Heloc LTV going to 65%?

Canadian Mortgage Trends is saying that changes to HELOC loan to value (LTV) limits are a done deal.

If so this means the maximum HELOC you’ll be able will move from 80% to 65% of the total value of the property.

Read the original link for full details. Many commenters there seem to think this is too big a move.

Appraiser said…
65% is too much of a leap all at once.

I can’t understand why OSFI doesn’t ratchet the LTV ratio down a little more slowly (i.e., 5% at at a time and sit back to observe the consequences).

As has been noted lately, the previous three sets of mortgage tightening guidelines have been gradually working their way through the credit markets effectively.

You can kill an ant with a hand grenade, but it usually makes a hell of a mess.

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Best place on meth
Member
Best place on meth

@Skeptic:

“I am starting to believe that all these “changes” to mortgages really will have no impact.”

Makes me wonder then why the crybabies on the mortgage broker site are so up in arms.

They act as if home owners have a god given right to dirt cheap money.

Anonymous
Guest
Anonymous
@Anonymous: “This looks like a scam of some sort. There is no way that house was worth $1,450,000 in 2008 and then only $595,000 today even if the interior is trashed. It must of been some type of mortgage scam where a place is sold way over its true market value to a friend, mortgaging it to the max with the plan of defaulting. The friend has his cash maybe $500,000 over what he should and the other guy goes bankrupt. It was probably used as a grow op in the mean time.” Like I said, it’s possible the owner put down a huge downpayment. So the $595,000 represents the amount of the mortgage that the bank is trying to recover. The foreclosure process is effectively a sealed bidding process in court, so it’ll sell for market value no matter… Read more »
mac
Member
mac

@mac: Why does this blog have to practice such heavy denial? What’s the point of creating a bubble in here the same as the one out there? Let’s hear from someone who is currently bidding on a property.

Anonymous
Guest
Anonymous

@mac: …No interest rate changes. No impactful price declines….

Ya, look at the US, their rates stayed low and they didn’t see any price declines.

President, Society for the terminally gullible.

jesse
Member

@mac: “People are holding onto their prices”

MOI for detached VanWest is at 10. Delist, drop the price, or wait. I think I just heard another blink.

registered
Member
registered

28 mac Says: “@mac: Why does this blog have to practice such heavy denial?”

Confusing your accounts?

Devore
Member
Devore

@Anonymous: Pretty much. The bank is interested solely in covering the outstanding mortgage amount. The excess is returned to the (former) owner. Ultimately the property will sell for market value regardless of list price.

A foreclosure will _probably_ sell for a bit less than if it were listed by owner, because a) owners will hold out for more money, b) the foreclosure auction-style environment easily allows buyers to low-ball, without worrying about “offending” the seller. Perversely, the reverse is not true, which is to say sellers are always free to offend buyers with high asking prices.

Anonymous
Guest
Anonymous

@Anonymous: Look at the face of the agent………………..think about it,is abnormal and fishy,even the market is in retreat but shan’t be that quick.Don’t ever touch it.

Anonymous
Guest
Anonymous

@mac:
(No interest rate changes. No impactful price declines.)

Bears are over optimistic and ecstatic,in reality the Van and Richmond SFH price has,indeed,edged up few percents.They are creating another bubble suiting to their liking in denial.

jesse
Member

@mac: Think through what it would mean if prices remain at current levels and GoC bond rates remain low for a prolonged period (say 20 years).

patriotz
Member

@Anonymous:
“Like I said, it’s possible the owner put down a huge downpayment. So the $595,000 represents the amount of the mortgage that the bank is trying to recover.”

The bank has a legal obligation to the borrower to make a best effort to get market price, not just the balance owing on the mortgage, and can be sued if they don’t.

Another problem with your scenario is that if there were any equity in the house the owner simply would have sold it rather than default.

Or maybe it’s not a foreclosure. The house may have been the object of a lawsuit or other legal dispute.

Perhaps the most likely scenario is that the agent is simply listing low to try to get a bidding war. But who knows.

Anonymous
Guest
Anonymous

@Devore: “The bank is interested solely in covering the outstanding mortgage amount.”

The bank is obligated to get a reasonable price for the house regardless of what they are owed.

If there was only 595K on a mortgage and the value of the house significantly more then the owner would not be in foreclosure. They would sell on their own. They could easily take out a HELOC to pay the payments like everyone else.

Common sense says the house was never worth 1.45 Million in 2008 even in this crazy market. Have a look at listings in the area and you get more than a dated 4000 sg ft house for 1.45 mil in Westwood Plateau. And prices have increased since 2008 for SFH in that area.

Anonymous
Guest
Anonymous

@patriotz:

“The bank has a legal obligation to the borrower to make a best effort to get market price, not just the balance owing on the mortgage, and can be sued if they don’t.”

That’s true, and I’d forgotten about that aspect.

patriotz
Member

@Best place on meth:
The brokers know full well that a great many entry level buyers are being enabled by their parents taking out HELOC’s on their houses.

Take that away and the house of cards collapses. With current interest rates.

N
Guest
N

@patriotz:

Is it possible that the agent forgot to type a “1” at the beginning?

Anonymous
Guest
Anonymous

Looks like 10yr bonds might set another new record today.

jesse
Member

@patriotz: “The bank has a legal obligation to the borrower to make a best effort to get market price”

A problem if a certain market isn’t seeing many sales, except if deeply discounted.

Anonymous
Guest
Anonymous

@jesse:

“MOI for detached VanWest is at 10.”

What about attached?

Best place on meth
Member
Best place on meth

@Anonymous:

“Looks like 10yr bonds might set another new record today.”

Looks like investors around the world are scared shitless right now.

We knew this was coming.

Skeptic
Guest
Skeptic

@Skeptic:

“I am starting to believe that all these “changes” to mortgages really will have no impact.”

Makes me wonder then why the crybabies on the mortgage broker site are so up in arms.

They act as if home owners have a god given right to dirt cheap money.

___________

The mortgage brokers were upset when the 0 down/40 year was eliminated, and when they made changes in March 2011 to lending rules as well. Their being upset in the past has not translated into price drops, so I wouldn’t put too much faith that their current angst will translate into big price declines.

I wish it wasn’t so though…

patriotz
Member

@Skeptic:
“Their being upset in the past has not translated into price drops”

Except for metro Vancouver, the whole province is down from two years ago. The second biggest market, Victoria, is down 10% from peak and is back to 2008 prices, and the third biggest, Kelowna, is down over 20% and is probably back to 2005 prices. And we’ve just been talking about Whistler – the whole recreational market is in similar shape.

Whether Vancouver can remain “special” remains to be seen.

Not much of a name...
Member
Not much of a name...

@Skeptic: They are just a bunch of self serving hypocrites. They are all screaming that it’s government interference in the free market, but there’s just one problem with that line of thought…CMHC!

Vic or bust
Guest
Vic or bust

Except for metro Vancouver, the whole province is down from two years ago. The second biggest market, Victoria, is down 10% from peak and is back to 2008 prices, and the third biggest, Kelowna, is down over 20% and is probably back to 2005 prices. And we’ve just been talking about Whistler – the whole recreational market is in similar shape.

_______

Can anyone verify that Victoria is actually back to 2008 prices after only a 10% drop. That seems a little ridiculous…

patriotz
Member

@Vic or bust:
No problemo. Click on Victoria:

http://www.housepriceindex.ca/default.aspx?langue=EN

As you can see the post-2009 runup was much smaller than in Vancouver.

Anonymous
Guest
Anonymous

@VMD

Ok so My wife called the realtor regarding the house listed:

The Realtor said it would take $200,000 to fix the place up because of water damage – the house doesn’t even have insulation in it and everything is water damaged to the beams.

You are paying, then, for an expensive lot – and if there is that much damage to the home you are probably better off tearing it down and building back up from the foundation.

The questions, however, is how did all that water damage occur? Me thinks it was a grow up perhaps all the humidity got into the walls… I don’t know, my current hydroponics operation hasn’t taught me much.

Thanks