A Mortgage Brokers view on rates and prices

Rob McLister is a mortgage broker and the editor of the informative Canadian Mortgage Trends blog.

He’s doing a livechat at the Globe and Mail answering questions about mortgages right now.

Yesterday they published his rather bearish opinion on the future of home prices in Canada, which may suprise you coming from a mortgage broker.

“Buying the same house will be more expensive this fall than this spring,” National Bank Financial’s Peter Routledge told the Globe and Mail last month. But analysts point to a range of factors that could moderate home prices in the next six months, including higher interest rates, growing supply, modest income growth and stricter mortgage regulations. Canada’s banking regulator is weighing new mortgage rules as we speak.

Rates are the biggest wild card and the No. 1 factor that could put the brakes on home prices. Higher mortgage rates immediately make it harder for budget-strapped buyers to qualify for a mortgage. That’s why – other things being equal – as rates increase, prices usually decrease.

So if home prices potentially face headwinds, does it really make sense to run out, compete with a stampede of other buyers and purchase a home?

Read the full article here and find the live chat session here.

Sort by:   newest | oldest | most voted
Best place on meth
Member
Active Member
Best place on meth

Well, that was a completely useless live chat.

Yalie
Guest
Yalie

I actually like Rob. His blog has useful information and insight from an obviously knowledgeable industry insider that you often can’t get anywhere else.

The problem with this GnM piece is Rob’s inherent conflict of interest. He knows the market is likely to crash, but since his income derives from sales activity he just can’t bring himself to say so. So instead his very first piece of advice is “don’t try to time the market – go out and buy as long as you can afford it, blah blah”.

He does show his cards a little though with one of his later comments:

“And if you’re overleveraged, there will be surprises at some point. I promise you 🙂 …”

franko
Member
franko

Mortgage brokers warning that prices could go down with higher int rates is not much different than used car salesmen telling you not to buy a used car.
Scotia Bank’s Real Estate Trends report also said today that they predict a housing downturn with higher rates…they’re also in the business of selling mortgages.

Interest Only
Member
Interest Only
I guess Teranet does a pre release for media: http://www.theglobeandmail.com/report-on-business/top-business-stories/home-prices-rise-23-as-market-rebounds-but-fall-in-vancouver-victoria/article14271845/ Some noteworthy points: “Prices fell for the 13 consecutive month in Vancouver, though by just 0.1 per cent, and for the sixth month in a row in Victoria, by 2.5 per cent.” The national bank idiot economist said the following: “National Bank economist Marc Pinsonneault sought to put this in perspective, suggesting there’s no bubble here …“Even if it [price gains] exceeds CPI inflation … home price inflation in Canada remains subdued in August, especially if it is compared to the 12-per-cent rate registered by the U.S. Case-Shiller index,” he said.” HA HA HA – when the Case Shiller index was diving and Canada was climbing did it appear that we were in a state of hyper inflation??? What a jerk-off, that has to be the dumbest comment by a… Read more »
Interest Only
Member
Interest Only

Calling VMD… SOS

@VMD
Despite the muted price increases in Vancouver over the last two years:
Falling average prices by 13%, slow sales over $1,000,000 price mark, a flat teranet HPI.

Surrey participants insist prices are going up at an alarming rate. Does your tank chart show this?

Son of Ponzi
Guest
Son of Ponzi

Nowadays,
Every man and his dog is an expert on RE.
Can’t wait for the crash to be over with, so that we can focus on what really matters again.

Aggregator
Guest
Aggregator

This is a table of random sampled mortgages rates from CanEquity for anyone who might find it useful. (5Yr) http://i.cubeupload.com/CNSRO6.png

Data is extracted from here http://www.canequity.com/tools/mortgage-rates-comparison/

Son of Ponzi
Guest
Son of Ponzi

RE Bust in India!
This will affect RE in Canada, particularly places like Surrey.

http://www.cnbc.com/id/101026277

RealityCheck
Guest
RealityCheck

Sure rates matter to local buyers.

The wildcard is foreign money and the money from the black market.

RealityCheck
Guest
RealityCheck

Son Of Ponzi,

“RE Bust in India!
This will affect RE in Canada, particularly places like Surrey.”
—————————————————————-

First, a South Delhi Condo that was $2 Million Canadian is now $1.4 Million. The average labourer wage in that area is about $5 a day. Do the price to income ration…and this is even detached homes in South Delhi. They make Vancouver homes look downright cheap1 Don’t believe me, read the link.

http://articles.economictimes.indiatimes.com/2013-09-10/news/41937957_1_south-delhi-defence-colony-crore

Also, Barely any Indians in Surrey are from the Delhi region. They are from the state of Punjab in the North West corner of India.

Yalie
Guest
Yalie

@RealityCheck

You’re a RE bull, I get it. What I don’t quite get is the logic behind your argument that there will be no crash in Surrey. Let’s see if I correctly understand your reasoning:

1. Condos in Delhi have dropped from 2M to 1.4M. Therefore there will be no crash in Surrey.

2. Prince/income ratios in India are way higher than they are over here. Therefore there will be no crash in Surrey.

3. Indians in Surrey are more likely to be from Punjab than Delhi. Therefore there will be no crash in Surrey.

Is that your reasoning, in a nutshell? Well done. With logic like that, sometimes I wonder why I still rent.

Son of Ponzi
Guest
Son of Ponzi

RealtorCheck # 10
Is Punjab not part of India?

Saver
Guest
Saver

@RealityCheck
“Also, Barely any Indians in Surrey are from the Delhi region. They are from the state of Punjab in the North West corner of India.”

Do you mean “it is different there”? LOL

Saver
Guest
Saver

Please don’t try to buy anything in Punjab – there’s nothing available…

VMD
Member

#5
Detached HPI Benchmark Price YoY % Change:
NORTH SURREY 0.5
SURREY 1.1
CLOVERDALE 0.7
SOUTH SURREY & WHITE ROCK -1.2
http://www.fvreb.bc.ca/statistics/Package%20201308.pdf

Son of Ponzi
Guest
Son of Ponzi

#15
Interesting, prices are up in Norh and Central Surrey, but down in South Surrey, which is the nicer part of Surrey.
Insights, anyone?

Guess today's total sales
Guest
Guess today's total sales

Just for fun I’m gonna pull today’s total sales out of a hat – 72.

C’mon 72!

VanRant
Member
VanRant

@ Guess today’s total sales

We have two 88 sales this month. I want to make it a hat trick. Go lucky 8’s.

Aggregator
Guest
Aggregator

@Son of Ponzi

Van detached in rupee terms was up 13.8% in August. http://i.cubeupload.com/Hh7Alm.png

That’s been a great inflation hedge for any Indian buyer who purchased a home years ago. How long that lasts is another question.

HAM Solo
Guest
HAM Solo
@ franko Scotiabank definitely originates mortgages, but that’s different from being wholly in the mortgage business. The credit risk is largely outsourced to the government. That being said, they will be toast in a big correction due to the rest of their on-book loan risk, combined with slowing origination, combined with weakening asset management fees from owning bank shares for their clients. As to why the banks are warning, my guess is that there is some degree of career incentive on the part of the equity analyst or economist in not looking silly (or perhaps being able to claim after the fact that he warned us). The bank may have an interest in getting the word out in order to influence Ottawa to call off the dogs at OFSI or help pull the BoC into aggressive QE mode as soon… Read more »
Son of Ponzi
Guest
Son of Ponzi

Thanks Aggregator,
Given the financial trouble in India, there will be huge pressures to lock in those gains, to cover the losses in their homeland.

UBC in crisis mode
Guest
UBC in crisis mode

what happened to this property:
MLS# V992729

Assessed around $4.5 million and listed for $9,580,000?

Son of Ponzi
Guest
Son of Ponzi

Funny, that the warning would come from Scotia Bank.
They always told us that we are richer than we think.
So, all of sudden, we’re poorer than we think.
I wish those guys would make up their minds.

Barb Rennie
Guest
Barb Rennie

MLS# V992729

Assessed around $4.5 million and listed for $9,580,000?

Expired Aug 2013

Son of Ponzi
Guest
Son of Ponzi

Prices are down in South Surrey and White Rock.
Looks like the Yellow Helicopters have moved on.

wpDiscuz