Bank ratings go negative

At the end of last week S&P cut the rating for Canadian banks to negative.

Royal Bank of Canada, Toronto- Dominion Bank and four other Canadian lenders’ rating outlooks were cut to negative by Standard & Poor’s, which cited regulations that seek to limit government support in a crisis.

Canadian officials issued regulatory proposals Aug. 1 aimed at relieving taxpayers from the burden of potential bailouts if key banks fail. The new rules mandate any new senior unsecured debt issued by a so-called systemically important bank must be convertible to equity if the firm faces insolvency. The proposals are open to public consultations until Sept. 12.

Read the full article here.

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Alum
Guest
Alum

I have been reading this blog for 5 years.

Its all about losers, who missed the train and try to find negative news online!

I am not a big fan of real estate, but like any other asset, RE moves up with inflation.

Joe Mainlander
Guest
Joe Mainlander

@#1

REBGV Benchmark Metro Van Apartment price:

July 2008 = $367,600
July 2014 = $376,500

Inflation = 8.3% so the price would need to be $401k just to keep up with inflation.

Detached has increased, but in condos there has been a 6% real drop in the benchmark average. Not all RE has moved up with inflation.

Average Vancouverite
Guest
Average Vancouverite

“Hey, honey, I just read something on this here real estate blog, ‘bank rates go negative’.”

“Phone up the bank… we’re buyin’ a place!”

crabman
Guest
crabman

“but like any other asset, RE moves up with inflation.”

So, since 2001, what has inflation been, and how much has Vancouver RE increased?

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

@2

condos are only for white people and economically bottom rung asians ( pensioners, developmentally challenged, degenerate gamblers, university students ).

just as tent cities are shelter for the marginalized, so are condos. and just as you wouldn’t consider a tent city when looking at the economics of real estate, you also wouldn’t look at condos.

crabman
Guest
crabman

@Alum, I did the math for you.

Since 2001, inflation has been 27.5%

http://www.bankofcanada.ca/rates/related/inflation-calculator/

Over that same period, Vancouver RE has gone up 154%

http://housepriceindex.ca/Default.aspx

Had RE tracked inflation over that period, the current benchmark price would be $317,831 instead of $628,600. So I guess you expect prices to fall roughly 50%?

patriotz
Member

@6:

“RE moves up with inflation”, like “I do not use crack cocaine”, means whatever the speaker wants it to.

Oracle
Guest
Oracle

Joe Mainlander:

Sure you can use inflation like that but then you must also apply it to the mortgage debt that was originally taken out.

For example, say $300,000 was loaned. After 5 years of payments, that is regularly paid of by payments to $255,000. Then add in inflation over 5 years at around 6% and that debt becomes “less than $240,000”..,

And that $240,000 you pay with rising incomes and increasing rents due to inflation.

bullwhip29
Guest
bullwhip29

@ Oracle

regarding the debt, taxes etc, most overlook this in error and simply focus on the capital gain portion of the equation. over the long term the interest paid to your bank (among other items) is very significant. i think many would be disappointed at what they really made on their RE transaction after everything is factored in. your bank, on the other hand, is all smiles ear to ear despite the BS downgrades. fwiw, if the $hit ever does hit the fan in Cda again with banks on the verge of imploding, we will still have to bailout the system in one way or another with the average joe coming out at the other end much poorer. this mumbo jumbo about downgrades and bail ins is meaningless.

bullwhip29
Guest
bullwhip29

@ Joe Mainlander August 12th, 2014 at 8:34 am

the definition of “average” apartment has changed considerably over time. i remember the days when 1BR units were 800-900 sq ft. just sayin…

registered
Member
registered

@6: So I guess you expect prices to fall roughly 50%?

At a minimum for Vancouver.

bullwhip29
Guest
bullwhip29

@ fixie guy

i expect prices to soften, but not by that much. a lot of these data points have been manipulated. imho, inflation has been alot higher than reported. the definition of average condos, det homes etc have changed too. condos are 1/3 to 1/2 the size now. so like your box of cereal or jug of juice, you are getting less for the same price. this type of “hidden” inflation is not widely discussed or reported. on the other hand, det homes are much larger, more elaborate and far more expensive to build than those of the prev generation.

Aggregator
Guest
Aggregator

Here comes the turning point just as RE sales are beggining to decline on a year-on-year basis.

CMHC MBS Net Issuance

Oh and the latest MBS member is Vancouver City Savings CU as of two months ago.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

@Aggregator

soft landing here we come!

Son of Ponzi
Guest
Son of Ponzi

#13
VanCity started with the MBS business in the early 90s.
They were securitizing the best mortgages on their books, and were left with the dogs.
I don’t think much has changed since then.

Aggregator
Guest
Aggregator
#16 These are NHA MBSs which are guaranteed by the Government of Canada. The taxpayer is on the hook now. It's all about funding mortgages and finding more deadbeat subprime borrowers to lend to. Vancouver City Savings v. Woolworth [1] These applications arise out a fraud perpetrated by Steven William Dyer (“Dyer”). Dyer is a U.S. citizen. While on bail in Arizona in respect of charges brought against him for 13 sex offences involving a minor, he fled the U.S. Ultimately he arrived in Canada and obtained a new identity under the name Brian David Woolworth. [2]  While in British Columbia, Dyer purchased two properties: one on Beatty Street in Vancouver, B.C. (the “Beatty Street property”) and a second on Cowichan Street in Chilliwack, B.C. (the “Cowichan Street property”). Mortgage financing was provided in respect of both properties by Vancouver… Read more »
Westside Realtor
Guest
Westside Realtor

Oracle, I hope they find the individual(s) who vandalized your car.

I hate senseless vandalism, it’s pathetic.

Did u do it? Get real.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

>What could possibly go wrong?

what will likely go wrong? answer: nothing.

Aggregator
Guest
Aggregator

LOL… Frankenumber denied! Retract! Retract! It was the TRAMO/SEATS noise suppression and X-12-ARIMA seasonal adjustment model! Not our fault!

Statscan races to fix jobs report error

And you guys are here debating MLS sales data while the incompetent StatsCan said CREA and Taranet data was open to manipulation!

Get it through your heads: It's an oligarchy dictating numbers to promote confidence. It's all rigged! There wil be no statistical recession, ever!

Softy
Guest
Softy

“Detached has increased, but in condos there has been a 6% real drop in the benchmark average. Not all RE has moved up with inflation.”

Welcome to the soft landing.

paulb
Member

New Listings 211
Price Changes 78
Sold Listings 144
TI:16409

http://www.paulboenisch.com

vangrl
Member
vangrl

Bullwhip – “i remember the days when 1BR units were 800-900 sq ft. just sayin…”

I remember a time when “professionally designed” meant some kind of “designing” went into it…

http://vancouver.craigslist.ca/van/apa/4609368465.html

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

Aggregator went full retard.

patriotz
Member
fitzrovia
Guest
fitzrovia

Holy Fuc% Aggregator. That makes me sick.

Vancity gave mortgages to a convicted US pedophile. Well as long as the broker got his bonus.

Wonder if the CMHC gave him insurance too. Why not, cannot deny anyone the right to own..

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