Blame the banks

Southseacompany pointed out this article in Canadian Business about how the banks have become complicit in the housing bubble, which strikes us as a bit unfair since any bank would be foolish to not take part in the low risk high profit business of mortgages.

As long as government is willing to take on the majority of risk and encourage high debt loads, why should a single bank step back from that money?

In a rational world, the banks could be counted on to help contain the housing mania that has put Canada in this perilous situation. Before the early 1950s, Canada’s biggest lenders had little interest in real estate, according to Charles Calomiris and Stephen Haber, the authors of Fragile by Design, a highly praised international history of the interplay between politics and banking.

That changed after William Lyon Mackenzie King created the Canada Mortgage and Housing Corp. at the end of the Second World War to backstop the construction of new homes for returning soldiers. Nothing stirs a banker like risk-free lending. By 1954, the banks had convinced the government to change their charters so they could join the post-War building boom. In 1992, they were cleared to buy the trusts that were the initial beneficiaries of CMHC’s backstop, triggering the consolidation that cemented today’s oligopoly.

In November 2015, the average monthly holdings of mortgages at Canada’s chartered banks exceeded $1 trillion for the first time. The figure continues to climb, reaching $1.07 trillion in December, according to the Bank of Canada’s most recent statistics. That’s more than double what the chartered banks commit to business lending.

Read the full article here.

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Banned Oracle
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Banned Oracle

Time is ready for an anti-immigrant party.

I will vote for any party that promises a 75%+ reduction in immigration..

Time for discussion is over. The other side is corrupt and their mouth pieces can really go fuck themselves. haha

And when such party comes to power, we should go back 20 years and tax the hell out of the people who abused the principle residence exemption (seize homes).

Shut It Down Already
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Shut It Down Already

I suspect the real immigration numbers are 75% below what your runaway imagination tells you anyway.

Banned Oracle
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Banned Oracle

Getting defensive are we? You have to understand that we are not attacking the Chinese here. We are attacking the policies.

You are Canadian first and foremost, right? We all want what is best for Canada, right?

KickThemOut
Member
KickThemOut

Gee, I don’t know, maybe a moral duty to society at large that allowed these banks to exist? Maybe a sense of this is wrong and we ain’t going to participate even if it means less profit as many ethical person would?

Oh wait, I forgot, corporations are exempt from basic morals & ethics. Profits above all else!

KickThemOut
Member
KickThemOut

Anyone seen the latest BC Lib’s election ads? Woops, sorry, I meant BC Gov’t Public Service Announcements about gov’t housing actions. Yeah, 15% foreign buyer tax in Vancouver mentioned right at the end by itself. Good luck NDP! Still not a peep from them on anything useful.

KickThemOut
Member
KickThemOut

“We Come Across Real Estate Being Purchased With Illicit Funds Once Every Other Case”

http://www.zerohedge.com/news/2017-03-13/feds-we-come-across-real-estate-being-purchased-illicit-funds-once-every-other-case

patriotz
Member

The government makes the rules, and any lender that self-imposes stricter rules is out of the game. That’s all there is to it. Take note that there are plenty of lenders other than Canadian banks that can do CMHC-insured mortgage lending.

KickThemOut
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KickThemOut

So basically, just follow the law and forget about ethics, morals, and high duty to society. Got it!

goofus ottawais
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goofus ottawais

Read Alinsky’ Rules for Radicals. There is little room for ethics, morals, duty in society, if you count yourself as one of the downtrodden. iow, your post is a god use of sarcasm. As far as law goes, members of the Deep State are agents of a law the rest of us have no privy to. Revolution and rebellion is the only way out for the dispossesed.

Hyper-mega-Bull
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Hyper-mega-Bull
Best place on meth
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Best place on meth
Banned Oracle
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Banned Oracle

Maybe tell Xi there by having a protest. Hold signs saying all the graft suspects are in Vancouver.

Hyper-mega-Bull
Member
Hyper-mega-Bull

Kushner Companies to receive $400m from Chinese deal

The terms of the sale as seen by some as a sweetheart deal for the Kushners, plus it is set to take advantage of a controversial federal program that gives residency permits to foreign investors.

https://www.axios.com/kushner-companies-to-receive-400m-from-chinese-deal-2313089247.html

Hyper-mega-Bull
Member
Hyper-mega-Bull

See out-of-control SUV crash onto house’s roof

A driver lost control of his SUV before skidding off the road and onto the roof of a house in Taizhou, a city in China’s Jiangsu Province

http://www.cnn.com/videos/world/2017/03/12/china-roof-car-accident-orig-llr.cnn

Best place on meth
Guest
Best place on meth

That is unbelievable – a chinaman driving a Honda?

They must be poor, you’d never see HAM in Vancouver in a Japanese vehicle. Ever.

Bag it and tag it
Member
Bag it and tag it

probably a counterfeit Honda

KickThemOut
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KickThemOut

You sure it is not a counterfeit Hyundie that’s made to look like a Honda?

KickThemOut
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KickThemOut

Ok, so how does this related to Van house prices? Is this going to make the housing price go up? Down? House insurance go up or down? How many homeowners will be forced to sell because of this?

myraandrews
Member
myraandrews

Will there be a flood of listings once the 15% foreign buyer’s tax exemption is approved? If I were a seller i would hold off until this exemption goes through. Do you think sellers are waiting?

Newcomer
Member
Newcomer

I don’t think so. People aren’t really watching all that closely. They just know that the market has taken a step back and that, in any case, it’s hard to find anything to buy or rent. The hold sentiment and the buy sentiment (fear) are much stronger than the cash out sentiment (greed). It’s interesting to look at Calgary. They’ve got no foreign buyers (or very few), a big chunk of the population is out of work, rents are plummeting, and yet there isn’t all that much supply because people are just holding.

Ulsterman
Member

Calgary is baffling. It’s all doom and gloom there yet prices seem so sticky. How? Do people just have lots of savings to keep paying mortgages? Are they getting payment holidays? Even if some people are “refusing to sell” aren’t there always people at the margin who must sell and set the new prices?

Just me
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Just me

The margin is thin with credit so cheap. An increase in borrowing costs would trigger a landslide.

Newcomer
Member
Newcomer

I have heard that there the banks were offering payment holidays while people waited for severance and payouts. But I would have thought severance pay would be running out by now. And what prospects do people there have? Sooner or later, you would expect to start seeing foreclosures.

I wonder if people are getting loans from family in other places.

KickThemOut
Member
KickThemOut

How about the simple fact that most people who work don’t sit on their ass waiting for pie from the sky? They go out and work and earn money to put food on the table? Maybe not everyone, especially in provinces where work ethic is valued, behaves like the bears where once you are out, you are always out and simply bitch and complain about how unfair everything is and it’s all those evil foreigners fault?

Shut It Down Already
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Shut It Down Already

I imagine many would burn down their RRSP before considering selling their house. It even makes some sense to do so in periods of no income.

david
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david

Calgary is not as ‘baffling’ as that.
1) House prices are always notoriously slow to reverse downward, and this particular epidemic of ‘mass delusion’ is lingering like the super-powerful psychosis that it is.
2) Most Calgarians are not levered to the very precipice on their houses. Many have built up a ton of equity, because they weren’t of the “lever-to-the-max, flip, & repeat” mindset.
3) Believe it or not, many really love living in Calgary, and view both the current provincial politics and economic situation as temporary. The Alberta economy on its very worst day is better than almost any other province’s on its best.

Just me
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Just me

Yes, if Christy Clark includes offshore students in the exemption.
If she does that, we are back to square one. It would kill the tax.

KickThemOut
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KickThemOut

Maybe you should date one of them, help them learn English so I can actually understand what the f they are saying, appreciate Canadian culture and cuisine so I don’t need to smell their smell food during lunch time, and as a side bonus, living rent free and get 1/2 as matrimonial asset? That would be more useful than complaining on here.

paulb
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Active Member

New
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TI:8209

http://www.clivestevepaul.com

history
Guest
history

https://youtu.be/0hUc9IvHi10?t=1519

Steve Keen,
0.8 correlation between rate of refinancing and house prices.

Here is your smoking gun

Video starts at about 25 minutes

KickThemOut
Member
KickThemOut

Because correlation is always causation?

history
Guest
history

did you watch the video? doesnt sound like it.

the data is American. This would of been a more appropriate refutation.

The point is, if you factor travel bans, the impulse to refinance is less compelling, because that is how travel money is raised. The talk on this thread today starts with a call to reduce travel, ie movement of people, whether for TFW, immigration, or leisure. Keens correlation kicks in, and RE goes down, it’s that simple.

Trump, China govt, Canadian govt, there is a concerted effort globally to stop people from travelling willy nilly over the globe. The benefits of travel has now negative repurcusive effect. The Deep States are setting us up for several years of Deflation.

Just me
Guest
Just me

Here is what happens when you trap a lot of capital within China.

“China Home Sales Surge 23% in First Two Months, Defying Curbs”

https://www.bloomberg.com/news/articles/2017-03-14/china-home-sales-surge-23-in-first-two-months-defying-curbs

(Those buildings look like beehives)

Banned Oracle
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Banned Oracle

Thats why we have to stop the movement of people between the 2 countries. They will buy up everything here.

KickThemOut
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KickThemOut

Not only that, we should stop movement of people between provinces and cities too. I sure don’t want some country bumpkin from Surrey moving to Van and ruining the neighborhood, and drive up house prices so my kids can’t afford a decent place when they grow up.

Banned Oracle
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Banned Oracle

Provinces are within a country called Canada you dumbass.

At the end of the day, it doesn’t matter what you say. The movement is growing and you’re going to lose…

Shut It Down Already
Guest
Shut It Down Already

He’s being sarcastic, moron.

Just me
Guest
Just me

Any of these in Vancouver?

“Realtors Investigated in Hong Kong on Overseas Property Sales”

https://www.bloomberg.com/news/articles/2017-03-13/realtors-investigated-in-hong-kong-on-overseas-property-sales

KickThemOut
Member
KickThemOut

You know that the major local brokerage houses have offices in China and all the good projects are advertise and sold in China FIRST right??! Where were you the last few years?

kabloona
Member
kabloona

Toronto’s Housing Bubble Has 24 Months To Live: BMO
The Huffington Post Canada | By Daniel Tencer

http://www.huffingtonpost.ca/2017/03/13/toronto-housing-bubble-24-months_n_15335246.html?utm_hp_ref=canada

“Desperate homebuyers, take a two-year breather. Housing speculators, take warning.

Toronto’s house-price juggernaut is two years away from the sort of peak it reached it 1989, when a housing bubble burst in the city, BMO Economics says.

“At the rate we’re now going with 20-per-cent year-on-year price increases, assuming stable mortgage rates and continued income growth, we’ll be at 1989 valuation levels in about 24 months,” senior economist Robert Kavcic wrote in a note last week….”

KickThemOut
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KickThemOut

Were there such prediction about Vancouver housing bubble on this blog every year for the last decade??

Hyper-mega-Bull
Member
Hyper-mega-Bull

No St. Patrick’s Day parade in Vancouver this year

Parade to be replaced in 2017 by street festival after weather, sponsorship and attendance woes

http://www.cbc.ca/news/canada/british-columbia/st-patricks-vancouver-1.4023336

KickThemOut
Member
KickThemOut

Meanwhile in China – Great Wall of China goes green for St Patrick’s Day

Haha! Maybe we need more Chinese and less of you in this city to get the parade going again!

http://www.irishtimes.com/news/world/asia-pacific/great-wall-of-china-goes-green-for-st-patrick-s-day-1.2575786

Hyper-mega-Bull
Member
Hyper-mega-Bull

the parade ending doesn’t bother me. i don’t attend it.

i’m simply posting the article to show the continued changes happening in the city.

try not to get emotional about these things.

Newcomer
Member
Newcomer

Change is the lifeblood of cities. When I lived in Brooklyn the 80% of the kids in the marching bands for the St. Paddy’s parade were black, because black kids were the majority in Catholic schools started by Irish immigrants.

Banned Oracle
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Banned Oracle

Not really. War is in the lifeblood of cities. It is your kinds’ views that leads to wars.

And war is one constant of history and the future.

Just me
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Just me

Is Trudeau going to increase capital taxes on financial income while leaving housing capital wealth totally tax free?

http://business.financialpost.com/fp-comment/stephen-jarislowsky-canadas-capital-gains-tax-is-already-highly-unjust-raising-it-will-make-that-worse

KickThemOut
Member
KickThemOut

Yes, cuz it’s ok to tax regular income and maybe capital gain that can’t be hidden, but you can never ever tax wealth, asset, and gains of the rich.

KickThemOut
Member
KickThemOut

@Banned Oracle – I never knew you were so altruistic!!! Wow, you are willing to have your home seized so the bears here can have a nice lovely Surrey cardboard box for $200K? Wow?

I have a better idea, why not start a new party with a -50% non-Euro immigration policy?! Not only do we stop all non-Euro, Canadian value incompatible immigrations all together, but let’s kick out the ones that got into Canada in the last 10 / 15 years and their hell spawns, seize their homes, and give them to deserve bears?

Banned Oracle
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Banned Oracle

Why don’t you personally accept a refugee/immigrant family that is struggling here in Canada into your house? Whats that? Put your money where your mouth is.

It doesn’t matter what you think. The movement is growing. Watch the agains by Wilder tomorrow. Sad it got to this state but its idiotic views like yours that lead to this.

fomostyle
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fomostyle
fomostyle
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fomostyle

Vancouver luxury condos still in high demand.

http://app.scmp.com/scmp/mobile/index.html#/article/2076761/desktop

fomostyle
Guest
fomostyle
Newcomer
Member
Newcomer

Wow, wrong on basically 8 out of 8. Impressive.

Banned Oracle
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Banned Oracle

Of course from the guy who’s parents still don’t have Canadian citizenship. So how much $$ have we laundered so far?

Just me
Guest
Just me
Great article. I particularly like point (1), perfect summary of where we stand in March 2017. Below is a quick extract, rich with facts, figures and data. Brilliant! Data collected by David Ley shows how, over the last few decades, metro Vancouver has become similar to other Pacific Rim “gateway” cities, such as Hong Kong, Singapore, London and Sydney. Each of these gateway cities have rising housing costs that are fuelled by high immigration-driven population growth and foreign investors. Ley isn’t the only one tracking this trend. University of Waterloo geographer Markus Moos and Queen’s University planner Andrejs Skaburskis back up Ley’s findings. Both Moos and Skaburskis concede that Vancouver is an “exceptional” example of how “globalization” can affect a local housing market. The biggest contributor to these rising housing prices is that these immigrants not only arrive with great… Read more »
Just me
Guest
Just me

Amazing. I agree with Joe Oliver, almost line by line. Does not happen very often.
Here is another tax change that would give immense advantages to homeowners and penalize people who save but do not own houses. Do the politicians do it on purpose or are they just stupid?

“Joe Oliver: Drunk on spending, the Liberal government’s too addled to see the idiocy of raising capital gains taxes”

http://business.financialpost.com/fp-comment/joe-oliver-drunk-on-spending-the-liberal-governments-too-addled-to-see-the-idiocy-of-raising-capital-gains-taxes

patriotz
Member

Any increase in capital gains taxes would include non-principal residences, and the taxable portion of principal residences (i.e. in the case of houses built with suites).

In any case, very few Canadians own stocks outside of tax shelters such as TFSA’s and RRSP’s. I am one of them, but I don’t rely on capital gains for my returns so it wouldn’t affect me much.

Also, I think it’s a bad idea for someone saving to buy a house to put the money in stocks.

Just me
Guest
Just me

The bottom line is: if you have 1 million in housing (first residence) any capital gains are tax exempt. if you rent and invest 1 million in a non-registered account, your capital gains are fully taxable.

In which universe is this fair legislation? And Trudeau and Morneau want to make the discrepancy even greater?

patriotz
Member

I think the open-ended principal residence exemption is open to criticism, but the two aren’t really comparable. If you sell your house you have to find somewhere else to live, but if you sell your stocks that’s purely a financial decision. Also someone holding stocks can take advantage of opportunities to buy and sell part of their holdings to minimize taxes. With a house it’s all at once.

I think the real issues are that too much leverage at too low cost is available to house buyers, and that property taxes are too low, which encourages investment in RE whether principal residence or not.

Just me
Guest
Just me

“If you sell your house you have to find somewhere else to live”

What is wrong with renting, if you can use your investment returns for that?
You are making no sense. This is a massive distortion. It will force people to hold portfolios heavy on housing just because of tax considerations.

Shut It Down Already
Guest
Shut It Down Already

Most people don’t have enough money to mean it’s a decision they’ll ever have to make.

Those with huge taxable accounts will likely already have a place to live with a small mortgage or no mortgage at all.

Those without a huge taxable account presumably don’t have enough cash to warrant one, and we already know that much of the public doesn’t need much encouragement to go “all in” on real estate.

So in theory this only impacts the wealthy, and the proposed path of avoidance by purchasing a primary residence isn’t a valid one.

Just me
Guest
Just me

“Those with huge taxable accounts will likely already have a place to live with a small mortgage or no mortgage at all.”

This statement is blatantly false in a place like Vancouver. I personally know of many professionals (in health, law, finance) who are unable or unwilling to buy housing currently on offer, and who hold large taxable saving accounts.

In fact, this is becoming true even of people in trades and other jobs, who are barred out of the market but still have non-trivial amounts of non-registered savings.

This is yet another handout to homeowners, plain and simple.

Newcomer
Member
Newcomer
I think there is a lot of point-missing going on in the article and in many people’s responses to it. Taxes are levied to get money to do things that the government sees as part of its mandate. Previous governments have given investors a special break because they wanted to encourage investment for various reasons. The current government is saying that people who get money without working for it (by investing and therefore taking risks) are no longer going to get as much as an advantage over people who get their money by working for it. One of the reasons for this is that people with investment earnings (aka, the rich) have been doing much, much better than people without investment earnings (by definition, the working class). If reducing income inequality, which is currently at record highs, is part of… Read more »
Just me
Guest
Just me
Again, you are missing the point (as usual). This change in the taxation of financial wealth (capital gains) will mean that, if I have a large amount of money and I want to shelter it from taxes, all I have to do is move it into housing for my principal residence or my kids’ principal residence. This is a distortion of massive proportions. It is effectively forcing people to buy even if they don’t want to. What is wrong with a person who rent and invests wealth in savings other than housing? Why make this disadvantageous? Do you see the point now, or are you still lost in your philosophical discussions about the role of the state and other nonsense? We all agree about tax and redistribute. But why not tax different assets at similar rates? Why take a large… Read more »
patriotz
Member

But in actual fact wealthy people have a far smaller % of their net worth in their principal residence than the middle class, many of whom have over 100%. There’s an old saying – don’t let the tax tail wag the investment dog. The wealthy understand that a principal residence really isn’t a good investment, even with the tax exemption.

YVR
Guest
YVR

I don’t think it makes more people buy a principal residence but it will reduce people from cashing out on investment properties due to the increased tax bill. More people will hold.

Newcomer
Member
Newcomer

I don’t think so. People sell because they want the money for something or they think that it’s time to cash out. How may people say to themselves, “If I’m going to have to pay 50% more tax on it, then I’d rather not have any money at all?” A few, but not a significant number.

YVR
Guest
YVR

If reducing income inequality, which is currently at record highs, is part of what the government sees as its mandate, this is a no-brainer.

You do not reduce income inequality by taxing one thing more (capital gains) and leaving the other thing (income) the same. It does nothing to help the person who has taxed income. If they were reducing income taxes by an equal amount then fine. That is unlikely. They will waste the money and nobody will benefit.

Newcomer
Member
Newcomer

Nonsense. If Bill takes home $100 and Bob takes home $50, and I increase Bill’s tax by $50, the inequality is reduced by as much as it would be if I lowered Bob’s by $50.

I’m confused by your statement. Were you thinking of something else?

Hyper-mega-Bull
Member
Hyper-mega-Bull

wow, is this for real? shockingly stupid.

we will become even more dependent on foreign capital coming into the country.

Banned Oracle
Guest
Banned Oracle

Corrupt MSM and Gov

Now they are saying in Toronto that rising prices are a DEMAND issue and not a SUPPLY issue.

No shit!

Its the millions of 10 year visa’s handed out and hundreds of thousands of foreign students.

Time to revoke the visitor visas and end the foreign student —> Immigration route. Education credentials will be assessed equally whether education done here or overseas.

Make no Mistake. Fed Liberals are aligned with Prov Liberals who are aligned with Municipal Politicians.

Citizens asleep all this time.

Banned Oracle
Guest
Banned Oracle

And for those SJW here of Caucasian descent who hasn’t seen the 3rd world work. Remember one thing: Workers never earn enough to own. Their disposable income just pays for food. No savings.

So quit being SJW and demand change. Time for discussion is over as the other side never listened.

southseacompany
Member
southseacompany

“Toronto housing will ‘come down with a bang’: Stephen Jarislowsky”, BNN

https://www.bnn.ca/toronto-housing-will-come-down-with-a-bang-stephen-jarislowsky-1.696204

““The housing market in Toronto is definitely something that’s going to come down, and come down with a bang. Not enough is being done in order to control it. This is just an accident [waiting] to happen.””

Newcomer
Member
Newcomer

As much as I agree, this is the type of prediction that has been wrong for a decade in Vancouver.

patriotz
Member

It did come down with a bang a bit less than a decade ago. You know what stopped the downturn then, and I don’t think that remedy is going to be available next time.

Newcomer
Member
Newcomer

Sure. True. But, again, we having been saying the same sort of things about Vancouver for a while now. It’s not that I don’t buy the underlying theory, it’s just that I don’t have any confidence in its near-term predictive capacity.

fomostyle
Guest
fomostyle
Shut It Down Already
Guest
Shut It Down Already

What’s a “case” then?

Typical hysterical ZH nonsense.

patriotz
Member

“What’s a “case” then?”

When they decide to investigate a property.

Shut It Down Already
Guest
Shut It Down Already

Exactly. So in other words half the properties they choose to investigate are clean as a whistle.

KickThemOut
Member
KickThemOut

Late to the party as usual. I already posted this.

history
Guest
history
i already posted the findings of Steve Keen on the next thread, where he states that the Rate of Refinancing has a 0.82 corelation to prices… now McLister has this to say at CanadianMortgageTrends “Mortgage volumes in the broker channel continued to grow in the fourth quarter. D+H data reportedly confirms that brokers did 12% more business in Q4, versus the same period last year. “Some of that business was an attempt by borrowers to beat the government’s mortgage rule changes. Those policies came into effect on October 17, 2016 (new high-ratio insurance restrictions), November 30, 2016 (new low-ratio insurance restrictions) and January 1, 2017 (new insurer capital requirements). “But these weren’t the only headlines last quarter. “The top 10 broker channel lenders now account for a whopping 87.1% of broker volume, as of Dec. 31, 2016. That’s the highest… Read more »
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