It’s a been a while since CMHC mortgage lending rules have been ramped back to more historical levels.
After dabbling in American style 40 year zero down mortgages we decided that might not be the best idea. Unfortunately we never did get the American style locked in interest rate for the full duration of the loan.
So now we’re back to 25 year terms and it’s more difficult to get a loan if you’re self employed. A lot of loan applications that would have been approved a year or two ago are now being rejected.
So what affect has this had on the market so far?
Well apparently the sub-prime lending market in Canada has rocketed to a record level for one.
Capital Corp is a non-bank lender that has been operating since 1988. Their chief executive Eli Dadouch says there’s a lot of money out there for non-bank loans to higher risk borrowers.
He said there is no question it’s the top of the real estate cycle, so anybody lending out money has to be more careful today.
“People always want to deal with a bank, it’s the cheapest form of money,” he said. “When they come to us and people like us, it is because there is some type of story [behind why they can’t get credit]. It’s easy to lend money, the talent in this business is getting it back.”
Read the full article in the Financial Post.
Joining in that venerable tradition of holiday season layoffs, the Canadian Mortgage and Housing Corporation has announced that it is cutting 215 jobs which is close to 10% of it’s workforce.
But of course this is government, so they will also be adding jobs, resulting in only a small net loss of positions:
The federal agency said Friday the employees have been declared surplus and will see their jobs disappear at both CMHC’s head office in Ottawa and its regional operations.
However, CMHC says it is adding to its staff in risk management and information technology, so the organization will only see a “small net reduction” in its overall staffing levels.
Read the full article here.
It’s that time of the week again…
Friday Free-for-all time!
This is our regular end of the week news round up and open topic discussion thread for the weekend. Here are a few recent links to kick off the chat:
-Canadian debt at unsustainable level
-Realtors optimistic about 2015
-Overly fat debt loads
-Not expecting unexpected economic shocks
-Oil to affect Calgary prices
-Vancouver Island Stats
So what are you seeing out there?
Post your news links, thoughts and anecdotes here and have an excellent weekend!
Some of you are under the impression that Bank of Canada Governor Stephen Poloz does nothing but sit around all day eating Doritos and watching The West Wing on Netflix, but you are sadly mistaken.
He also issues reports that freak out Realtors.
Consumer debt loads and house prices that could be as much as 30 per cent overvalued are the two biggest risks to Canada’s economy, the Bank of Canada warned in its semi-annual Financial System Review on Wednesday.
Yeah, but “up to 30 percent” includes zero percent over-valued too you know? Surely not everyone is overpaying for Canadian real estate.
The bank says it’s about 95 per cent sure that house prices have been overvalued by an average of about 10 per cent since 2007. That’s based on a new forecasting model the bank says it created, which incorporates existing data from private banks and other government institutions.
Huh. 95% Sure? really? I bet it’s all a’cause of those wealthy foreigners right?
And a lot of those inflated house prices are coming at a cost of rising debt loads. About 12 per cent of Canadian households are considered to be extremely indebted — which means they have a debt-to-income ratio of at least 250 per cent. That ratio has doubled since 2000, the report notes.
But that’s ok because younger buyers are building equity right?
Young homeowners, the bank added, have become even more vulnerable to negative shocks to income and to higher interest rates.
Wow. What a buzzkill.
*For those who followed the foreigner link we would like to offer our sincerest apologies. If you are a glutton for punishment, here’s a video of our prime minister singing Guns n’ Roses “Sweet Child o’ Mine“. If you watch the whole thing you earn a cookie! If you cut it off at 3:33 you have to go to work at a Tim Hortons in Fort Mac. You have been warned.
Skook has updated the massive Sunshine Coast Land Sales thread over at VancouverPeak- this thread shows historical and 2014 data.
Just a short ferry ride away they never really saw a recovery after the 2008 crash – There are lots for sale in Gibsons that were asking $219k in 2007 and are currently asking $169k.
Here’s the most recent post with data for November 2014.
Hat-tip and thanks to Skook for compiling the data!
Canada’s job market dropped close to 11k jobs in November, but this is after a couple of months of big gains. We’re sitting now at 6.6% unemployment nationwide.
The good news? We’re seeing gains in full time positions and most of the losses are in part time positions:
Full-time employment grew by 5,700 jobs, while part-time work dropped by 16,300. The goods-producing sector, which includes the manufacturing, natural resources and construction industries, added 17,300 posts, while the services sector lost 28,000.
The 12-month gain came to 146,000 positions, an increase of 0.8 percent, while the six-month moving average for employment growth was 21,300 jobs, down from 27,400 in October.
Read the full article here.
It’s the end of another work week and that means it’s time for our regular Friday Free-for-all!
This is our usual end of the week news roundup and open topic discussion thread for the weekend.
Here are a few recent links to kick off the chat:
-Balancing Retirement & mortgage
-27% don’t count mortgage as debt
-Vancouver closet for rent
-Longest interest rate pause
-Higher tax for empty houses?
-Millionaire visa for only 50 people?
-Dipping under a million on the coast
So what are you seeing out there? Post your news links, thoughts and anecdotes here and have an excellent weekend!
Just how fat can this debt pig get before it’s stomach explodes?
You thought this nation had impressive debt levels before? It’s now topped One and half trillion dollars and an astounding 65% of that is mortgage debt.
In one report, Equifax Canada said that “Canadian consumers have yet again tipped the scales setting a new benchmark of over $1.513-trillion in debt.”
That third-quarter figure marked an increase from $1.448-trillion in the second quarter and $1.409-trillion a year earlier, according to Equifax, whose numbers are based on more than 25 million unique consumer files.
Excluding mortgages, average debt held by Canadians has increased 2.7 per cent to $20,891.
The good news is that 27% of Canadians apparently don’t believe that a mortgage is debt, so we shouldn’t really even count that part.
RFM has updated the Vancouver Realtor Hunger Index for November 2014 over at Vancouverpeak.com
The index is creeping up from its mid levels, but nothing too dramatic at this point.
The VANCOUVER REALTOR HUNGER INDEX for November 2014 was 62%. How does this compare? The 17-year average for November is 54%. At 62%, the 2014 November VRHI equaled 1999’s figure and was higher than 10 years and lower than 5 years since 1998.
Details and comparison data for 17 years at:http://vancouverpeak.com/showthread.php?tid=64
No matter how much you know, there’s always something new you can learn.
From this article in the Vancouver Sun there are at least 3 lessons we can learn:
1) Shaughnessy is a ‘tony’ neighborhood:
Laura De Munain moved into her family’s Oak Street house on the outskirts of the tony Shaughnessy neighbourhood in April. While working from home, the pregnant lawyer soon noticed groups of two or three people regularly stumbling around her back alley in a daze.
2) You can’t force absent owners to evict partiers from their property:
Police answered her first call to their non-emergency line and toured the property, but they “said they didn’t see any evidence of consistent living here,” according to De Munain. She says city staff referred her back to the police when she complained about drug users and squatters in June and asked the city to force the owner to board the home up properly.
3: Government hears you, but they’re not sure you mean what you say:
In the weeks leading up to this month’s civic election, a blog showcasing “beautiful empty homes” of the west side and a proposal from COPE mayoral candidate Meena Wong for a vacant home tax gained support from residents simmering with anger over Vancouver becoming a “hedge city” for foreign real estate investors. A poll last month showed 72 per cent of respondents thought such a tax a “very good” or “good” proposal, and only 18 per cent deemed it “very bad” or “bad.”
Vision Vancouver Coun. Geoff Meggs said he, like many, finds it offensive when a perfectly good home is held empty for speculative reasons, but he doesn’t know that such a tax is “legally possible or even desirable.”
You’ve either learned something new from this writeup or it’s been a complete waste of your time. In either case you can read the full original article here.