Canada, debt, mortgage, predictions, rates

RBC warns of mortgage rate increases

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RBC sees mortgage rates going up instead of flat or down.

Their forecast is for housing to get less affordable due to rate increases.

The Royal Bank of Canada says the ability of Canadians to keep up with housing costs has been improving of late, but warns that’s about to change.

RBC’s latest housing affordability measure shows home servicing costs relative to incomes dipped slightly in the last three months of 2013 after having risen the previous two quarters.

But the relief will be temporary, the bank says in a new report, because mortgage rates are due to start rising this year.

“RBC anticipates that as longer-term interest rates begin to moderately rise, the costs of owning a home at market value will gradually outpace (growth) household incomes by late-2014, leading to strained affordability in several markets across Canada, much like the trend in Toronto,” RBC chief economist Craig Wright said in the report.

The finding bucks the recent trend, which has seen mortgage rates remain stable or even moving lower, with some brokers offering five-year fixed rates below three per cent.

Read the full article here.

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Enigma

@76: “… it simply means more private profitmakers like Genworth with the debt and guarantees remaining with the taxpayers.” Yes, but private insurers are only 90% backed by the feds, unlike CMHC’s 100% backing. Assuming this remains the same, 10% may not seem like a lot, but that’s still 10% less exposure to taxpayers on new mortgages. It’s clearly not ideal, but I think it’s a step in the right direction. As a side question, what premium would investors demand for the additional exposure? “It’s not even possible to get the government out of these going forward because private capital won’t take them on.” I’m sure they know that doing so would almost certainly kill the market, if done now or too quickly. If taken in small steps and after the bubble, and without changing the terms or guarantees of… Read more »

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bullwhip29

@ Son of Ponzi February 26th, 2014 at 1:38 pm (#77)

you got that right. if it goes private, you know damn well that it will be a sweetheart deal among close family and friends with few details provided. of course, prior to any potential deal they’ll trim off all the infected and rotting portions of flesh first and dump those into some new and improved tax payer backed entity. when the SHTF you can count on the boys in ottawa to provide billions in bailout funds (at a premium valuation to boot). wash, rinse, repeat….

having said all this, there is no way we get an annoucement like this tomorrow. maybe some new board appointments or maybe a completely different curve ball that we aren’t aware of

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trackback

[…] -Privatization would require the finance department -No one in their right mind would take on the debt […]

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patriotz

@79:

It’s gross, but middle income earners don’t pay that much provincial tax anyway. For example an individual making $35K (no deductions) pays $6,363 in Quebec and $4.233 in BC (that’s federal and provincial taxes), the difference in after tax incomes being less than 10%.

Families get a lot of breaks in Quebec such as very cheap daycare and their own baby bonus, so middle-lower income families are likely better off even before looking at housing costs.

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BWilson

Nice to see the UDI stop pretending their lobbying on the PTT is all about helping first time homebuyers:

http://www.biv.com/article/20140224/BIV0320/302259937/0/SEARCH/Beijing-eyes-Lower-Mainland-development-opportunities

“The measure will boost the savings available to first-time home buyers and, more importantly, allow them to consider paying more for a home – PTT-free – than they would have otherwise.”

I.e. driving up prices is the most important thing.

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space889

@Babcook – is that gross or disposable income?? I heard that Quebec has much higher income tax compared to BC.

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space889

@bullwhip – thanks for the info. Well the place we are looking at has some suspicious disclosures on the PDS. Apparently it was rented last year and after the renter left, owner found some dead plants in the crawlspace and called police and city about it. This kind of triggered some alarm bell because wouldn’t most owners just dumped the plants?? Why call the police unless there is something else that’s going on?? Also sounded like the renter left without informing the owner. I remember seeing in news a few year ago about how you can get some history on a property from VPD, just curious if that would include all previous and ongoing police incident/investigations regarding that property?? @mac – that actually happened to my manager where rough looking people would knock on his door asking about the previous… Read more »

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Son of Ponzi

# 76
right, no private imvestor will catch this falling knife, unless they get it at a huge discount.

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patriotz

@71:

If this story is for real it simply means more private profitmakers like Genworth with the debt and guarantees remaining with the taxpayers. It’s not even possible to get the government out of these going forward because private capital won’t take them on.

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crikey

@mac #69 “Let the guy speak for himself.” Hahaha. In case you haven’t noticed, he speaks for himself every day, in those posts that are voted down by a majority. Softy has had countless invitations and opportunities to engage in meaningful debate, but most often chooses to try to start flame wars instead. >>”I hate all this crap sleuthing that leads to the same conclusion…He’s not an agent or he’d have property.” Great example of the kind of sleuthing you mention! Not all used house salespeople have property. For some that is by choice, for some it is due to means. In a similar way, many bears are in fact homeowners — because owning a home doesn’t mean you don’t think there is a bubble and that prices should/will stay flat or come down (and NO, being a homeowner that… Read more »

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kabloona

Thanks for the info, data junkie…..

Great moniker, by the way.

😉

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T

Looks to be an announcement. Something minor, privatization will require the finance department. Flaherty was in Australia for the G20 and won’t be back in time so won’t be any major announcement. as per the same link above

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data junkie

Here’s the source:

https://twitter.com/KristineOwram/status/438779078296891392

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data junkie

As fun as it is arguing about whether or not someone has dumb opinions because they are paid to be dumb or just because they were Born That Way:

BNN is reporting that they have strong indications that CMHC will announce tomorrow morning that they are going to be privatized.

Now back to your regularly-scheduled pissing contest.

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Babcook

I have found out that actually Montreal has higher income then Vancouver according to the stats canada in 2011
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil107a-eng.htm

so what are they talking in that article when they say:
“Higgins said Vancouver generally has higher incomes allowing consumers to take on more debt, while consumers in Montreal usually save to buy bigger items or pay with debit cards.”

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mac

Let the guy speak for himself. I hate all this crap sleuthing that leads to the same conclusion: anyone who doesn’t agree is a real estate agent. He’s not an agent or he’d have property. Unless he followed the posters here who have been so wrong for sooo long.

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crikey

Softy obviously has a vested interest in the fortunes of real estate. So why don’t you come clean about that, Softy? What is your vested professional interest related to real estate? Let’s look at the clues… (1) You have *lots* of free time, every day, to be a contrarian here. Hmmm… what profession could that point to? (2) You don’t provide any meaningful facts and discussion, but instead mostly try to sway opinion with hot air, hyperbole, and (laughable) attempts at evoking emotion. Hmmm… what profession could that point to? (3)You waste your time here despite knowing that your posts are read by very few, because they are quickly downvoted into oblivion the vast majority of the time. Hmmm… what profession out there wastes a lot of time following useless leads? What’s that? You’re a Used house salesperson you say!… Read more »

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mac

But you like goading– is that the right word?–people who also got it wrong but think they’re right, or smarter than other people?

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Softy

“You’re an optimist. And that’s a good thing. How much Vancouver RE do you hold?”

None. I was priced out a long time ago.

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crikey

@39 Patriotz

“Rising asset prices aren’t savings. Savings means spending less than your income.”

That is so well put – thank you!

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mac

What bullwhip says is soooo true. It happened to us just that way. And the idea of all your money tied up in a property that is overrun with Vancouver lunatics is really stressful. You wake up in the night thinking who will buy it? Will they pass a law about disclosing problem neighbours? Your wife is freaking out about her safety. And when you bought it it was the perfect property until Calamity Jane & her drug addled buddies moved in next door.

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mac

Softy,

You’re an optimist. And that’s a good thing. How much Vancouver RE do you hold?

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mac

Space, I think you’re worrying for nothing. But here is my experience when a problem person moved next door to our property everything changed overnight. Police were called constantly. And once they were gone the problems went away just as fast. Criminals are looking for their criminal buddies. That’s where the money is, not the new homeowners. They also know how transient Vancouver is. Now having said that, the police are very savvy a out their beat. Just call a few of them and ask them what’s happening in the hood. Like right now if you chatted with a cop about the OV they would tell you how many times they’re being called to the social housing unit on w 2nd and all the increased breakins. Same with the area at 6th & Fir. One told me they never went… Read more »

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Softy

RE: RBC warns of mortgage rate increases

Nothing is better for a bank’s business than the threat of imminent rate increases, made at the start of the spring buying season. It gets buyers super-motivated. It happened last year when thousands of fence sitters got rate holds caused red-hot sales.

The entire system is geared towards real estate pumping.

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Son of Ponzi

# 59
to have someone “undesirable” move in next door.
—————–
Another advantage of renting: you can move.

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