Archive for the ‘mortgage’ Category

Saving is hard.

Wednesday, April 9th, 2014

One of the great things about the Vancouver housing market is that we don’t have subprime lending.  All of our loans are rock solid and even if they weren’t guaranteed by the government banks would still be eager to hand out the same mortgages.

And yet..

If there’s one thing Vancouverites know, it’s that saving money is difficult.

So what are you to do as a responsible first time home buyer who is unable to save up the hefty 5% required to get a CMHC insured mortgage?

Don’t worry, at least one bank has your back: Vancity will match half your downpayment savings on a home priced under $500k.

Still that’s not exactly zero down, since the CMHC scrapped that in 2008, but if saving up 2.5% is still too difficult you may have other options.

But remember, unless you have a poor credit rating this still isn’t subprime.

Apparently it’s gotten harder to get the long term zero down mortgage the CMHC made available in the past, but not impossible.

What will the CMHC announce?

Wednesday, February 26th, 2014

Who wants to play ‘guess the future’?

Apparently the CMHC is holding a conference call at 10 am EST on Feb 27th.

Some rumours are saying privatization, though it looks like most everyone agrees that would extreeeeemely unlikely at this point for a few reasons:

-Privatization would require the finance department
-No one in their right mind would take on the debt

But that doesn’t mean you can’t guess at what is going to be revealed tomorrow!

So what do you think the CMHC will announce? Privatization? Tougher underwriting standards? Branching out into commemorative figurines? A new special expert task force comprised of Brad Lamb, Bob Rennie and Angelo Mozilo?

What’s your best guess at what the CMHC will announce tomorrow?

RBC warns of mortgage rate increases

Tuesday, February 25th, 2014

RBC sees mortgage rates going up instead of flat or down.

Their forecast is for housing to get less affordable due to rate increases.

The Royal Bank of Canada says the ability of Canadians to keep up with housing costs has been improving of late, but warns that’s about to change.

RBC’s latest housing affordability measure shows home servicing costs relative to incomes dipped slightly in the last three months of 2013 after having risen the previous two quarters.

But the relief will be temporary, the bank says in a new report, because mortgage rates are due to start rising this year.

“RBC anticipates that as longer-term interest rates begin to moderately rise, the costs of owning a home at market value will gradually outpace (growth) household incomes by late-2014, leading to strained affordability in several markets across Canada, much like the trend in Toronto,” RBC chief economist Craig Wright said in the report.

The finding bucks the recent trend, which has seen mortgage rates remain stable or even moving lower, with some brokers offering five-year fixed rates below three per cent.

Read the full article here.

Should bank CEOs be worried about housing market?

Wednesday, January 15th, 2014

Who should worry most about an overheated housing market?

Overstretched owners with big debt? Renters who want to buy? Government?

What about Bank CEOs?

TD CEO Ed Clark says that bank CEOs ‘should be worried’ about the Canadian housing market.

While he isn’t worried about a full-blown bust, Mr. Clark believes chief executives simply can’t ignore warning signs in the market – particularly the sudden run up in prices for real estate of all stripes. “If you run a bank, you should be worried about it,” he told the audience at a bank conference in Toronto.

Now if banks start to worry about insured mortgages, maybe the taxpayers insuring them should be worrying a bit too.

Of course other bank CEOs have said that there is no problem and lending has been prudent and restrained.

That article ends up with possibly the weirdest last paragraph of the year so far:

Mr. Clark’s comments Tuesday weren’t the first he’s made on the topic, but this time he went into more detail on how his bank is changing its behaviour.

“We’re saying ‘no’ lots of times” to potential real estate borrowers,” he said, some of whom are big, lucrative clients. Mr. Clark wouldn’t name names, but he noted that in one instance, Tim Hockey, the bank’s head of Canadian retail and commercial banking, was “virtually in tears” for having to turn the client down.

The austerity! it hurts!

Housing Collapse: banks ok, consumers vulnerable

Wednesday, November 27th, 2013

The head of the OSFI is warning about the dangers of a Canadian housing market correction.

Speaking on Monday Julie Dickson said that the OSFI would be preparing new guidelines for the mortgage industry.

“Consumers must be considered here because, while banks may be able to withstand shocks, consumers may not,” said Julie Dickson, the head of the Office of the Superintendent of Financial Institutions. “Banks have to set aside reserves for unexpected losses and are typically far better situated to deal with shocks than consumers — who may be highly indebted and therefore particularly vulnerable to significant increases in interest rates or unemployment.”

For more details read the full article over at the Financial Post.

When mommy and daddy help you buy.

Monday, November 4th, 2013

It’s hard to buy your first place.

Thats why more and more parents are chipping in to help junior get their feet in the real estate market.

“The (housing) market would have been much weaker if we didn’t have this phenomenon. There’s no question about that,” says Tal, deputy chief economist of CIBC World Markets.

“I’d say this generation is getting more help than any other generation did, but I’d say they need this help more than any generation, too.”

Interest rates may be keeping monthly payments relatively affordable, but the big issue for young first-time buyers has been coming up with sizable downpayments when the average price of a home in the GTA is now more than $534,000 — more than $850,000 for a detached in the City of Toronto — almost double the $293,000 they averaged just a decade ago.

Saving can be especially tough when many first-time buyers are still paying off student loans and dealing with rents that can run from $1,100 to more than $2,000 a month.

Read the full article in the The Star.

How much mortgage is too much?

Monday, October 21st, 2013

You’ve probably heard over and over again that household debt in Canada is climbing to record levels.

And it’s probably not a surprise to you that mortgages due to the high cost of housing holds some blame there.

But did you know that the total amount of mortgage debt in Canada has nearly doubled in the last four years?

According to CAAMP the total national mortgage debt in 2008 was $664 billion. It now stands at a total of $1.2 trillion.

Over in the Vancouver Sun Barbara Yaffe sees this stat and seems to blame the little transaction fees for the high cost of housing.

But there’s a little four letter acronym conspicuously missing from her article: CMHC.

That would be the Canadian Mortgage and Housing Corporation, which has been flooding the market with insured mortgage money at a time of low interest rates.

So here’s the real question: Is Canadian mortgage debt so high because of our house prices, or are our house prices so high because of that mortgage debt?

A Mortgage Brokers view on rates and prices

Thursday, September 12th, 2013

Rob McLister is a mortgage broker and the editor of the informative Canadian Mortgage Trends blog.

He’s doing a livechat at the Globe and Mail answering questions about mortgages right now.

Yesterday they published his rather bearish opinion on the future of home prices in Canada, which may suprise you coming from a mortgage broker.

“Buying the same house will be more expensive this fall than this spring,” National Bank Financial’s Peter Routledge told the Globe and Mail last month. But analysts point to a range of factors that could moderate home prices in the next six months, including higher interest rates, growing supply, modest income growth and stricter mortgage regulations. Canada’s banking regulator is weighing new mortgage rules as we speak.

Rates are the biggest wild card and the No. 1 factor that could put the brakes on home prices. Higher mortgage rates immediately make it harder for budget-strapped buyers to qualify for a mortgage. That’s why – other things being equal – as rates increase, prices usually decrease.

So if home prices potentially face headwinds, does it really make sense to run out, compete with a stampede of other buyers and purchase a home?

Read the full article here and find the live chat session here.

CMHC tightens mortgage rules (again)

Tuesday, August 6th, 2013

Ottawa must really want to see more of a downturn in the Canadian housing market.

This week saw a new limit to CMHC largesse. The latest change limits guarantees on Mortgage Backed Securities which will slightly increase lending costs.

In the financial post Mortgage Brokers and Bankers differ on their opinion of the latest move, some think it’s too much too soon, others think it’s a minor tweak that will have no real effect.

Doug Porter, chief economist with Bank of Montreal, wonders if housing statistics over the last couple of months showing sales and prices rebounding might have spooked the CMHC.

“I think this step is being taken because we have seen some signs in recent weeks that the market is not cooling as much as had been expected,” said Mr. Porter. “All the debate has been whether we will have a soft or hard landing and I would question whether the market had any landing whatsoever.”

Read the full article in the Financial Post.

Phony Appraisals and Mortgage Investments

Wednesday, July 24th, 2013

Canso Investment Counsel has released a study about mortgage securitization in Canada:

The “securitization” of mortgages that many economists blame for the housing collapse and subsequent financial crisis in the U.S. is now a runaway problem in Canada, says a new study that also casts doubt on whether Canadians can trust the house price information they are seeing.

The study from Canso Investment Counsel, a corporate bond management firm, says mortgage securitization — bundling mortgages together and selling them to investors — has spiralled out of control in Canada in recent years.

On a side note, how many renters out there are buying MICs as a hedge against high property prices?

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