TD defends Canada from Krugman

Why is everybody picking on the Canadian housing market lately?

US economist Paul Krugman was one of the latest to say that we’re at risk for a housing market collapse.

An economist at TD bank couldn’t let that stand though, and was there to defend our delicate reputation.

“Largely owing to a continued low interest rate environment, mortgage interest costs as a per cent of personal disposable income have fallen despite the sharp rise in the debt-to-income ratio,” she added in her report.

“Meanwhile, while mortgage delinquency rates in Canada and the U.S. were similar during the 1990s, the per cent of mortgages in arrears 90 days or more in Canada is about a third of what they were in the U.S. leading up to the 2008-2009 crisis.”

Ms. Petramala cited the “riskier lending practices” in the U.S. between 2002 and 2007, and the tighter restrictions now in place in Canada.

Of course the reason ‘tighter restrictions’ are in place now in Canada was because they had become rather loose.  And as Patriotz points out, mortgages arrears are a trailing rather than leading indicator.

The TD spokesperson is ignoring the fact that the US housing bust started in 2006, when mortgage arrears were at historic lows, not in 2008. Mortgage arrears are a lagging indicator of falling prices.

Lots more “it’s different here” for your enjoyment.

Read the full article in the Globe and Mail.

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F contradicts Poloz and Carney too!
Guest
F contradicts Poloz and Carney too!

http://www.timescolonist.com/news/federal-briefing-deflates-claim-of-inappropriate-hoard-of-corporate-cash-1.331978

“While Canadian non-financial corporations are holding more cash than ever before, they appear to have legitimate business and economic reasons for doing so,”

Gee, with that out of the way, what’s the hold up on raising the overnight rate and stopping the wholesale rip-off of savers?

Ralph Cramdown
Guest
Ralph Cramdown

Maybe above optimal unemployment and below target inflation have something to do with keeping the overnight rate low?

The only savers who are being involuntarily ripped off are life insurers and similar capital pools which are mandated to hold high quality bonds. Everyone else has a choice where to invest their money. There’s even a sale on yield right now!

Anonymous
Guest
Anonymous

“raising the overnight rate ”

Longer term fixed income, at least, is real zero or higher. Not high but at least it’s not a tax.

The high corp savings rate annoys everyone but OTOH they won’t invest into a weak economy and provision for future economic shocks. Higher rates might actually get them off the bed only because their capital is going to start eroding if they don’t get it working.

DADDY BEAR
Guest
DADDY BEAR

I’m glad I plowed all my money into stocks instead of Vancouver real estate.

BULl
Guest
BULl

Lol house bears getting spanked on stocks

golden_boy
Guest
golden_boy

Mortgage arrears are a lagging indicator of falling prices.

USA:

2006 1,259,118 foreclosures
2007 2,203,295 foreclosures
2008 3,157,806 foreclosures
2009 3,957,643 foreclosures
2010 3,825,637 foreclosures
2011 1,887,777 foreclosures
2012 1,836,634 foreclosures

As you can see, delinquencies didn’t start to skyrocket until 2 years after the bust started so I would expect the Canadian default rate start to creep upwards soon.

BULl Flub
Guest
BULl Flub

BULl Says:
June 24th, 2013 at 8:16 am 5

Lol house bears getting spanked on stocks

Unless they are short stocks, oil, dollar…

Wait wha… you can do that? Who knew? I thought I buy the thing and wait for the guy on TV to tell me, sell it. You know, like when ancient forefather advised me to buy land/wives/oxen/etc… You mean I don’t have to drive my father’s Oldsmobile?

That’s right @BULl#5, you don’t know and you’re too dumb to find out. But you’re gonna find out what a real spanking is when what you think you’ve got is marked to market. LOL!

Anonymous
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Anonymous

Dollar getting hammered. Watch for items around you rise in price. READ not going to budge as that’s the last thing immigrants will let go!

Meanwhile ur savings will get eaten up…

Anonymous
Guest
Anonymous

Read should read RE. Damn auto….

Anonymous
Guest
Anonymous

RE not going to budge? Tell this guy, his place is down at least $100k since 2007:

http://vancouverflippersintrouble.wordpress.com/2013/06/21/six-years-six-figure-loss/

bears dont get it
Guest
bears dont get it

house bears end up with worthless shares that can only wipe their A$$ and house bulls at least will have roof under their head.

Carioca Canuck
Guest
Carioca Canuck

Bears don’t get it said……”and house bulls at least will have roof under their head”

Very true…..because they’ll be sitting on the roof of their properties as they’ll be underwater…..LOL !!!

bears dont get it
Guest
bears dont get it

and when you are 70 you will not be able to afford philipina to change your diepers because you have to pay rent hmm lol

Anonymous
Guest
Anonymous

Have your say in Future Immigration Levels. Remember, lower levels equals lower house prices.

http://www.cic.gc.ca/english/department/consultations/levels/2014/index.asp

Anonymous
Guest
Anonymous

bears don’t get it:

when he’s 70, his pension won’t be around anymore.
Unsustainable in a globalized world!

Do the Math…

Anonymous
Guest
Anonymous

The problem with pensions isn’t that they are unsustainable. The real issue is contained in comment #1:

“While Canadian non-financial corporations are holding more cash than ever before”

Money that used to go to fund pensions is now being hoarded by corporations.

VMD
Member
Chinese buy up Canada farms; is Beijing behind it? 23 Jun 2013 In Saskatchewan province, home to 45 percent of all arable land in Canada, the price of farmland has risen an average of 10 percent in the last year, and as much as 50 percent over three years in areas where Chinese immigrants have settled, according to farmer Ian Hudson, who lives near the village of Ogema. Provincial authorities counted a half dozen large investment firms buying up farmlands in the province of one million people, but could not say if any of them are linked to Beijing, nor estimate the size of their land holdings. Facing mounting demands from local mayors for an investigation, Saskatchewan officials began looking into the issue last year. … Real estate speculation has made it harder for young local farmers to buy their… Read more »
Son of Ponzi
Guest
Son of Ponzi

Listings are shooting up here in Richmond.

Mick Murphy
Guest
Mick Murphy

Was talking about the China situation with a co-worker. He told me that the ATMs have run out of money, although they have deposit insurance it is nothing like we have here, and that because they distrust the government people believe rumour more than officials.

It seems that there is a run on the Chinese banks.

Also, this:

http://www.zerohedge.com/news/2013-06-24/bank-china-declares-moratorium-transfers-online-banking-counters-inoperable

Kbro
Guest
Kbro

Looks like George Soros was right half a year ago when he said int rates were going to spike…who’da thunk it!

Global markets getting pounded again today.
China monetary crisis looming with economy in trouble.
US bond yields up again today.

” RE not budging “?
With HAM totally dried up and mortgage rates in a major reversal, you will probably miss the “budge” as our housing market implodes.
Of course it will take a while for the penny to drop as our housing market is not exactly driven by rocket scientists.

Democrass
Guest
Democrass

“Listings are shooting up here in Richmond.”

Got any numbers?

BULl
Guest
BULl

Puling the numbers from his arse. HAM is buying whats left, farmland. RE is gone, oil sands gone.

Son of Ponzi
Guest
Son of Ponzi

# 20
Townhome listings increased from 381 to 419 over the weekend in Richmond.
Builders are dumping their inventories.

Dumbest time in 31 years to buy RE
Guest
Dumbest time in 31 years to buy RE

Every single fundamental that drove Van RE to new heights since 2009 has totally reversed:

China syndrome could force HAM to liquidate.
Unemployment will worsen with faltering economy.
Government cutting back on immigration.
Demographics, more boomers will soon be downsizing than ever before.
Higher mortgage rates will be the single biggest factor to kill this market.

How dumb do you have to be not to figure this out?
Pretty friggin dumb!

ALL-CAPS
Guest
ALL-CAPS

CHINA IMPLOSION IS HERE. WHAT NOW?

YOU CAN MAKE ARGUMENTS THAT THIS WILL INCREASE OR DECREASE VANCOUVER REAL ESTATE PRICES.

THE WORLD HAS NEVER SEEN ANYTHING LIKE THIS BEFORE.

wpDiscuz