IMF says Canada should end CMHC insurance

In a surprising recommendation, the International Monetary Fund has suggested that Ottawa should do away with mortgage insurance offered by the CMHC (Canadian Mortgage and Housing Corporation).

The IMF concedes that the current system has its advantages for stability. But it says it also exposes the government, or taxpayers, to financial system risks and might distort the market as a whole in favour of mortgages over more productive uses of capital.

Huh, would any of you taxpayers miss insuring high risk mortgages?  By which we mean would you miss insuring MORE higher-risk mortgages, since there’s no way you can drop responsibility for the ones we already insure.

Read the full article here.

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patriotz
Member
” there’s no way you can drop responsibility for the ones we already insure. ” Actually it’s possible: 1. GoC or CMHC buys mortgage from lender. 2. As Crown now owns mortgage it can cancel the insurance. 3. Crown sells mortgage uninsured on open market. The rub is that the sell price in #3 is going to be lower than the buy price in #1 because it no longer has a Crown guarantee. And that difference is a current expense, i.e. on the books spending. So it’s not going to happen. I have said before that any “privatization” of CMHC would just be a ruse with private entities dealing with the borrower and lender and the government still holding the bag on guarantees. The RE market would collapse to below US prices if government no longer guaranteed new mortgages and… Read more »
patriotz
Member

Why Goldman Sachs recommends shorting the Canadian dollar

“Since the global financial crisis, significant external imbalances have built up in the Canadian economy,” Goldman said.

“In 2008, the current account balance fell from a surplus of 1 per cent of GDP to a deficit of 3 per cent – and it has remained stable at this level since then,” the bank said in its report.

“The main reason for this has been a decline in manufacturing exports, which fell by about 30 per cent during the crisis.”

Executive summary: the Canadian economy has been running on debt since 2008. That’s the real “Economic Action Plan”.

If you were a bond market investor and you believed that the CAD was due to fall further, would you buy a CAD bond for the same yield as a USD bond?

registered
Member
registered

“… the International Monetary Fund has suggested that Ottawa should do away with mortgage insurance offered by the CMHC ….”

…and replace it with a system, immune to party political manipulation, designed to temporarily assist only the very lowest rung of the economic ladder. A social security measure instead of a vote harvesting engine. That would be novel.

ILoveCharts
Guest
ILoveCharts

It’s a trap of course. If they were to stop insuring new mortgages, that would cause a fall in house prices that would end up causing problems for many existing mortgages. They will keep this party going for a while longer – hoping that something miraculous will happen or that someone else will be at the helm when the music stops.

George
Guest
George
That BIV article that Son of Ponzi linked to is interesting. Yes, the article is citing stats collected by a real estate firm so we have to keep in mind the potential for bias/manipulation. But still, it is interesting to ponder some of the statements made in that article, such as: “foreign investors are switching from residential to commercial” …So maybe foreign investors sense trouble with residential real estate in Vancouver and that is why they are switching to commercial (if they are indeed switching) “they outbid local buyers by quite a margin.” …Sounds right to me. “an unnamed “foreign buyer” paid $1,803 per square foot for a 13,200-square-foot retail building on Robson Street; another paid nearly $500 per square foot for an older eight-storey office building on West Pender.” …I wonder which buildings? “Foreign buyers are also snapping up… Read more »
patriotz
Member

@5:

The reporter could have found out who the “unnamed foreign buyer” is by doing a title search, so I don’t see why this or similar articles should be taken seriously.

“…So clamping down on mortgage lending may actually assist foreign buyers, potentially having the perverse effect of increasing Vancouver’s real estate bubble,”

Er what? Yes reducing the ability of domestic buyers to borrow would assist any cash buyer, foreign or domestic, through lower prices. But that’s reducing the bubble.

George
Guest
George

@6

Okay, yeah that last part I wrote didn’t make sense. It was early in the morning and I hadn’t fully woken up yet.

George
Guest
George

Here’s an article about the vacation rental market up in Whistler. It says a lot of the owners of Bed and Breakfasts are upset about property owners who are illegally renting out their units as vacation rentals on a nightly or weekly basis. It seems to me these people wouldn’t be crying if Whistler were going gangbusters and there were loads of vacationers pouring in–interesting to see how the winter will go up there.

http://www.cbc.ca/news/canada/british-columbia/illegal-whistler-vacation-rentals-anger-business-operators-1.2443656

Melba
Guest
Melba

….Of course the surest sign that the Cons know something is that they are saying the opposite….

Yes, we all know that Conservatives are the only politicians full of shit.

Snake
Guest
Snake

1)The Most Overvalued And Undervalued Housing Markets In The Developed World
http://www.businessinsider.com/chart-over-and-undervalued-markets-2013-11#ixzz2lxePPf00

2)Canada’s housing market overvalued, but crash worries ease

http://www.bnn.ca/News/2013/11/26/Canadas-housing-market-overvalued-but-crash-worries-ease.aspx

3)7 Remarkable Numbers From Canada’s Housing Market

http://www.fool.ca/2013/11/26/7-remarkable-numbers-from-canadas-housing-market/?source=c75yhocs0040001

4)Mark Carney To Stop Mortgage Funding Scheme As House Prices Soar

http://www.huffingtonpost.co.uk/2013/11/28/mark-carney-mortgages_n_4354789.html?utm_hp_ref=uk

5)Housing Bubble? Canada’s Top Banking Regulator Refuses To Say

http://www.huffingtonpost.ca/2013/11/26/housing-bubble-julie-dickson_n_4344884.html

6)Vancouver Real Estate Canada’s Least Affordable: Report

http://www.huffingtonpost.ca/2013/11/27/vancouver-real-estate-least-afordable_n_4351424.html?ref=topbar

7)Affordability calculator: How much house can you handle?

http://globalnews.ca/news/993865/affordability-calculator-how-much-house-can-you-handle/

8)Home affordability worsens, new report shows

http://globalnews.ca/news/993130/home-affordability-worsens-new-report-shows/

9) The Chase: an expat couple’s citywide search for a $650,000 house

http://www.torontolife.com/informer/toronto-real-estate/2013/11/26/november-2013-the-chase/

Snake
Guest
Snake

welfare funds scammed by organized crime ring

http://toronto.ctvnews.ca/video?playlistId=1.1563738

Melba
Guest
Melba

….Here’s an article about the vacation rental market up in Whistler. It says a lot of the owners of Bed and Breakfasts are upset about property owners who are illegally renting out their units as vacation rentals on a nightly or weekly basis…

Mongrel dogs fighting over scraps. A lot of folks have lost a lot of money on Whistler RE and no sign of that changing anytime soon if ever.

registered
Member
registered

@4 : Or until after the next federal election.

sunny day in vancouver
Guest
sunny day in vancouver

another beautiful day in the best place one earth. how are bears doing? not so great since there was no crash. lot of things you should be thankful for though!

aa4
Guest
aa4

If I was a super rich foreigner with say 100 million USD worth. I’d buy properties in Australia, Canada, Singapore, UK.. maybe a sprinkling elsewhere. I know 30 years from now the properties might have declined in value. But I don’t really care, I just want a way to retain my wealth.

For most people who are into money, they are always thinking about ‘opportunities’ to make new money. ‘Investments’. But when you are already super rich, the goal is capital protection.

Maybe Vancouver will be a city of renters in palatial houses, for $2000 a month. Priced out Vancouverites will have to think of other ways to build wealth besides buying a house.

Melba
Guest
Melba

….I know 30 years from now the properties might have declined in value. But I don’t really care, I just want a way to retain my wealth….

So the best way to retain wealth is to buy stuff that drops in value? Wow, this really is the new economy!

Son of Ponzi
Guest
Son of Ponzi

# 16
“Wow, this reLly is the new economy”.
Yup, built on laundered money.

HAM Solo
Guest
HAM Solo
BC Foreclosure Filings for Month-to-Date November 2013 MTD / (Oct 2013) Vancouver: 70 / (117) New West: 34 / (44) Nanaimo: 29 / (28) Victoria: 25 / (33) Kelowna: 16 / (33) Chilliwack: 10 / (7) BC Total: 250 / (350) Countrywide Cup – Foreclosure Lenders League Table MTD / (Oct 2013) TD: 32 / (38) Royal: 29 / (28) CIBC: 27 / (31) First National: 15 / (24) Scotia: 14 / (31) MCAP: 10 / (7) Coast Capital Svgs CU: 8 / (3) HSBC: 8 / (10) Overall, somewhat slower pace than October The pace of filings picked up quite strongly this week after a slow start to the month. I think a lot of the variation week to week has to do with court schedules and backlogs etc. New West for instance, had only 7 filings through Nov… Read more »
glut
Guest
glut

Here are a few stupid things I hear a lot.

“They don’t have any debt except for a mortgage and student loans.”

OK. And I’m vegan except for bacon-wrapped steak.

http://www.fool.com/investing/general/2013/11/14/stupid-things-finance-people-say.aspx#commentsBoxAnchor?utm_medium=Newsletter&utm_source=Personal%20Finance%20Reader&utm_type=text&utm_content=PersonalFinanceReader&utm_campaign=111241702

Bilbo Bloggins
Guest
Bilbo Bloggins

This scam works in Canada as well.
I’m all for immigration, but these people are not here to live here, to integrate, no contribute to the community.
Sadly, it’s not their fault. I would do the same thing.
The rules are to blame.

http://world.time.com/2013/11/27/chinese-women-are-flocking-to-the-u-s-to-have-babies/?hpt=hp_t2

VMD
Member
G&M: Toronto condo rents look poised to fall, report shows Nov 28, 2013 There are signs that rents in Toronto’s condo market are on the verge of decreasing, at a time when new landlords are already dealing with low returns, a new report says. The idea that the condo rental market might be tipping in favour of renters runs counter to the general belief among economists and industry experts that the condo rental market is strong, and that rents are rising. “We believe the rental market may be at an inflection point,” says the report by Veritas Investment Research analyst Ohad Lederer. “Our weekly review of condo ‘for rent’ postings on craigslist.org indicate an approximate doubling of the number of condo listings in late 2013 versus late 2012.” ““New condo landlords in Toronto today can expect going-in unlevered cap rates… Read more »
Son of Ponzi
Guest
Son of Ponzi

Did not somebody on this blog a few posts ago claim the rents in Vancouver are on the rise.
Is Vancouver different?

jesse
Member

“Investor owners are accepting returns below available REIT yields”

Amateur landlords get away with this because they often don’t account for their time managing the property, and don’t need to produce cashflow to appease investors. Either this continues forever, rents skyrocket (ie high PE multiple is justified), or something “goes wrong” and capital re-allocates to more productive pursuits.

Son of Ponzi
Guest
Son of Ponzi

This usually happens when you extrapolate “known data ” into unknown territory.

Market cough
Guest
Market cough

Million-dollar babies

http://www2.macleans.ca/2013/09/30/million-dollar-babies/

‘From crushing daycare fees to saving for university, the cost of having kids is reaching astonishing new heights’

“Elisa and Dave Santiago bought a two-bedroom condo with a den in a trendy neighbourhood in uptown Toronto in 2009 with plans to eventually start a family. Then they found out they were pregnant—with twins. When daughters Micah and Yuna arrived eight weeks ago, the joy of becoming new parents clashed with the new reality of what it meant to raise a family in a high-cost city.”

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