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Phony Appraisals and Mortgage Investments

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Canso Investment Counsel has released a study about mortgage securitization in Canada:

The “securitization” of mortgages that many economists blame for the housing collapse and subsequent financial crisis in the U.S. is now a runaway problem in Canada, says a new study that also casts doubt on whether Canadians can trust the house price information they are seeing.

The study from Canso Investment Counsel, a corporate bond management firm, says mortgage securitization — bundling mortgages together and selling them to investors — has spiralled out of control in Canada in recent years.

On a side note, how many renters out there are buying MICs as a hedge against high property prices?

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PavelBure

The reason why the WCE isn’t turned fully into a commuter line is that CP (or is it CN? – whoever owns the rights to the tracks) makes more on freight than passenger service. This is the case that’s happening in London with TFL. Certain overground lines have lessened passenger service due to freight ROW.

But unlike London (who is in the middle of a multi billion construction of a new metro line “Crossrail”), Vancouver can’t seem to get it’s finger out of its ass to start tunneling and laying down tracks.

Vancouver needs so much more transport infrastructure, it’s not funny. At the least, use appropriation and build on the Arbutus corridor already and extend the skytrain to UBC!

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trackback

[…] rent a bargain by comparison -Cognitive dissonance on debt -Everything higher than ever before -Running the numbers -DTES building crumbles […]

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db

S11

Yup…we are up to 46. MOI of around 11-12 by months end.

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Son of Ponzi

Does no one know how to use amortization tables anymore?

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jesse

” I would be surprised to see 50% going to the principle in the first 5 years” Principal payback is an exponential relationship with interest rate. For example at 0% interest 100% of your monthly payment is principal. For a $100,000 loan at various interest rates, the first payment will be: rate pmt interest principal % principal 0% -333 0 -333 100% 1% -377 -83 -294 78% 2% -424 -167 -257 61% 3% -474 -250 -224 47% 4% -528 -333 -195 37% 5% -585 -417 -168 29% 6% -644 -500 -144 22% 7% -707 -583 -123 17% 8% -772 -667 -105 14% As the rate increases the payment towards principal decreases and is more heavily weighted near the end of the schedule. Why is this important? Right now with low rates, an increase in rates will more significantly affect savings… Read more »

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canadian

#72 Mr Chow you make good point. Canada Man also have no children because he has to pay so much to live here, so we take his money and he disappear after this generation .Vancouver good investment and soon Canada Man be bye bye as well.

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s11

@db,

Can that be right 43 homes sold in Van east so far in July. That seems really low.

Can you confirm.

Thanks!

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Ludvig von Mises

Hmmm … a different Hodgins apparently.

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Ludvig von Mises

“James Hodgins said …”

Since when do you guys take realtors seriously?

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paulb

New Listings 142
Price Changes 81
Sold Listings 128
TI:18026

http://www.paulboenisch.com

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chilled

slurker Says:
July 25th, 2013 at 3:39 pm 85

I agree about WCE – I never understood why no one is willing to go with this option…..

++++++++++++

Because that sounds like something most major cities would do in a heartbeat, but this is Vancouver.

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b5baxter

2 of the 3 options under consideration for the Broadway transit do involved extending the millennium line from VCC:
http://www.translink.ca/ubcline

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franko

# 84

” ITB slammed today ”

Just goes to show that the smart money is able to sniff out the consequences of higher rates a lot faster than our poor FTBs.

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slurker

:

I agree about WCE – I never understood why no one is willing to go with this option. The track is already there and the improvements needed to make it usable for 24/7 commuter use would surely be cheaper than building a new Skytrain line. They could probably electrify the entire stretch, upgrade all the stations and replace all the sets of much less than the 1.6 billion for the Evergreen line. And it’d be faster to get downtown, higher capacity and cover a much larger area.

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homebuilders etf

ITB slammed today

http://s23.postimg.org/6spkexizv/itb.png

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DaMann

It works that way? I thought the lower rate just means a lower payment but the first 5 years is mostly interest. I could be wrong ( wouldn’t be the first time!) I would be surprised to see 50% going to the principle in the first 5 years. But I guess that’s the way it works…

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Best place on meth

Funny you should mention that because the folks who got rate holds at 2.79% would be getting 50% of their payment put towards principle on day 1, with that number increasing each month after that.

Anyone signing up now for the new rate of 3.39% won’t hit the 50% mark until the middle of year 5.

The wait will get longer as rates continue to climb.

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jesse

Looking back at January I had made a comment on reasons why 2013 could be less severe for price drops than 2012. The comment can be found by clicking here. I have also made a fair number of “bearish” comments about 2013 that, so far, have not panned out with the magnitude I have been expecting. But based simply on 2009’s strength over 2008 I had made the conjecture that 2013 would be a “hybrid” year with some, albeit muted, strength over 2012. In addition I had been looking at intraprovincial (in the province) migration as well as the trend of residential construction activity differentials that point towards higher net migration from non-LM cities towards the LM as measured mid-2011 to mid-2012. That uptick led to Vancouver-area population growth in 2012 being higher than 2011. If one believes that in-migrants… Read more »

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Son of Ponzi

Pdub,Melba,

As Vancouver becomes more like Beijing and Shanghai, the rich Chinese wil asked themselves: Why did we come here in the first place?
They will then either go back home or find other BPOEs
They will liquidate their RE holdings, which will drive prices down, which will encourage poorer Asians to come.
IMO, this is how this will play out.
Unless, of course, the powers that are will put a stop to this madness and put some control on immigration.
I say, Fat Chance.

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DaMann

Many Franks #64

Would love to know what bank puts 50% of your payment towards the principle! Sign me up. Maybe after year 10 or 15…

and 3% for 25 years? Haha yah good luck with that one. He sure is reaching in his math.

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franko

Softy #71

Sorry,
I guess I should have said James Hodgins, Chief Investment Officer of Curvature Hedge Strategies. Just assumed that most people would realise that BNN is not in the habit of interviewing footsoldiers in the RE game.

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Joe Mainlander

Mr Chow may be facetious, but commuting and transit may not be as much of a driver in these decisions as real estate is. In the proposed viaduct plans Concord Pacific gets the adjacent unsightly viaducts removed, a land swap, and an enlarged park area next door. Sure to enhance values.

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Son of Ponzi

Softy,
I accept your apology.

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db

Correction: 6 sales today

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