Mortgage carrying costs to rise 8% next year

Scotiabank is forecasting a big bump in mortgage carrying costs:

New buyers can expect home ownership to become even less affordable next year as mortgage costs rise, while current owners will be largely insulated from higher rates.

Add it all up, and the bank forecasts that Canada’s housing market seems to have “peaked” and is expected to cool down from its recent breathtaking pace.

Read the full article here.

97 Comments on "Mortgage carrying costs to rise 8% next year"

Notify of
avatar
Sort by:   newest | oldest | most voted
Oh NO
Guest
Oh NO

Happy 10k Tuesday

Burnabonian
Guest
Burnabonian

What percentage of buyers just got removed from the market.

In a city where a bungalow costs 20-100 years of local incomes, I would guess that most buyers are already towards the bottom of the distribution curve.

I would also guess that reducing mortgage affordability by 8% reduces the available capital in the market by a lot more than 8%.

Also, recall that demand is elastic. What percentage of would-be purchasers will delay their market move until they see the effect of the new rule?

You can price your property however you want but you won’t find out the value until you find out what someone is actually willing to pay for it.

Hence http://www.myrealtycheck.ca/ — chronicling the gaping void between sellers’ dreams and the long throbbing shaft of reality since 2016.

history
Guest
history

a valuable debate seems to growing , around Value versus Growth real estate investment.

Doomcouver
Guest
Doomcouver

Yes you’re right this is exactly the point. Due to how much debt Canadians have there are a ton of us clustered around the “marginal borrowers” end of the spectrum. It’s very possible that 8% could push a massive number of first-time buyers out of the market. It’s like we’re living through an experiment to see what happens when you force every single first time buyer out, and observe how many times homeowners can swap overpriced homes with each other until the whole thing collapses.

Also, look at Richmond avg. price reduction 4.4%, McMansion sellers must be getting more desperate by the day. Capital controls from China seem to be seizing up the luxury market. Canary in the coal mine perhaps? We’ll see.

Burnabonian
Guest
Burnabonian

+1

Madashell
Guest
Madashell

Canada’s national financial watchdog is taking a closer look into reports of shoddy anti-money laundering compliance at British Columbia casinos.
https://calvinayre.com/2017/09/28/casino/feds-reviewing-bclc-money-laundering/
Fintrac is a joke. If they have any backbone, they should have been on top of it a long time ago.

Just me
Guest
Just me

Fintrac’s enforecement track record is ludicrous. Why do we even pay their salaries?

history
Guest
history

we pay them to Not do anything… because

… the high salary’s are designed to purchase housing they dont need, thus removing the stock from the market and drive people into their vehicles(sorry for the pun), eventually to become the last labour resource for Restaurants set up to service the Heloc patio crowd, ie Themselves…

see how clever it all is?

MarKoz
Member

I guess this isn’t really new, but it is encouraging to see continued coverage… Tax avoidance real estate madness!
http://vancouversun.com/opinion/columnists/douglas-todd-vancouvers-ethnic-chinese-irked-by-inequality-tax-avoidance

Ulsterman
Member
It really is comical how bad this situation is. My favourite part: “In a large swath of northwest Richmond, centred around Westminster Highway and Gilpin Road, which is replete with new high-end condos, 33 to 50 per cent of residents report living in low-income households. The Canadian average is 14 per cent. Yan said his study revealed parts of West Vancouver and the west side of Vancouver are also sharp anomalies, with 25 to 33 per cent of individuals in households declaring poverty-like incomes, despite the stratospheric housing prices in those areas.” You can’t make this stuff up. The CRA is too busy investigating waitresses for not declaring tips or a small business person claiming too many lunches, meanwhile condo flippers claim principal residence status for multi-hundred thousand dollar flips and people in multi-million dollar homes declare $20,000/annum incomes. Carry… Read more »
Just me
Guest
Just me

I guess it is all good for the economy. This is the line politicians like to use.

If we scare them off, these “investors”might stop coming. That would be disastrous, hey?

Doomcouver
Guest
Doomcouver

This is why we needed the 2% tax per year on houses declaring no or low income. Sadly the NDP have been totally absent on this election promise.

Just me
Guest
Just me

The NDP have tricked us all. I have never even suspected they could renege on housing so easily.

They just made many new enemies, fir years to come. They will pay a heavy political price for not enacting policies to mitigate house prices. Very heavy.

Doomcouver
Guest
Doomcouver

I’ll be voting Green next election if we don’t at least see the 2% tax on households that pay no income tax.

Just me
Guest
Just me

Ditto.
I will never vote NDP again, unless they do the serious thing and start taxing the mainland Chinese millionaires.
No ifs, no buts. Cannot waste my vote on liars.

b kalra
Guest
b kalra

i am 100% agreed on this.

paulb
Member
Active Member

New
381
Price Change
93
Sold
130
TI:10031

http://www.clivestevepaul.com

Just me
Guest
Just me

Politicians, read and learn something.

Chinese Investors Keep Pouring Money Into Australian Housing.

https://www.bloomberg.com/news/articles/2017-10-11/china-capital-curbs-aren-t-slowing-aussie-property-buying-bingeWhile local property agents say higher state taxes on foreigners are deterring buyers, Credit Suisse isn’t so sure they will have a big impact on prices. They point to even-higher taxes in other global cities, the relative cheapness of Australian property compared to Chinese cities, and the growing stock of wealth in China.

“Local incomes are becoming less relevant in determining the outlook for house prices and regional wealth is becoming more relevant,’’ Credit Suisse analysts Hasan Tevfik and Peter Liu said in the report. “We see no evidence of a slowdown in foreign demand because of the stronger capital controls introduced by Chinese authorities.”

That’s not good news for locals already struggling to break into the booming housing market.

Lost...but not leased
Guest
Lost...but not leased

The Joker in the deck is Great Fools…
These have kept the market juiced…like any ponzi scheme.

The interest rate rise will cut off the Greater Fools….and moreso negating price increases, even condos..Then what?

Probably a holding pattern , until fear sets in when the first significant waves of foreclosures starts eroding prices.

Time to go
Guest
Time to go

Trust me, I am pulling for this scenario, but I’ll believe it when I see it. I am almost starting to believe the “it’s a world class city and local incomes aren’t necessary to support prices” pundits. This has gone on so long and is so unbelievably detached from any fundamentals that maybe this is just the new norm and we’ll have to deal with it. Eventually, when the current crop of homeowners need millennials to step up and show them the money, maybe something will change. But maybe not.

Burnabonian
Guest
Burnabonian

Just like they said in Tokyo

Simple Solution
Member
Simple Solution

This time its different…. just like every other time it was different…

Just me
Guest
Just me

This is the Cina effect. And it will keep going until people who set taxes decide that enough is enough. At the moment there is no political will to stop the circus.

Oracle
Guest
Oracle

Hearing breaking news from sources that there is a backroom revolt among some NDP MLAs who want the referendum to fail. Why? Because the will lose their seats if the number of elected MLA’s remain the same.

But, Im hearing that the NDP is going o propose a solution by where they increase the number of MLA’s in the province to 99 (Don’t know where they will sit). That way the backbenchers today can stay in gov.

If they don’t get the 99, I’m hearing the referendum will be set up for the sheep…TO FAIL.

Just me
Guest
Just me

And by politicians, I mean the lot of them. The NDP so far sucks.

ChinaOne
Guest
ChinaOne

I vant to thank you to Trudeau for helping million my cousin get here. He buy 3 house and other he buy 5 condo. We like Richmond. We go one flight home and we make money. We no tax here. Thank you Trudeau and we like environment and school here free. We like road to and Bentley but too many poor people drive. Raise fee to drive. My cousin afraid NDP but now cousin say they good. Maybe he buy 7 condo now.

ChinaOne
Guest
ChinaOne

We go Lasalle college. Local poor people can’t come there security will stop them. Only my cousin go there. We study hard and sometimes not hard. We pass and buy Lamborghini. We like Vancouver.

ChinaOne
Guest
ChinaOne

My young cousin buy Range Rover grade 12. He mom ten year visa but get work permit easy. Not cousin pay no school fee. We love Vancouver and Range Rover and Trudeau and NDP

Just me
Guest
Just me

Why am I not surprised?

Highest proportion of high-rollers at River Rock Casino are real estate professionals: internal audit.

http://vancouversun.com/news/national/highest-proportion-of-high-rollers-at-river-rock-casino-are-real-estate-professionals-internal-audit

Corrupted to the core. The whole system.

Just me
Guest
Just me

And of course, housewives and students.

Auditors were surprised by the number of high-roller “housewives” and how much they spent on chips. Seventy-five “housewives” spent $14.3 million in cash at River Rock VIP betting rooms, making this the sixth-top occupation in the review. Three of these women deposited over $1 million in cash in 2015. Nine of the women deposited over $500,000 in cash. And 42 different “housewives” were involved in 126 “unusual financial transactions.”

“There are occupations, such as housewife, student, and server that are not typically able to support the level of cash buy-ins made by those patrons,” the Aug. 2016 memo stated. Flagged transactions “arising from associations with other known patrons, were more prevalent with housewives than any other occupation reviewed.”

Just me
Guest
Just me

We are drowning under a Tsunami of illegal money from China. It is wiping out any semblance of legality in this city.

And our politicians are doing nothing. They even refuse to contemplate measures to stop this. Shame on the lot of them. Shame.

Dave
Member

They are doing worse than nothing. The Feds are increasing taxes on honest people and businesses and ignoring all the illegal money coming in to our country.

Oracle
Guest
Oracle

Shut down YVR. Protest!

Ulsterman
Member

If this were France you may have a chance, but this is Canada, home to “nice’ people.

bullwhip29
Guest
bullwhip29

if one needed even more proof that the New Coasts, NuStreams, MetroEdges of the world are essentially in business to launder money and provide other related services, then look no further…

Time to go
Guest
Time to go

Neng pian jiu pian
If you can get away with cheating, then cheat (Chinese idiom)

Just me
Guest
Just me

From the article.

The memo noted that as most of the high-risk gamblers are from China, much background information could not be verified, because gamblers presented English-language approximations of Chinese character names.

“The legitimacy of the 52 companies listed by the top 62 patrons were reviewed and testing was found to be inconclusive,” the memo said. “We were unable to conclusively determine whether the companies exist. Obtaining the characters of the companies given by high rollers would help … determine whether the positions given could support the level of play.”

Simple Solution
Member
Simple Solution

asking too many questions would be RACIST….

bullwhip29
Guest
bullwhip29

only a question of when, not if, Vancouver becomes the HK of the west, Toronto another Beijing and best of all, Richmond the new Macau which will not only feature condos for supercars, but also exclusive marinas for yachts, helicopter landing pads all over the city and additional private runways for more high rollers

southseacompany
Member
southseacompany

“Economic guru Robert Shiller on Canadian housing, distracted investors and a new ETF bearing his name”, Financial Post

http://business.financialpost.com/investing/robert-shiller-on-canadian-housing-bubble-market-distractions-like-trump-and-new-bmo-etf

“Existing real estate in established cities like Toronto and Vancouver looks bubbly to me, and I would be concerned. I wouldn’t advise someone to buy two or three houses in Toronto.”

“I don’t know what exactly is driving it, and I know it’s not just Canada — it’s also New Zealand, Australia, Hong Kong and Shanghai.
History doesn’t show this as a good investing strategy, as even great cities don’t appreciate very much over time. It’s very slow compared to other investments and in the long run, it hasn’t worked out. If you look at major U.S. cities over 100 years, they do not appreciated that much.”

bullwhip29
Guest
bullwhip29

“I don’t know what exactly is driving it…”

>>> loses all credibility by making statements like this. either he is a naive fool or afraid to rock the boat

Shut It Down Already
Guest
Shut It Down Already

Yes, you have way more credibility than a Nobel prize winner.

Just me
Guest
Just me

Schiller has been saying this for the past ten years. Just Google him.
I think even he is finally realizing that money from mainland China is driving prices in the Pacific basin. Until we stop that, there is risk in buying RE.

MarKoz
Member

Longer. I had a link to a 2005 article at G&M that quoted him as saying Vancouver was the “bubbliest city in the world”. Sadly, the link no longer works.

MarKoz
Member
Ulsterman
Member

Yup, any Joe Nobody who bought a SFH in Vancouver around 2005 (counter to Schiller’s advice) could probably buy and sell him several times over by now. I would give much credence to anything Schiller has to say in terms of timing markets.

southseacompany
Member
southseacompany

‘What Tulips and the Great Recession Have in Common”, Bloomberg video

https://www.youtube.com/watch?v=qr76385gErA

“Most people would agree that the bond market is expensive. But is it in a bubble? Alan Greenspan thinks so. So will this bubble be popping anytime soon? Bloomberg’s Jonathan Ferro explains.”

bullwhip29
Guest
bullwhip29

…and on the subject of the proposed (and soon to be killed) tax on employee discounts, my sister in law the mortgage underwriter along with her colleagues tossed out a question that so far no msm expert has yet touched on and that is how such a policy might affect the many 100’s of thousands of employees that either work directly for the banks or its subsidiaries, their spouses, partners and other “family” members (bringing the total likely to 7-figures) who presently receive a “discounted” rate on their mortgages, HELOC’s and other loan products?

consider the measure dead…

bullwhip29
Guest
bullwhip29

OSFI’s proposed mortgage stress test is unnecessary, harmful: study
https://www.theglobeandmail.com/report-on-business/osfis-proposed-mortgage-stress-test-is-unnecessary-harmful-study/article36537405/

consider this measure dead too…

Doomcouver
Guest
Doomcouver

The Fraser Institute has no clout with OSFI, I’m sure they’ll be ignored like they usually are.

southseacompany
Member
southseacompany

There was a lot of whining when Flaherty tightened CMHC standards, but it happened anyway.

Expect a lot of whining as the ‘punch bowl’ gets taken away.

‘Expect anger as Poloz pulls the punch bowl’
http://www.cbc.ca/news/business/canada-interest-rates-1.4276955

Oracle
Guest
Oracle

WOW.. you finally commented. Why now?

Diadora
Guest
Diadora

Remember it is not the sub-prime that sink the US in 2017, it’s the rich investors that panic and sold at once when interest rate go up and RE prices come down. OSFI have to slow the market or all banks are in trouble.

Oracle
Guest
Oracle

Told you guys so.

These kind of media measures are always watered down. To satisfy people like BPOM..

UBC in Crisis Mode
Guest
UBC in Crisis Mode

That couldn’t be right?
Simple math:
If 100,000 rich households in BC won’t pay their tax of 30,000 each (based on their world wide income of $150,000), that would be 3 billion a year, and BC’s GDP is only 237 billion, 1.3% of GDP.
But CRA is focused on employee discount of small change, something makes no sense here.

Just me
Guest
Just me

I would argue that is a conservative estimate. 150k average hidden income? It is more.

Just me
Guest
Just me
Actually, is starts to make perfect sense if you assume that the government wants to give a free ride to these tax evaders. When you look at it this way, it all starts to fit together. The government mistakenly believes that we are all better off having these millionaire migrants gracing us with their presence and the extra cash they bring with them. This is not true, in terms of our overall quality of life. Evidently. We would be better off with less people, a bit higher unemployment, lower economic growth and significantly lower house prices. The majority would benefit if we stopped millionaire migrants in their tracks. The problem is: politicians seem to have a trembling hand. Once in power, they immediately start worrying about stopping the money flows. Of course, they will inevitably pay for this lack of… Read more »
Diadora
Guest
Diadora

Globe: The NDP, which came to power after the May election, had said while in opposition that the Liberals were not doing enough to curb speculation in B.C. real estate.
In its election campaign platform, the NDP promised to set up a multi-agency task force to fight tax fraud and money laundering in the B.C. real estate marketplace.
http://vancouversun.com/news/national/highest-proportion-of-high-rollers-at-river-rock-casino-are-real-estate-professionals-internal-audit
Just a friendly reminder to the NDP to do something about housing or they will be booted out very soon.

Oracle
Guest
Oracle

There is no organization for the renting class. One way they can show unity is threaten to vote no.

history
Guest
history

the Hollow Earth Society stands beside them, in theory.

Oracle
Guest
Oracle

ITS OFFICIAL NOW FROM THE NDP!

Basically what they are considering doing over the next year is dealing with AirBnB and Closing the bare trust loopholes. Carole James basically said its a long term solution (Meaning they will keep prices high). NO 2% TAX!!! NO CLOSING LOOPHOLES FOR WORK PERMIT FOR FBT!!! Heres the link:

https://www.bloomberg.com/news/articles/2017-10-11/government-eyeing-all-options-to-cool-vancouver-housing-market

I seriously hope the word gets out to defeat the referendum. Otherwise you will have given these liars exactly what they wanted.

Oracle
Guest
Oracle

AND NOTHING WITH PRESALES!!

I’d like to see the NDP MLA’s foundations/overseas bank accounts now.

Oracle
Guest
Oracle

PLUS OSFI measures DEAD!!

Burnabonian
Guest
Burnabonian

No they are not.

That turd is still in our punch bowl and it’s too late to fish it out.

Lost...but not leased
Guest
Lost...but not leased

Au Contraire..

be a TURD in THEIR punchbowl….the revolution started YESTERDAY

…hasta la vista baby

Burnabonian
Guest
Burnabonian

They don’t have to do anything.

Oracle
Guest
Oracle

Please kick these people out.

VOTE NO!! and SPREAD THE WORD!!

Just me
Guest
Just me

Carol James’ interview in New York City is, again, disappointing,

“James acknowledged that the biggest pressure the administration faces from voters is to act immediately on housing. But with prices so far out of reach for most buyers, that won’t be easy.

“No one expects you can get to affordability within a year,” she said. “We want to develop a comprehensive plan that is long term and doesn’t create unintended consequences.”

READ: we will not rock the boat. Nobody wants lower prices in that’s government. This is becoming increasingly obvious.

They just lost a few voters in my household.

Doomcouver
Guest
Doomcouver

Someone ought to tell the NDP that you can’t make an omelet without breaking some eggs, and you can’t fix housing affordability without destroying some home equity in the process.

Mick Murphy
Guest
Mick Murphy

Fake Richmond “winery” sours business relationship leading to violence

2018. The year vancouverites finally realize they’re in the sinosphere.

https://thinkpol.ca/2017/10/11/fake-richmond-winery-sours-business-relationship-leading-to-violence/

Lost...but not leased
Guest
Lost...but not leased

My wish to” Sanity Clause” this year is that the Queens Cowboys..aka RCMP…SERIOUSLY investigate Richmond Politicians and bureaucrats …there is no way in hell they aren’t aware aka forewarned of the crime and corruption that permeates many facets of the Local economy…while us humble plebs are only aware because the putrid caked lid has been finally blown off.

Start with Richmonds Mayor(ex lawyer), a round eye Asian ass kisser supreme…as well as “certain” Councillors ( D.D. and K.J. ) who shamelessly are partners in many local Condo projects

This corrupt boil needs to be lanced…….YESTERDAY

Combat roach
Guest
Combat roach

Our local sewer got clogged with too much excrement, slowly flooding while faeces coming to the surface. Soon we’ll all need life jackets.

history
Guest
history

https://en.m.wikipedia.org/wiki/Columbus_Day_Storm_of_1962

here’s a pretty good story for Vancover history buffs
Tomorrow is the 55th anniversary of the 1962 Columbus Day Storm. I wouldnt know about this day under normal circumstances. I came across it while researching the Mother of my only child, (who happens to live in Vancouver). Oct 12 is the Mothers birthday.

now take your mind to this disaster, especially if you are from Pakistan, Bangledesh or India

“one of the first times that a natural event helped to trigger a civil war.”
https://en.m.wikipedia.org/wiki/1970_Bhola_cyclone#Death_toll

Lost...but not leased
Guest
Lost...but not leased
Not sure how many are aware of Steve Saretsky.., local realtor who is on YouTube and has a website as well. He did an approx 1/2 hour interview with David Eby before the election Eby noted that Singapore has restrictions of foreign ownership…and that Hong Kong policy is to build housing for many of it citizens. He also noted the old Transit works yard at 41st near Oak…..approx. 14 acres …aka once Public Property.. In 2015 City of Vancouver unanimously approved development of 1000-1200 units..20 % of which will be “affordable housing” (whatever the f*ck that means anymore) If there was ever a golden opportunity for the left wing nuts on COV Council to drive a harder bargain..this was it. This was public land…sold for millions…which ended up where? Divvied up into various Gov’t bureaucratic ratholes? They left wings impotence… Read more »
Oracle
Guest
Oracle

Padding their pockets.

Doomcouver
Guest
Doomcouver

Yeah it’s like the NDP want their turn at the government trough. They don’t want to kill the Chinese goose laying the golden eggs right now.

paulb
Member
Active Member

New
195
Price Change
68
Sold
144
TI:10020

http://www.clivestevepaul.com

wpDiscuz