read more »
Best place on meth
Guest
Best place on meth
3 years 11 months ago

@jesse:

“What would be interesting is how the Bank of Canada would change its outlook if it included commodity price drops among its “downside risks”.”

If commodities keep falling then so will the dollar, that would make it easier to raise the bank rate.

If the rumors that China is tanking hard are true then commodities will keep falling.

Some say their GDP numbers are completely fabricated and that their economy is already contracting.

http://seekingalpha.com/article/610891-is-china-in-recession

spareanickledimedollarpenny
Guest
spareanickledimedollarpenny
3 years 11 months ago

@s: If that’s what they’re doing it sounds like a risky strategy since the rule change could be blamed for the crash.

M-
Member
3 years 11 months ago
@N: IMHO, it makes sense for OSFI to include requalifying in their proposal for new rules. 1) It’s something that people will talk about, because regular people can see that it could be scary to requalify every few years. 2) It is so universally dislikeable that it’s guaranteed to get press, and… 3) Draw attention and criticism away from OSFI’s other, more reasonable proposed rules. 4) Allows OSFI to exclude the widely-criticized requalification rule when they finalize the new rules. 5) OSFI can then keep their other rules, and just eliminate this one, and claim that they paid attention to… Read more »
Anonymous
Guest
Anonymous
3 years 11 months ago

@boogeybear:

“For the typical Canadian, the re-qualifying requirement is of no concern and probably would have little to no exposure in any election.”

It would have massive exposure in an election if a significant number of people found themselves being foreclosed on despite the fact that they’d never missed a payment.

boogeybear
Guest
boogeybear
3 years 11 months ago

But there won’t be a significant amount of people being foreclosed on. That’s just fear mongering.

Losers with girls
Guest
Losers with girls
3 years 11 months ago

oil today had a handle $89, first time since October 2011

DOW was saved from carnage in the afternoon trading by rumours again. for how long?

Anonymous
Guest
Anonymous
3 years 11 months ago

@boogeybear:

“But there won’t be a significant amount of people being foreclosed on. That’s just fear mongering.”

Aren’t we always being told that everybody who has bought recently has been doing so with 5% down over the maximum amortization period?

Patsan
Guest
Patsan
3 years 11 months ago

Just wondering.
Would a mortgage payment that is made from a HELOC be considered as a missed?

shriller
Guest
shriller
3 years 11 months ago

I think the requalifying rule is intended to get banks to offer longer term mortgages, like banks in the US do. It will probably be grandfathered, so that anybody with an existing mortage will be exempt, but future borrowers will need to requalify at renewal. This should give banks an incentive to issue duration-matched mortgages. Otherwise, renewal risk for the bank and borrower will be uninsured.

ReadyToPop
Guest
ReadyToPop
3 years 11 months ago

@Best place on meth

If the rumors that China is tanking hard are true then commodities will keep falling.

Some say their GDP numbers are completely fabricated and that their economy is already contracting.

….and will the same ebb of foreign capital create a giant sucking sound, as a government who turned a blind eye to the RE tsunami on the way in, has to watch the implosion as it makes it’s way out? Maybe it will be Canadian land for Canadian citizens once more…..what a concept!

Anonymous
Guest
Anonymous
3 years 11 months ago
@Anonymous: …Aren’t we always being told that everybody who has bought recently has been doing so with 5% down over the maximum amortization period? … Yes. But ‘recently’ is the key! Most folks won’t be affected by new mortgage rules or increased rates because they either don’t have mortgages or they’re so small it’s not an issue. But, those folks don’t have to sell either when things get really bad, but for those that are affected, they’re the ones, the ‘minority’ that will deepen the crash and put a serious dent in prices. Keep in mind the US has gone… Read more »
McLovin
Guest
McLovin
3 years 11 months ago

oil today had a handle $89

That is good for the markets and the economy. (Other than oil companies)

Numskull
Member
Numskull
3 years 11 months ago

Do you think the Rules changes are to force banks to deal with potential default problems , instead of letting them become CMHC problems?
Numpty

patient renter
Guest
patient renter
3 years 11 months ago
watson
Guest
watson
3 years 11 months ago
@Patiently Waiting: It really kills me that all these stupid politicians, mortgage brokers, real estate whores and general bleeding hearts are clamoring over one another to speak out against the proposed OSFI regulations. What they simply don’t understand is that this shit should have NEVER been allowed to happen in the first place. Owning a home is not a right. Taking on a $500,000 mortgage when you only make $50K a year is not a smart thing to do and it is not the banks or the governments fault for not protecting you from your own stupidity. They should make… Read more »
mac
Member
mac
3 years 11 months ago
@Turkey: Thank you. I believe I shut down that blog by dogging the guy in every blog post as FedUpwithU. Yet, he still doesn’t get it. He’s going to set up another one to defend his fight against the CMHC in the vein of Gandi, the Russians who fought the Nazis, and the Tunisian flower seller who set alight the Arab Spring. Yes, he’s that delusional: He goes by the name of dandy rough. This is his best post ever at : Tue May 08, 2012 10:05:40 AM http://www.canadian-money-advisor.ca/threadview/2232.html Sad thing is, I bet at least 50% of all people… Read more »
mac
Member
mac
3 years 11 months ago

test

mac
Member
mac
3 years 11 months ago

Having trouble posting.

sunblaster
Guest
sunblaster
3 years 11 months ago

@M- got it 100% correct

mac
Member
mac
3 years 11 months ago

Now have nothing to say. Except, Turkey, I am FedUpwithU from that guy’s blog over at the Imma gonna sue the CMHC. I shut down his blog. I went all RJ on him. I couldn’t help myself. But he’s going to start another blog soon too because he says the posters didn’t “get” what he was trying to do. He’s nuts. I know. I’m wasting my time but I know in my heart of heart’s that at least 30% of people with CMHC backed mortgages think they’ll be bailed out if they default.

AG Sage
Member
3 years 11 months ago

@mac: I thought his blog interesting not for his content, per se, but for the level of pain it expressed. Multiply that pain by a million or two households and you have a real crisis on your hands. Everyone mocks the walk-aways in the U.S. but at least we have an outlet available that returns millions of households to normal consumer status again.

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