TD outgoing CEO wants tighter lending rules

Ed Clark is the CEO of Canada’s 2nd largest lender: TD Bank, but he’s heading out in November.

He has some interesting things to say about mortgage lending in Canada:

“It’s just not realistic in a competitive marketplace to say, ‘Why doesn’t one bank lead the way and change the rules?’ It won’t happen. This is a responsibility of the government,” he told Reuters.

“I get why they keep worrying about doing it. But I think you have to just keep touching this brake. As long as you run low interest rates, you then should be continuously leaning against asset bubbles.”

Why is it not realistic for an individual bank to change lending rules? Because they would be the chump to leave money on the table.  If your business had an oppourtunity for income which the government would insure against loss, how much sense would it make to not take advantage of that business?

And you’ve got to love this seemingly prerequisite paragraph that comes next in all of these articles:

Canada’s Conservative government has stepped in four times since 2008 to tighten mortgage lending rules to cool a real estate market that flourished as the financial crisis ebbed.

It is accurate to say that the government has stepped in four times since 2008 to tighten mortgage lending rules, but it omits the change before 2008. For those of you just tuning in they look something like this:

•March ’06: CMHC change to allow 0% down, 30 year Amort.

•June ’06: Allow 35 year amort & interest only payments for 10 yrs

•Nov. ’06: Aw heck, lets go all out and allow 40 year amorts!

•April ’07: Insured min. down payment moved from 25% to 20%

•Oct. ’08: 5% down allowed, amort moved back to 35 years

•April ’10: Require approval at 5 year fixed rate

•March ’11: Drop back down to 30 year amorts.

•July ’12: Drop back down to 25 year amorts.

Shouldn’t we take into account how much gas was applied before we started tapping the brakes?

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Westside Realtor
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Westside Realtor

Chinese real estate prices continue to decline.

That is one of many reasons why Westside sfh prices continue to soften.

Joe Mainlander
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Joe Mainlander

Don’t forget that in 2003, the Liberal Government of Jean Chrétien announced changes to CMHC mortgage insurance guidelines; Reduced mortgage insurance premiums by 15 percent and eliminated the homeowner price ceilings

2003 is when home prices started their steep climb.

Corruption
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Corruption

#2 “2003 is when home prices started their steep climb.”

You’re just picking that date because it aligns with your views. I don’t think any reasonable person could look at that graph and pick 2003 as the year things took off. If anything, 2002 looks like it took a bigger jump from the trend than 2003.

VanRant
Member
VanRant

No More Ham for Vancouver?

“In the Financial Times, Jamil Anderlini writes that the Chinese Communist party is turning to western governments – including Canada – to help in its quest to track down individuals who have moved themselves, and more importantly, their wealth, overseas.

The latest escalation of China’s anti-corruption campaign was brought to our attention by the FT’s Matthew Klein, who noted that it could be “ultra-bearish” for Canadian housing.

If the Chinese government is successful in preventing more funds from flowing into Canadian real estate, or able to force individuals to repatriate wealth held overseas, it could cause a fair amount of stress to the high-end segments in two of Canada’s hottest real estate markets, Toronto and Vancouver – especially for the latter.”

VanRant
Member
VanRant

Also…
From Greater Fool Vancouver: “2014 “Hot Money” inflow is to beat the CRA commencing tracking of >$10k international money transfer starting 2015.”

Should be interesting for real estate in Vancouver in 2015.

Shut It Down Already
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Shut It Down Already

2015? I thought the crash was going to happen right after the Olympic closing ceremony?

Van Coffee
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Van Coffee

I’m not seeing the Westside price declines. Wish I was.

If anything, in Marpole (working class Westside), I am seeing the builders getting increasingly more active buying tear-downs and building spec houses.

Wish it wasn’t the case, but that is what I am seeing.

It’s not the Marpole of my youth anymore…..

space889
Member
space889

A lot of people in Marpole are waiting for developers to buy them out at huge prices to build condos and townhouses after rezoning went through.

So far, no big deals appears to be done yet but developers are soliciting, though on the condition that it is an all or none type of deal – ie. everyone the developer made an offer to must agree or no deal.

Joe Mainlander
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Joe Mainlander

@#3 Corruption.

Yes, CMHC dropped its 10% downpayment standard from 10% to 5% in 1999. Plus interest rates were lowered after the 911 scare to stimulate the economy. So the rises started earlier, but by 2003 the game was on.

I’m picking that year because, I remember it well, all the news items (especially Global) started appearing about our hot real estate market, and how pre-sales buyer were making money before the units were built, and all the condo line ups started then. The craziness had begun. I has gone to the bank in very early ’03 to talk about getting mortgage, and none of that hype had appeared yet.

Best place on meth
Member
Best place on meth

#3

“If anything, 2002 looks like it took a bigger jump from the trend than 2003.”

Correct. After the 2000 dot-com crash the Fed began lowering interest rates aggressively in 2001.

Early 2002 real estate prices began climbing sharply.

crabman
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crabman

#3, 10:

Prices started going up in 2002, but the pace really picked up after 2003. After F and the Peckerettes took over in 2006, things went into batshit crazy territory.

Here are the Teranet HPIs for Jan. 1:

2001: 68
2002: 71
2003: 76
2004: 85
2005: 94
2006: 107
2007: 128
2008: 144
2009: 138
2010: 150
2011: 158
2012: 169
2013: 165
2014: 177

Priced out by choice
Guest
Priced out by choice

“That is one of many reasons why Westside sfh prices continue to soften.”

Please show us some evidence Westside Realtard. For once.

crabman
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crabman

#12: Westside Realtard has no evidence, because he isn’t a realtor. He used to post as Romeo Jordan, but after one too many profanity-laced tirades, he changed his handle.

ostritch
Member
ostritch

So no hard news from the trenches. All quality information is covered up or rather, not even collected. Christie and her Minister for Education change their language and discover more money only a few days after China has a word in their ear. The mayor wonders ‘what Chinese owned empty property?’ do people want to tax? Is there any?’ And Harper signs a FIPA contract with China. This has not been a good month for the Old Canada.

Westside Realtor
Guest
Westside Realtor

IIP cancellation has stemmed the flood.

Next year the wire tsf tracking starts. Some $ wants to best that, from what we hear. Still, it’s relatively quiet out there, the buzz seems to have been flushed out of the system.

taylor192
Member

2006:
GDS: 32%
TDS: 40%

2007:
GDS: unlimited (limited to TDS)
TDS: 45%

2012:
GDS: 39%
TDS: 44%

Government should step in a 5th time to resets GDS to 32% and TDS to 40%.

These loose ratios are contributing to Canadians piling on debt… cause they can!

piper
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piper
Best place on meth
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Best place on meth
chilled
Member
chilled

“TD outgoing CEO wants tighter lending rules”

+++++++++++++++++++++

And I want a ‘tighter’ girlfriend! But after years of loosely flapping in the wind, it probably isn’t going to happen.

UBC in Crisis Mode
Guest
UBC in Crisis Mode

Is it legal to add “Sold” to the sell sign while the property says on the market for the right buyer?

http://www.realtylink.org/prop_search/Detail.cfm?MLS=V1083841&REBoards=All&From=MLS

1872 WESTERN PW, University, Vancouver West, $5,050,000.00
V1083841

Heard Herd selling
Guest
Heard Herd selling

16k party:-)

Yunak
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Yunak
Yunak
Guest
Yunak

As for investors from outside China, these developments may be most welcome. They make it more possible for them to apply and gain approvals. Therefore, unless current policies in the U.S. and Canada are changed – and despite the growing urgency of Chinese investors to exit China – you should expect a future source of investors to shift from China to elsewhere.

Therefore Chrusty goes to India?

Ulsterman
Member

Best place on meth Says:
Early 2002 real estate prices began climbing sharply.

I agree. I viewed 1 bed apartments around Commercial & 7th / 8th in late 2001. They were selling for 80-90k. I looked again in Feb/March 2002 and similar places were listed for 110k. I distinctly remember wondering if the market was moving too quickly and that I could be chasing a top. Sounds absurd now, but it’s the truth. It was a big percentage jump in prices and I worried it was unsustainable. Ho ho!

For those interested, those places were renting for about $650/month. Mortage/Tax/Strata was about the same with 5% down.

paulb
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Active Member

New Listings 218
Price Changes 75
Sold Listings 95
TI:16040

http://www.paulboenisch.com

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