CMHC: One home is enough?

The CMHC has just ‘tightened’ their mortgage regulations again.

You might not have know that the CMHC would provide mortgage insurance on second homes, but they won’t anymore:

Canada Mortgage and Housing Corp. is cutting the types of mortgage insurance it offers, meaning the era of tighter rules for home buyers hasn’t come to an end.

The Crown corporation said late Friday it will stop insuring mortgages on second homes, effective May 30. Anyone who has an insured mortgage will no longer be able to act as a co-borrower on another mortgage that CMHC insures. In addition, it will stop offering mortgage insurance to self-employed people who don’t have standard documents to prove their income.

Gotta love that first sentence: The era of tighter rules hasn’t come to an end?  I guess by tighter rules they mean doing away with the most absurdist bubble policies in the form of zero down 40 year mortgages.

What’s next? Banks not being able to offload risk for mortgage lending?

Here’s the amazing bit for those just tuning in:

The Crown corporation has been offering insurance on second homes since 2005. It has been offering insurance to self-employed people without strong income validation since 2007.

Remember NINJA loans in the states?  Good thing we never had those here!

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Jon
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Jon

Albertans will still buy 2nd properties on our coastline with cash.

Calgary luxury home market sets another record
Most ever April sales of $1-million-plus properties
http://www.calgaryherald.com/business/real-estate/Calgary+luxury+home+market+sets+another+record/9783090/story.html

UBC in crisis mode
Guest
UBC in crisis mode

I think the CMHC rule change has little effect on high end sales in Vancouver (e.g. West Van, Van West).

From what I heard, banks still provide loans to wealthy buyers. For example, if I just arrived as a visitor, put down $1 million cash for a $2 million property, bank would lend me the other 50% (yeah, they say they need to see my income, actually they don’t).

patriotz
Member

@2: ” put down $1 million cash for a $2 million property, bank would lend me the other 50% ”

Yes I think that’s right. But it shows you how much confidence the banks have in the market when their own money is at risk, doesn’t it?

Yellow Helicopter
Guest
Yellow Helicopter

Aquilini Group buys last remaining Olympic Village condos for $91 million

“- Against improbable odds, in a glutted market, and in an election year, Vancouver has paid off the entire $630 million debt of the Olympic Village by selling the last 67 condominium units in the trouble development to the Aquilini Group for $91 million.”

http://www.vancouversun.com/news/metro/Aquilini+Group+buys+last+remaining+Olympic+Village+condos/9784174/story.html

patriotz
Member

@4:

Which would indicate that the loss to the CoV will primarily be the lost land value in the ballpark of $200 million.

Oracle
Guest
Oracle

This rule change will have little effect.

Called Genworth today and they confirmed that I could have ONLY ONE insured mortgage with CMHC and can have as many as I want ADDITIONAL ones with Genworth for second, third etc. homes.

Looks like this change is really about boosting share prices of the private lenders.

media-manip
Guest
media-manip

“Albertans will still buy 2nd properties on our coastline with cash”

you’re not suggesting that we have a Dutch Disease economy, are you? Carney and other manip careerists, say there is no DD in Canada. AB oil workers buying RE on the coastline is a delusion. Away with you!

crikey
Guest
crikey

@#6 “This rule change will have little effect.”

Agreed, but it is a step in the right direction. It is like when playing Jenga. Which little piece of wood will it take to bring the teetering mess down to its fundamentals?

Those mortgages may have represented only 3% now, but I’ll bet CMHC must have realized that percentage was going to go up in coming years… especially since so many children of baby boomers will have no other way to get into the over-inflated market than to get mom+dad to co-sign.

At least that new risk will be the banks’ now, and not the taxpayers’.

Royce McCutcheon
Member
Royce McCutcheon

@8:

Good points but I’d like to add (as noted in the last thread) that that 3% value may be under-selling the $ value of those mortgages (2nd homes + self-employed with no verification):

“CMHC says its second home program and its self-employed-without-third-party-income-validation programs combined account for less than 3 per cent of its insurance business volumes in term of the numbers of mortgages insured.”

That seems like pretty weaselly phrasing to me. And I think it’s a mistake to cite that number without attaching a caveat along the lines of “% of insurance business in dollars has not been disclosed”.

tedeastside
Member
tedeastside

vancouverites are real estate obsessed to the point of crazy
so 1 home is not enough, good thing that town has weed or else nobody could buy any houses

One Migrant Economy
Guest
One Migrant Economy

“vancouverites are real estate obsessed to the point of crazy”

and Once Jupiter leaves Cancer and enters Leo, they’ll become obsessed with the Royal Family and Gold

Dave
Member

Olympic Village = Sold out

mac
Member
mac

Yay! Now they can put a sushi place in the Rennie sales office.

Son of Ponzi
Guest
Son of Ponzi

What’s Aqua gonna do with the Condos?
Give you one if you buy a season ticket for the Canucks.

CPG
Guest
CPG

In March, the Bank of England published an excellent, very clear paper titled Money Creation In The Modern Economy.

It explains how, contrary to what people might think, a bank doesn’t make loans, by taking the deposits of a client and then lending those deposits out. Instead, the bank creates money out of thin air. If you want to get a mortgage for a house, and the bank deems you to be credit-worthy, it puts the amount of money you need into an account. That money in your account becomes a liability for the bank. And the mortgage it now owns is an asset of the bank.

Everybody Should Read This Explanation Of Where Money Really Comes From

http://www.businessinsider.com/where-does-money-come-from-2014-4

registered
Member
registered

@6 Oracle Says: “Called Genworth today and they confirmed that I could have ONLY ONE insured mortgage with CMHC…”

Preferred Conservative ‘solutions’ funnel money to the private sector:

http://business.financialpost.com/2012/12/21/feds-ok-another-50-billion-of-mortgage-guarantees-for-private-sector-players/

The Feds aren’t backing away from mortgage guarantees for corporate pals.

RFM
Guest
RFM

The Aquilini folks will just add these overpriced units to their ‘luxury’ rental pool, currently under construction at Rogers Arena…

http://www.cbc.ca/news/canada/british-columbia/3-rental-towers-approved-for-vancouver-s-rogers-arena-1.1258691

Joe Mainlander
Guest
Joe Mainlander

@#2 “I think the CMHC rule change has little effect on high end sales in Vancouver (e.g. West Van, Van West).”

That may be true, but high end home sales (over $2 million) accounted for 5% of total sales in Metro Van last year. So they are not significant driver of the market anyway.

4SlicesofCheese
Guest
4SlicesofCheese
Beluga
Guest
Beluga

Great! More waterfront! Who says: ‘there not making any more of it’?

Troll
Guest
Troll

I would like to congratulate VCI. 20 posts today and not a single racist HAM tirade. Congratulations, a new record!

Stay Classy VCI!

BOM
Guest
BOM

Read this:

“The Crown corporation has been offering insurance on second homes since 2005. It has been offering insurance to self-employed people without strong income validation since 2007.”

And then read this:

“CMHC says its second home program and its self-employed-without-third-party-income-validation programs combined account for less than 3 per cent of its insurance business volumes in term of the numbers of mortgages insured.”

CHMC has a pool of mortgages insured accumulated over the last 25 years. They have only offered the products they are cancelling for 7 to 9 years but they make up 3% of that pool. Simple math indicates over the last 7 years about 10% of mortgages would have been part of the program they are cancelling otherwise it could never reach 3% of the total pool which was already significant prior to the program starting.

BOM
Guest
BOM
“- Against improbable odds, in a glutted market, and in an election year, Vancouver has paid off the entire $630 million debt of the Olympic Village by selling the last 67 condominium units in the trouble development to the Aquilini Group for $91 million.” I smell a rat. First I don’t see how the OV breaks even even with a $91 million sale. Second, why would the Aquilinis want to buy 67 condos for $91 million? That is almost $1.4 million each. Since they are bought in bulk you would have to expect at least a 20% discount over the retail price. That would put them at about $1.6 million per condo average price. Are these 2000 sq ft condos? I wonder what the assessed value of these units are. Could there have been a back room deal to fast… Read more »
Son of Ponzi
Guest
Son of Ponzi

#23
something does not add up.
_______________
Nothing adds up in this Ponzi scheme called Vancouver Real Estate.

Son of Ponzi
Guest
Son of Ponzi

What has sold in Richmond in the last 7 days?

76 properties have sold and 178 have been newly listed.
11 are 1 Bedroom or less apartments from $189,000 to $380,000.
17 are 2 Bedroom apartments from $182,000 to $541,000
That’s it for apartments.

20 townhouses have sold from $262,000 to $815,000
29 houses have sold from $647,000 to $1,900,000.

Houses are generally the most expensive of the three types of properties, but they are still outselling both apartments and townhouses.
————————-
The above is from A.Shuchart’s blog.
Draw your own conclusions.

 

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