YVR pointed out this article by Rob Mclister about the OSFI B-20 bombshell:
The new OSFI’s stress test rules will make 20% of the mortgage market not qualify or they will have to reduce their mortgage by 18% to qualify. That is before recent and future mortgage rate increases are factored in.
Roughly 80% of new big bank lending in the richly valued Toronto and Vancouver markets is low-ratio mortgage lending
OSFI’s stress test, as proposed, would slash buying power for prime buyers by roughly 18%
For non-prime borrowers, qualifying rates would immediately rocket into the 6% to 7% range
Read the full article here.
If you’ve got an idea of how to make housing more affordable in Vancouver, city officials say they’re all ears.
“I think we’re almost at the desperation stage,” said Randy Pecarski, the City of Vancouver’s deputy director of planning. “People are on the verge of leaving the city because they can’t find a place to stay.”
First step: another survey to improve housing affordability over the next ten years.
Read the full article over at the CBC.
The Bank of Canada is still worried about housing debt levels in Canada and joins the OECD in expressing that concern:
The two biggest concerns on the bank’s radar are also intertwined. It said the growth in mortgage lending in Toronto and Vancouver has largely fuelled an increase in Canada’s overall household indebtedness since the bank’s last review six months ago.
“Highly indebted households have less flexibility to deal with sudden changes in their income,” said the bank.
“As the number of these households grows, it is more likely that adverse economic shocks to households would significantly affect the economy and the financial system.”
The document was released as concerns about the Canadian real estate market — domestically and from abroad — continue to pile up.
Read the full article over at the Financial Post.
The recent BC first time buyer loans program announced by the liberal government has successfully driven condo prices higher by handing out interest free loans from tax payers to first time buyers, but it sounds like David Eby and the NDP want to ruin that party:
“We were told by economists at SFU, UBC, CMHC that the impact of the program would be to increase the cost of the housing stock,” says Eby.
“Essentially a transfer of money directly to developers and people selling their existing homes, and put people further into debt. So if that is truly the impact of the program in Metro Vancouver, then that’s something we want to review and make sure there’s not a better way we could allocate the $700-million that’s been allocated to that program.”
Read the full article over at News 1130.
Canada’s economy is booming, expanding at a 3.7% annual rate in the first quarter. And yet…
Meanwhile, in a year when stocks are rising everywhere, Canada’s benchmark index is the second-worst-performer in the developed world after Israel, according to Bloomberg data. It’s a similar story in currency and bond markets.
The performance underscores how, even with the improving economic performance, caution prevails. Investors remain concerned about geopolitical risks such as U.S. trade protectionism, the outlook for oil prices and a housing market that some analysts say may be on the verge of a correction.
“It is a tad curious to say the least that the Canadian economy arguably has been one of the bigger pleasant surprises in 2017 and meanwhile the equity market has done a belly flop,” said Doug Porter, chief economist at Bank of Montreal, who highlighted the disconnect between Canadian growth and market performance in a May 26 note.
Energy shares are down 10 percent year-to-date, while fears about contagion from a run on deposits at troubled mortgage lender Home Capital Group Inc. have weighed on financial shares, which are down 1.2 percent.
Read the full article over at Bloomberg.