Bullwhip29 pointed out this article in the financial post where Bank of Canada governor Stephen Poloz says that the troubles at Home Capital are ‘idiosyncratic‘ and contained:
Poloz said the central bank saw no signs that Home Capital’s deterioration had triggered contagion, according to an interview with the newspaper on the sidelines of the Group of Seven meeting of finance ministers and central bankers in Italy.
“We’d be looking for signs that there are problems with the (financial) system as opposed to preoccupying ourselves with individual institutions,” Poloz said.
He also has some stuff to say about the housing market in general:
Poloz also reiterated in the interview the central bank’s view that recent house price increases were not sustainable, and echoed previous statements that some speculation appeared to be at play in the market. He added that did not mean a major price correction was in store.
“Often, when you have a truly unsustainable housing market, you will see very rapid price increases (and) very rapid credit growth,” Poloz said. “But we don’t see that in the credit side, so I do think a significant amount of this that is fundamental, but layered on top, is a speculative element.”
Read the full article here.
Well that was interesting, looks like we’re still not sure how that vote went.
If you know who our government is going to be made up of please let us know in the comments below.
And is there any difference when it comes to house prices?
This is hard to believe, but apparently more than half of all Canadians are just $200 away from not being able to pay their bills.
“With such a small amount of wiggle room, any kind of unanticipated hardship, such as a job loss or even a car repair, could send an already struggling family into financial despair,” said Grant Bazian, president of MNP’s personal insolvency practice, which is one of the largest in Canada.
For 10 per cent of Canadians, the margin of error when it comes to household finances is even thinner, at $100 or less.
But those with anything at all left at the end of the month were in better shape than many: A whopping 31 per cent of respondents said they already don’t make enough to meet all their financial obligations.
Then there’s this little detail:
Another hair-raising finding from the survey: Roughly 60 per cent said they don’t have a firm grasp of how interest rates affect debt repayments.
The statistic helps explain why many indebted Canadians end up taking on more debt and high-cost loans, said Bazian. “That’s how so many end up in an endless cycle of debt,” he noted.
Shouldn’t be a problem, interest rates are low forever now aren’t they?
Read the full article over at Global News.
You’d think that lending out money for real estate in Canada would be a no-lose deal, but Home Capital Groups shares collapsed 41% at open today:
The embattled lender announced early Wednesday Home Trust has a non-binding agreement in principle with an unnamed institutional investor for a $2-billion line of credit to be secured against mortgages. The agreement is expected to be finalized later in the day. Home Trust will have to pay the investor $100 million to tap the line of credit and interest will be charged at 10 per cent on outstanding balances.
Read the full article at BNN.
Bank of Canada Governor Stephen Poloz has said he doesn’t think there’s a strong correlation between interest rates and speculation, claiming even a 5% increase in rates wouldn’t have an impact on real estate speculation in Canada.
Over at BetterDwelling.com they disagree with this thought:
It was almost stupid to not buy property at these rates, since it was almost free money. This didn’t just give speculators more capital, it created speculators out of people that would normally not be able to play the game. These aren’t Bay Street suits with wads of cash. Everyone from your barber to grocery store clerks are turning into real estate speculators. Cheap rates, a larger qualified buyer pool, and the expectation that you can always make money, turned shelter into lottery tickets.
Read the full article here.