Subprime lending in Canada ‘rockets’ to record high

It’s a been a while since CMHC mortgage lending rules have been ramped back to more historical levels.

After dabbling in American style 40 year zero down mortgages we decided that might not be the best idea. Unfortunately we never did get the American style locked in interest rate for the full duration of the loan.

So now we’re back to 25 year terms and it’s more difficult to get a loan if you’re self employed.  A lot of loan applications that would have been approved a year or two ago are now being rejected.

So what affect has this had on the market so far?

Well apparently the sub-prime lending market in Canada has rocketed to a record level for one.

Capital Corp is a non-bank lender that has been operating since 1988. Their chief executive Eli Dadouch says there’s a lot of money out there for non-bank loans to higher risk borrowers.

He said there is no question it’s the top of the real estate cycle, so anybody lending out money has to be more careful today.

“People always want to deal with a bank, it’s the cheapest form of money,” he said. “When they come to us and people like us, it is because there is some type of story [behind why they can’t get credit]. It’s easy  to lend money, the talent in this business is getting it back.”

Read the full article in the Financial Post.

 

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[…] of CMHC data? -Langley Condos at 2006 prices -Canadas random success story -A bubble in renters? -Market peak -Oil prices on housing a […]

Slagathor
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Slagathor

…..Site C HydroElectric Dam approved. $8.8B construction project. That should provide some help for those escaping from Fort Mac….

As long as those Fort Mac refugees can continue to pay the rent for another 10 to 15 years as that’s how long it’s going to take for Site C to wind it’s way through the courts.

Slagathor
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Slagathor

….– if you make repeated money transfers under $10,000, it would attract even more suspicion from CRA/FINTRAC…

Except they’re not tracking transactions less than $10k so how are they supposed to know about something they’re not tracking?

bullwhip29
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bullwhip29

@ #52
not that it really means much but i think the 2.3% figure understates total foreign ownership; in many cases it is impossible to trace source of funds and beneficial owner of property; it would interesting to find out % ownership by immigrants (or relatives, associates, nominees etc) not born in Cda

HAM is a Myth
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HAM is a Myth

2.3 % of condos are owned by foreign residents in Metro Vancouver. At least half of that is US residents and the other half split amongst the rest of the world.

Are people still buying this HAM realtor spin?

Foreign residents own nearly six per cent of downtown Vancouver condominiums and 2.3 per cent of condos in the Metro Vancouver region, according to a Canada Mortgage and Housing Corp. survey.

Read more: http://www.vancouversun.com/Foreign+ownership+highest+downtown+Vancouver+condos+CMHC+report/10658524/story.html#ixzz3M8Ma53lN

Shut It Down Already
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Shut It Down Already

Ted, you’re right that it sometimes rains here. Good observation, and well made.

Meanwhile your beloved California needs only a mere 11 trillion gallons of water to recover from its ongoing drought:

http://science.nasa.gov/science-news/science-at-nasa/2014/16dec_drought/

bullwhip29
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bullwhip29
@ #28 i think N. American mkts were hit for 20-30% over the course of a few wks, but didnt stay down for very long. imho, things have changed a lot in 16 yrs, so i think it is possible that today’s highly sensitive, computer controlled mkts respond in a much different and more violent way to put it mildly. the rapid and surprising collapse in oil is proof that wide ranging mkt moves can not only occur at the snap of a finger, but also when you least expect them (as we also witnessed in may 2010). we also learned the hard way in 2008 that mkts are indeed interconnected. the notion that so called problem areas can be easily ring-fenced was put to bed for good too. i have no doubt that the effects of a meltdown in… Read more »
Westside Realtor
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Westside Realtor

Our HAM clients have been all over that cra new rule and my very string sense if it is that they don’t like it (or any kind of scrutiny at all) and it’s not going to act as a catalyst for more money coming here.

Quite the opposite in fact.

You’d have to be clinically brain dead not to realize that.

Bills, give your heads a shake, this market is NOT HOT, and HAM sightings are increasingly rare.

Jmho

WSR

LL
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LL

Re: rich annoying Asian show

No hot or rich guy would have anything to do with douchebags

paulb
Member

New Listings 86
Price Changes 29
Sold Listings 118
TI:12221

http://www.paulboenisch.com

Whistler or bust?
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Whistler or bust?

Anyone dipping their toe into the high quality low payout, low debt oil and gas names in Canada?

Wait that is no because you all think oil is going to $0 like RE.

You can lead a horse to water….

Whistler or bust?
Guest
Whistler or bust?

“CRA begins tracking all international money transfer >$10,000 on Jan 1, 2015″

You guys are dreaming if you think the CRA can do anything. They got how many complaints that people were coming into the River Rock and turning duffle bags of cash into chips and back in 30 mins and they followed up on how many? ZERO

Come on! The CRA would rather go after the Earl’s waitress for not declaring $3k in tips than actually doing some work.

space889
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space889

@patriotz – The program expects immigrants to hand over $2M for 15 years to be invested in some venture fund for start-up or whatever. It doesn’t sound like the immigrants are expected to start new biz here themselves. So why does it matter if immigrants have biz skills if they aren’t expected to actually start biz here. Canada just wants the $$$.

This sounds a lot like the old program that a lot of Taiwanese families in my highschool came over under.

VanRant
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VanRant

@39 VMD

That possibly mean less lambos at UBC.

patriotz
Member

@37: “When oil fell from $145 to $30 in ’08 Alberta barely hiccupped.”

RE prices fell 20%. Calgary only got back to peak in 2014, Edmonton never did. And oil hit bottom in early 2009 and rapidly rose again.

BURP.

Mortgageslave
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Mortgageslave

@37 “Alberta barely hiccupped”??

You think $55 oil is the bottom?

I won’t go into what was done to save our economy back then with the bank bailouts and stimulus.

This is a different scenario.

The only thing that the 2008 bailout did was delay the inevitable. If you don’t believe me then go buy a house. Let us know where you buy so we can drive by and laugh for the next 10 years.

VMD@work
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VMD@work

Interesting that on local Chinese news/web-portal sites, one of the top headlines features “CRA begins tracking all international money transfer >$10,000 on Jan 1, 2015” (Link in Chinese)

emphasis on:
– if you make repeated money transfers under $10,000, it would attract even more suspicion from CRA/FINTRAC
– the “living expense” that international students get as gifts from parents in China does not count as income; however, if the amount is >$10,000, the student will need to explain how his/her parents are able to gift this (large) amount of money, and if necessary, provide proof of parental income.

southseacompany
Member
southseacompany

Now that the CMHC study has 2.3% of homes foreign owned, the local media is quick to come up with another meme;

“What bubble? Renters underpin Toronto, Vancouver condo markets” Global News.

http://globalnews.ca/news/1730114/what-bubble-renters-underpin-toronto-vancouver-condo-markets/

“So who is underpinning the elevated number of condos that have sprouted up in Toronto and elsewhere in recent years? Renters.”

Perfect Storm for Alberta
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Perfect Storm for Alberta

When oil fell from $145 to $30 in ’08 Alberta barely hiccupped.

Perhaps this time from $100 to $55 they let out a wee fart.

Yunak
Guest
Yunak

@34

Aren’t those about the only ways to get rich in China?

Of course not, but for the most of those rushing to Canada or else they probably are.

tedeastside
Member
tedeastside

5 degrees and rain and not even winter yet, i dont know why more people dont move here …vancouver should put that on a billboard in Orange County

bull bull bull is right.. its kind of like a tech start-up vancouver style,
think less silicon chips and more potato chips, you’ll notice most vancouver start-ups involve marijuana or munchies, vancouvers technology scene isnt exactly known like the one in SF but you could say vancouver has weed valley

patriotz
Member

@33: “To prove that they didn’t make money as prominent comrades through bribing or run sweatshops.”

Aren’t those about the only ways to get rich in China?

Yunak
Guest
Yunak

@32

why do these people need to have business experience if they can’t manage the investment themselves?

To prove that they didn’t make money as prominent comrades through bribing or run sweatshops.

space889
Guest
space889

@VMD@work – I thought the money was to be handed over to some portfolio manager to be managed, so why do these people need to have business experience if they can’t manage the investment themselves?