The man who loved short

children

Alicia has a problem. She finds me uncle-ly.

“Hi Uncle Garth – Yes that’s what my husband and I think of you. You’re like Canada’s straight shooting, talk no nonsense uncle,” she writes. Guess it’s better than Dear Abby. But I’d personally have chosen something closer to ‘stud muffin’.

“I am hoping you can confirm that I am a good student and have read and applied your teachings. Hubby and I just bought a place in the Hammer (aka Hamilton). It’s old and strong and costs about the same as a 350 square foot decomposing pressed cornflake sky box in Toronto. Cost of the house is less than 2x our household income. We want less exposure to risk, wanted to be flexible, and wanted to build our savings and not have all our eggs in one basket.”

Good girl. Nice strategy. Remember the breathing mask filters.

“My question is this – I think it would be wise for us to lock in now for a 10 year fixed (Royal will give us 3.79%), but we are also thinking we should do the 30 year amortization the NL@TB is offering us. We think we can pulverize our mortgage in less than 10 years but like the flex of the 30. Did we get it right? Paperwork is not yet signed. Ps – you rock. Alicia.”

Well, babe, you’ve hit on one of the few advantages of a 30-year mortgage – locking in a rate for ten long years and then scaling back the monthly payment by extending the amortization. Using this technique you get a monthly which is about the same as that of a cheapo five-year home loan, and yet you need not worry about where mortgage rates will be in 2018 (and they won’t be pretty).

Moreover, because of the Canada Interest Act (I explained this in a recent post so boring people bled when they read it), the 10-year home loan actually becomes fully open at the end of five years, meaning you can pay off as much as you want, when you want.

Of course, there are two problems: (a) lower monthly payments with a 30-year mortgage mean you end up paying more interest than with a 25-year deal (but in this case you gain rate protection) and (b) F will soon crush the long mortgage out of existence. So, vite.

I told you last week that the Department of Finance, OSFI (the bank cop) and the Bank of Canada were about to lower the boom on thirty-year amortizations, because real estate is not croaking fast enough. (Just read this story to see how the world views our steamy little bubble.) When the post was published here Friday a banker made this comment to the mortgage industry newspaper, which reported on this blog’s facts:

A report on Greatest fools, blog of the day? Sorry, I will have to pass. Honey boo boo’s Mom is getting married which is probably more relevant to the mortgage market than any of GT’s wild speculations.

Don’t you just adore those bankers? They look great in their little Porsches after a Hummer rolls over them. Not that I would know.

In any case, my information was correct. The same mortgage newspaper was forced to report this on Monday:

Federal policymakers are exploring additional mortgage rule tightening, CMT has confirmed. A spokesperson from Canada’s banking regulator, The Office of the Superintendent of Financial Institutions Canada (OSFI), verified that it is looking at the issue of limiting amortizations to 25 years on conventional mortgages (those with 20%+ equity). Currently, those “low-ratio” mortgages can have amortizations up to 35 years.

For the record, the feds have done some damage control (it’s a sad day when Ottawa reacts to a pathetic blog), by moving their leak-type announcement up in time, and vowing we’ll be consulted on a change which will (a) lessen consumer options, (b) increase mortgage costs and (c) strip up to 10% from national home sales.

“A decision in that regard would be taken once we hear back from the industry. Any proposed changes to our mortgage guideline that may result from this work would be subject to a public consultation process.”

In reality, that’s a fraud. In the words of an Ottawa insider who knows better, “The public consultation is a sham…decisions are already made.”

And make no mistake. This is a big deal. As you know, 30-year mortgages are already verboten when a borrower wants or needs CMHC insurance, but there have been no limits placed on uninsured loans, where a downpayment of 20% is made. In the estimation of one analyst (Peter Routledge at National Bank) an astonishing 48% of all outstanding mortgages – insured and uninsured – in the portfolios of the monster banks have amortizations of longer than 25 years. Of all the uninsured loans, at least four in 10 have been financed over 30 years.

So, have the banks been playing fast and loose with risk? Do all these long, long mortgages taken out with lower monthly payments suggest millions have pigged out on properties they couldn’t finance otherwise? Or are the feds simply hot to squish the housing market every way possible, short of raising interest rates?

Beats me. I’m just Uncle Garth. So, Alicia, if you want to do the 10-year loan term hedged with a 30-year am, go back and see the bank lady before the lights go out. In a few weeks you’ll be F’d.

144 comments ↓

#1 TurnerNation on 05.13.13 at 9:02 pm

Not a Leafs fan eh.

#2 Josef on 05.13.13 at 9:03 pm

3-2=Josef!!! Oh Yeah!! Groovy BABY!!!

#3 Adam on 05.13.13 at 9:05 pm

No more 30 year mortgages? I’m giddy with excitement at the prospect….

#4 Yellow rox rock on 05.13.13 at 9:07 pm

Thank you. Bankster fix of the day: acheived!

#5 Canadian Watchdog on 05.13.13 at 9:08 pm

HASTINGS SUNRISE DEVELOPMENT LIMITED

The challenging real-estate market that the Vancouver area is currently experiencing has resulted in our decision to postpone our enlarged new store and condominium project until conditions improve. While this project was important to you, the surrounding community and of course, a general lack of condominium sales made postponement the most prudent decision for all concerned.

While the condominium market conditions provide reason enough to delay it should also be noted that we remain in the process of finalizing a number of environmental requirements that have ben more challenging than originally expected.  

As you can appreciate our first duty was to advise our tenants, purchasers, staff and prospective purchasers of the delay prior to communicating publicly. Now, with those notifications needs having been met we wish to ensure our neighbours and other interested parties are aware of our decision.

We are exceptionally proud of the design that we have cerated for this important site. we look forward to reconsidering the project as market conditions improve. In the meantime we will be taking action on the site to minimize any impact on the neighbours and neighbourhood.

—–

Next…

#6 Yellow rox rock on 05.13.13 at 9:08 pm

Achieved

#7 Johnny D on 05.13.13 at 9:12 pm

Sales way down in Regina. Tons of for sale signs out there. But the local newspaper the leader post is assuring everyone how rich and prosperous us saskatchewanites are. Jobs galore, millionaires around every corner. Just ignore all the stats on how indebted the average person here is.

#8 Cory on 05.13.13 at 9:17 pm

I wish someone would grow some balls and just end this charade already. It is not good to be on the radar with a housing bubble at this point in time especially after bragging to the world the last 5 years about how great our bankng system and economy is.

They can change the amorts to max 25 yrs, the banks and weasels (aka realtors) will find a way around it and then brag about it and the cycle repeats.

The only thing that will kill this without a doubt is higher interest rates but that ain’t happening any time soon.

#9 Victor V on 05.13.13 at 9:19 pm

Canada’s banks could be on the hook to bail out CMHC if disaster strikes http://natpo.st/13friRA

#10 visorman30 on 05.13.13 at 9:20 pm

can I just clarify something in this post re: her mortgage repayment timeline. From the sounds of it, she has the capacity to pay it off well before 10 years but is going to amortize 30. But does that necessarily means she will be mortgage free after 30 years?

The way I’ve understood your prior posts is that the relative cost of a mortgage is pretty low so there is little incentive to try to pay this off faster. Credit card debt would be a counter example as they typically can have 18% interest. Is it fair to say that for 10 years she should just pay the minimum and at the end of 10 years (if the interest rate is a lot higher, it definitely should be by then) she should try to pay it off within say another 10 years? or should it be ASAP?

I guess it’s tough to definitively say without hard numbers but I would still like to hear what you have to say about it.

Her strategy is to secure a fixed rate for 10 years while not having to pay a premium for the first five. She gets rate protection and then an open loan to pay off at will, assuming rates rise in subsequent years. — Garth

#11 Nemesis on 05.13.13 at 9:21 pm

@CanadianWatchDog#5…

With apologies to Hemingway, clearly… “The Sun Also Sets”…

#12 White Rock Mom on 05.13.13 at 9:23 pm

Garth, you make me laugh!
The BC housing market needs to be F’d….bring it on leprechaun.

#13 Dean Mason on 05.13.13 at 9:23 pm

We should go back to 20% downpayment for buying any house,condo etc. and 25 year maximum amortization.This will keep housing prices more in check and reduce speculation alot.

The only thing left is a higher mortgage rate a 5 year fixed of at least 5.50% to 6.00% should be enough.If these 3 things were in place you would of seen housing prices at least 25% to 40% lower today.In Vancouver a $1,200,000 house would never been worth that much it was more like $720,000.

#14 Nodebt on 05.13.13 at 9:25 pm

May 7th Post #73
Hi Garth, I don’t know much about investing but was rather curious of what you thought of that post last week? I know a person if they had a good financial advisor could get a higher rate of return. For myself I’m only 39 but when I’m 50 hope to have between 1.5-2 million to invest and would feel much safer having it locked in like that retired couple so I don’t lose my principle. The way I look at it if I can lock that money for 30 years I’m set, when I hit 80 I can lock it in for another 30! I’m not going to have a pension either so that will be mine kind of. What do you think Garth? Thanks

You sound schizophrenic. — Garth

#15 Smoking Man on 05.13.13 at 9:27 pm

TurnerNation on 05.13.13 at 9:02 pm

Not a Leafs fan

Obviously .

Back to the gamr

#16 T.o. and GTA bidding wars debunked -May 13 -Go leafs go! on 05.13.13 at 9:29 pm

I have readjusted the maps for a better coverage of Barrie and Oakville which were partially of the heat map grid

Also I have increased the resolution of the Toronto heat map and both heat maps include the latest sales (the small black spots)

http://recharts.blogspot.ca/2013/05/toronto-bidding-wars-debunked-may-13.html

http://recharts.blogspot.ca/2013/05/gta-bidding-wars-debunked-may-13.html

#17 mac on 05.13.13 at 9:30 pm

You’re avuncular.

#18 TurnerNation on 05.13.13 at 9:35 pm

C, H, and F (or P, H, F?) are in a PANIC! This pathetic weblog is being thumbed though – on Blackberrys and Ipads – in Parliament Hill washroom stalls on all floors!
The leak is out. Rumors swirl.
Expectorating rubies crowd banks’ waiting rooms everywhere.

#19 Toromierda on 05.13.13 at 9:39 pm

I think one mortgage rule that needs modifying is the 5 year rule from a couple years back. The one that states that buyers must qualify at the 5 year rate even when taking the variable.

Now that the rate has dropped to <3% since then the rule has lost its teeth, it should say that buyers should qualify for the 5 year or 6%, whichever is greater.

That is if you, Mr. Turner, really think it will be 6% in five years since you said two years ago the Prime rate would be 3% by now and we'd be in 'vultch' territory.

I'm sure the words "renting is better" is easy for you to type but I'm still renting here in Edmonton with a huge, nearly 20% rent increase coming when my lease expires next month.

How many more fools can there be? Apparently quite a lot more than we all thought.

#20 Nodebt on 05.13.13 at 9:42 pm

Garth I’m more bipolar if anything! Lol, I’m serious what do you think? Dean mason what do you think? Thanks

#21 Smoking Man on 05.13.13 at 9:43 pm

Relax leaf fans, I have just willed the leafs the win, will come at 18:52

#22 CrowdedElevatorfartz on 05.13.13 at 9:44 pm

@#11 Nemesis

Good one :)

#23 CrowdedElevatorfartz on 05.13.13 at 9:47 pm

@#14 NoDebt

Have you been trapped in an elevator I just exited? Have the “fumes” affected your reasoning powers?
Have you voted Liberal yet?
Have I just answered the first two questions?

#24 canadian on 05.13.13 at 9:50 pm

Gasoline in Vancouver $1.50 per litre today and barrel of oil down to $95.00.Inflation down to 1% , I wonder if there is a connection .

#25 Nodebt on 05.13.13 at 9:53 pm

#23 quite obvious you have a thing for the NDP, you must be on welfare ? How was the taste when Adrian Dix gave you that Dutch oven treatment last nite?

#26 Sebee on 05.13.13 at 10:05 pm

Garth,

Doesn’t the fresh Hamilton air blow east over Oakville and Mississauga 365 days a year?

#27 DON on 05.13.13 at 10:09 pm

MSM is the worst it has been of all time.

Water cooler talk on the door steps while knocking door to door in Point Grey/Kits. “house prices are too high, I fear my children/grandchildren cannot afford to live here, hell if we sold we wouldn’t be able to afford the house down the road under this current model”

More water cooler talk at work. So and So’s house still hasn’t sold yet, people are getting nervous, those who recently purchased…you can see the fear on their faces. Oh well…….dive prices dive.

#28 Smoking Man on 05.13.13 at 10:09 pm

Back to blogging, golf and boating, darn better team won

Says something for experienced old facts..

#29 Boomer21 on 05.13.13 at 10:15 pm

#21 SM
Loser, loser, loser, The Maple Leafs loser! Oh well maybe next year, they did give it a good try.

#30 Angry But Not Unhappy Twenty Something on 05.13.13 at 10:24 pm

My understanding is that the penalty to break a mtg after 5 yrs is just 3 months interest – not totally open? 10 yr does look attractive though at 3.7%

I think the magic number is 4.8% in 5 years?

As in – if you took 10 years term today and in 5 years the 5yr fixed was over approx 4.8% you’d be ‘winning’ out. Plus you’d have the Canada Interest Act working to your favour being 5 years into the mortgage.

Shall we force feed 10 year terms today to protect everyone from higher rates 5 years into the future? (Not to give Senor F more ideas…)

As a renter who isn’t at all particularly House Horny…I’m sure this whole housing scenario will be a valuable lesson 10, 20 and even 30 years from now.

#31 rosie "moving forward" on 05.13.13 at 10:26 pm

Come on F. You can do it. If at first, and all that. http://www.slate.com/blogs/trending/2013/05/13/building_implosion_fail_australian_building_won_t_fall_video.html

#32 Mister Obvious on 05.13.13 at 10:28 pm

#5 Canadian Watchdog

Thanks for the news on the ‘official’ halting of the Hastings Sunrise London Drugs development.

A few other condo developments in the area are now about half complete. I see bankrupt people.

“In the meantime we will be taking action on the site to minimize any impact on the neighbours and neighbourhood.”

Taking action? Doubtful.

#33 Chickenlittle on 05.13.13 at 10:31 pm

I appreciate your prayers, SM. For the Leafs, that is. My heart is broken!! :(
I will miss my Lupul!!!! No more gorgeous man for me to stare at.

If I was a Canucks fan I’d be used to this feeling right now.

Go Ottawa!!! Sigh…I can’t believe I just said that!!

Oh well, at least I still have Uncle Garth to entertain me.

#34 Sparky55 on 05.13.13 at 10:32 pm

Wow,
I think a new record was set today on Nova Scotia Viewpoint:
– 115 “new prices” – the vast majority of them price reductions. Normally it’s 30-40 “new prices” or less. I thought the up to 70-80 I saw over the last week or so was really high.
– 124 new listings – (fairly high, but likely normal for the spring market)
– 57 Solds – on the low side for the spring market, and this is a high number this year.

Here’s a listing that started at $590,000, and just sold today for $420,000:
http://www.viewpoint.ca/property/cutsheet/00504225?no-nav=1&no-footer=1

Here’s a weird one just up the street, looks realtor owned. Bought in 2008 for $279,900. On the market again last Sept for $569,900, with several price reductions, with the last one today at $449,900

Lots of other examples.

#35 Inglorious Investor on 05.13.13 at 10:35 pm

F’s ostensive plan to cool RE seems to be having no effect in some areas. Just anecdotal evidence, so take it for what it’s worth, but word from agents I know is that in T.O. supplies for SFDH are way down, but demand is still sky high.

Just saw a new listing for a home in a pleasant, but nothing special Etobicoke neighbourhood that in my opinion gets far more attention than it deserves. Four years ago this particular house would have probably fetched no more than $450,000. Today, they are asking a hair below $600,000––and believe me, they’ll get it. I know the agent (sort of). Real pro. You know, the kind that turns a “fixer upper” into a “renovator’s delight.”

As for condos, I predicted condos could crash while SFH goes relatively unscathed. Too easy to increase supply quickly. Because you don’t need more land, just more air.

F should return the markets to a solid regulatory footing, based on sound financial principles, and then F off. Government should stop playing with the markets. They always muck things up. And innocent people pay the price.

#36 Tom Vu on 05.13.13 at 10:36 pm

Much thanks to Maple Syrup Fig Leaves.

Makes one be proud ( =concerned ? ) to be a molson Canadian.

To have 4-1 lead…the brass ring within one’s grasp..to have a 1″ putt….to have a beach ball pitch with bases loaded in 9th inning World Series ….to have Jolly Green Giant with basketball at rim…..or WWF cage match…

Why one should have a bottle in front of you…then frontal lobotomy ..when the Maple Syrups Fig Leaves ever get into playoffs.

Go Moose Jaw Go !!!

#37 :) on 05.13.13 at 10:44 pm

Wow, it couldn’t be more obvious that the federal gov wants to crush housing market. I hope prices come down enough so ppl can afford the cost of living again.

#38 Phil Kessel on 05.13.13 at 10:44 pm

Hi Leafs Nation,

Anybody know how long it takes to do the Real Estate Agent Course?

I’ve got some free time on my hands now, and I hear there is a condo boom in Toronto and I can make some more easy millions in commissions, and maybe flipping some boxes in the sky.

Also, the experience of all that sales BS will help polish my public relations skills in preparation for our next playoff run in 2022.

And Thanks Again, Suckers!

#39 Freebird on 05.13.13 at 10:47 pm

Once again my condolences to Leaf fans. Now they can pull out their golf clubs and hit the links, do charity appearances etc.

Great post Garth. Love to hear evidence of a new generation making smarter decisions and waking up from the attitude of entitlement for granit counter tops and shiny appliances….with of course a shiny new car in the drive way to match (seen as needs of course).

See, and you’ve wondered why you keep doing this at times in your comments. Even some of the young’uns are listening to Uncle Garth.

Cheers

#40 happy renter on 05.13.13 at 10:48 pm

Relax ,interest rates will stay low for many years to come because the US can’t service its debt unless it defaults and lets the economy collapse.Japan did itwith successs so will we.I can see 5 year rates under 2% coming soon.

#41 Buyer on 05.13.13 at 10:51 pm

“As you know, 30-year mortgages are already verboten when a borrower wants or needs CMHC insurance.”

Weird. I got a 30-year mortgage, with an CMHC insurance, and only 15 % down, no later than last december … but maybe it’s because loans for a 6-plex are different than for a SFH ?

#42 Van guy on 05.13.13 at 11:00 pm

#33 Chickenlittle

“If I was a Canucks fan I’d be used to this feeling right now.”

All Canadian teams are bad luck. The Americans have taken over the NHL like HAM has taken over our high end real estate :(

#43 ValleyRenter on 05.13.13 at 11:01 pm

Surrey in the area of 152st and 60th ave. A whole bunch of acreages for sale, one of them 5 acres. Signs all say “development opportunity”. All on East side of 152, right across from a big ol’ townhouse complex that seems to be taking longer than usual to be built. Some of these acreages have been for sale for over a year! Seems the local developers smelt blood in the water some time ago and didn’t bother betting on being stuck holding the bag.

#44 Piccaso on 05.13.13 at 11:04 pm

Laughs how could you choke, blow a 4-1 lead with 10 min left. lol

#45 Shawn on 05.13.13 at 11:15 pm

LOCK IN LOW RATES FOR TEN PLUS YEARS?

Angry Butt at 30 said:

Shall we force feed 10 year terms today to protect everyone from higher rates 5 years into the future? (Not to give Senor F more ideas…)

****************************************
I think of it more as shall we facilitate locking in for 10, 20, 25 years at low rates?

As we all know in the U.S they can lock in for 30 years and even have the option to opt out if rates drop. Heads (higher rates) the borrower wins and tails the banks (actually investors in securitized mortages) lose as rates drop and people refinance.

That works in the U.S because of the type of securitization they do which passes the interest rate and refinance risk onto investors and away from the banks. Yeah, it led to problems when they started dragging bums off the street and giving them mortgages but the actual securitization and 30 year lock in is a thing of beauty for homeowners.

Canada could avert most risks of higher interest rates by facilitating the lock in for 25 years and passing the risk to investors. You see fixed income investors are accepting terribly low rates even for 25 and 30 years and we need to let homeowners borrow on that basis.

There has been good progress in the past year as 10 year rates are suddenly pretty reasonable for the first time perhaps ever in Canada and certainly first time in three or four decades. A year ago the ten years were more like 3 to 4% higher than the 5 year, if you could find one. Now its a much smaller premium for the ten year. I have no idea why that changed. But it’s a good thing.

Please bring on 25 year locked in mortgages at small premiums like in the U.S. and make ‘em refinanceable too else the break fees would be astronomical. It’ll be just like in the States!

#46 I see a spending spree on 05.13.13 at 11:29 pm

Let me get this straight – they have the income to eliminate the mortgage in 10 years but because they want a lower payment they’re going 30 years am? Why? What’s the plan with the savings from the lower payments? If its a Couch Potato portfolio it may work for them but I’m sensing a spiral into the debt abyss. “Lower payments allow for a nice new king-size bed for the bedroom. And what’s a new bed in the bedroom without a wide screen on the wall to watch those late night Leafs games? And that dining room table looks so small in that big room. And you can’t buy just a table and chairs. We’ll need the hutch. Aren’t you glad Uncle Garth said the lower payment option was a good plan?”

#47 not 1st on 05.13.13 at 11:36 pm

Garth, I think Regina just fell into a stalemate. Listings not moving. Lots of lookies around but no buying. 8,000 new millionaires minted in the province.

I stopped by some showhomes the other night. its crickets in there and the reps are all playing candy crush.

#48 Yuus bin Haad on 05.13.13 at 11:39 pm

I love it when Uncle Garth stirs the pot!

#49 Mt pleasant on 05.13.13 at 11:42 pm

#5 Canadian watchdog
I road my bike by the alba yesterday to see if it was true they stopped work on it. I have not lived in that nabourhood for almost a year I believe they were starting on the alba ten or so mounths ago tearing down the old buildings.
Starting price was I think 319k for 650sq feet.
Is this the first that has fallen ?

#50 Tom Vu on 05.13.13 at 11:46 pm

Think +ively !

Last MaPLE sYRUP fIG lEAVES wIN WAS 1967 !

cANADA was 100 years old…eligible for OAP !

Before Moon Landing…..Beatles still together…Jimi Hendrix just getting warmed up before being toast..Al Gore was inventing Internet,….and neither Trudeau in charge to Flush Canada down Ralph(aka Big white telephone! )

Read tea -off leaves

#51 squish on 05.14.13 at 12:07 am

What happens to people who took out long amortization mortgages not too long ago, and who will have to renew their mortgages after all these rule changes?

For example, a 40 year mortgage taken out few years ago, coming up for renewal in the next couple of years, with only 25 mortgages or less allowed. Will they have to renew with a 25 year amortization at that time, meaning a big bump in monthly payments even if interest rates are the same? Or is there some kind of amortization grandfathering …

#52 The man who loved short — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate – The Affluent Boomer on 05.14.13 at 12:19 am

[…] via The man who loved short — Greater Fool – Authored by Garth Turner – The Troubled Future of Rea…. […]

#53 FTP - First Time Poster on 05.14.13 at 12:29 am

Uncle-y: noun: See also, “Garth Turner”; See also, “The Red Green of Canadian Politics”.

#54 LEAFSBIG FAN on 05.14.13 at 12:31 am

Alice. Tell TNL@TB (Royal in this case) that you want 3.65% for 10 years . You will get it. If not, call a broker who will get that rate for you.

#55 Buy? Curious? on 05.14.13 at 2:38 am

Garth, sorry but today’s post gets a 6 out of 10. The picture is lame. It’s some hipster’s idea of humour since they’ve delayed adulthood, work in a coffee shop and are blaming their frustration on young parents instead of their poor decision making of prioritzing “Cool” instead of “Living”. Also, the bulk of today’s post is from another Dodo who can’t make a decision. You do make valid points and it’s great to read them again (that’s why I love you) but because she refers to you as “Uncle Garth” it just reaffirms that she has no social skills and should go the way of the previously mentioned Dodo.

http://www.youtube.com/watch?v=DFt-HaBezgs

#56 Ballingsford on 05.14.13 at 5:54 am

Photo: Are they not giving the unattended kids condos anymore?

Go SENS Go!!!

#57 Victor V on 05.14.13 at 7:23 am

http://www.theglobeandmail.com/report-on-business/economy/housing/flahertys-concerns-throw-thirty-year-mortgages-in-spotlight-again/article11900963/

Finance Minister Jim Flaherty has been concerned about the sale of 30-year uninsured mortgages because the risks from some of these loans are ultimately being transferred from banks to taxpayers – and that’s part of the reason why the banking regulator is now weighing changes, sources say.

Mr. Flaherty has tightened the country’s basic mortgage insurance rules four times since the financial crisis, most recently last July, in bids to stop consumers from taking on too much debt, to cool the housing market, and to protect government coffers. Mortgage insurance is mandatory when the borrower’s down payment is less than 20 per cent (so called high loan-to-value mortgages) and Mr. Flaherty’s changes, such as cutting the maximum length of an insured mortgage to 25 years, applied to such loans.

#58 economictsunami on 05.14.13 at 7:48 am

Perhaps our own Fannie/Freddie (CMHC) need to be audited; more appropriately, the entire system.

F offered unsustainable incentives which drove expectations of banks, RE industry and consumers. The unintended consequences were: many markets didn’t need this artificial boost in the first place. Throw in “investment” money seeking safe haven/ yield and voila.

Now the constant tinkering and tightening has turned into a chess match between F and the banks.

Canada’s banks could be on the hook to bail out CMHC if disaster strikes… http://business.financialpost.com/2013/05/13/the-price-of-taxpayer-support-for-canadian-banks/

14/05/13: Flaherty’s concerns throw thirty-year mortgages in spotlight again

http://www.theglobeandmail.com/report-on-business/economy/housing/flahertys-concerns-throw-thirty-year-mortgages-in-spotlight-again/article11900963/

Remember the lifeboat protocol: Bankers and politicians first…

#59 detalumis on 05.14.13 at 8:05 am

Nothing wrong with a 30 year amort. That’s what I started with. I also paid it off in 11 years through making extra payments. The only problem this lady will have is with the location of her actual house. There is a reason why so many older houses in the Hammer are uber cheap. Except for one small pocket where they are kaching-kaching you will wake up one morning and then notice who your actual neighbours are.

Most of those solid houses are full of baby mammas, crack dens, group homes, halfway and rooming houses. The poverty industry is big business in that town, the poor are morally superior and all that good stuff. The other thing is, is that unless you work around there you will find it’s too far to commute to Toronto, it will suck the life out of you. It’s my hometown by the way until I packed up and moved on down the road.

#60 John on 05.14.13 at 8:17 am

Hi Garth,

I rent an apartment, I save twice my rent and I invest. One day I would like to rent a townhouse or a house. Ive noticed that most of these are owned by individuals not corproations. Do you think that more corporations will start buying houses to rent out like they do with apartments?

#61 gotthardbahn on 05.14.13 at 8:58 am

Hey Garth –

‘Uncle-ly’?

Try ‘avuncular’. Bill Davis was once described as avuncular – and he was – and circumlocutious too – which you definitely are NOT.

#62 EXILED on 05.14.13 at 9:34 am

Mr Turner: I submit a question. High rise condo’s, do they the building, own the land that the building is erected on? Or is the land “leased” to the builder for a specific time frame? The reasoning being that the condo fees are subject to outside control. That being the “owners” can never catch a break, as does every “owner” get a Deed to the space they occupy? Or a partial ownership whatever? What ownership or property rights do condo have?

Condo owners ‘own’ their units from the paint in. However they form a portion of the condo corporation which controls and maintains the common structure and the land upon which it sits. — Garth

#63 HalifaxEd on 05.14.13 at 9:39 am

It’s finally happened.

Bill McMullin, founder of Viewpoint.com, will be putting some of the RE info behind a paywall to help prop up an unsustainable business model:

http://www.cbc.ca/news/canada/nova-scotia/story/2013/05/13/ns-viewpoint-real-estate.html

$29 per month or $3 per day.

Viewpoint was a fantastic site, way ahead of it’s time. It gave consumers free access to RE information, including sales histories, price changes, days on market, etc, and thus gave them substantial negotiating power.

But now it seems that knowledge is being snatched away and kept behind closed doors again.

Too bad it didn’t work out as a free model. It’s understandable that McMullin should make a buck for his efforts but it’s a shame that such a consumer-empowering site is now going subscriber-only.

#64 daystar on 05.14.13 at 9:48 am

Hey Unc!

I cruised your link and found this one which I think is also worth a read:

http://www.cnbc.com/id/100732172

Of course banks will go to the markets for cash if things get tight but the problem with that scenario is that banks aren’t loved in hard times. The true fear with Canadian housing is higher interest rates and for bank risk, it extends to what isn’t insured including mortgages, HELOC’s and business loans. Most definitely, higher rates… say 8% for 5 year terms for example, would crush the housing market values by oh… 40% or more from last years peak? One should not be naïve and at least ask what it could take to create an 8% scenario. For me, its easy.

A fallen loonie around .70 – .75 cents or less. What would do that? A U.S. economic recovery. Not even with jobs really, just good old fashioned reduced trade deficits, say in the 20’s (billion$) per month. When Bush exited his term, trade deficits were breaking records I believe at the highest being $77 billion. For April, the U.S. trade deficit was at $38.8 billion (last time that happened was 2002), thanks to the energy renaissance going on due to fracking for gas and horizontal drilling of old verticals in Texas, Wyoming, the Dakota’s as well as new wells in the Bakken play and out east.

As you know Garth, U.S. energy corps are poised to produce more oil & gas at home and abroad than the U.S. consumes at home by years end. The U.S. has drilled more drill holes on U.S. soil than the rest of the world combined for a solid 3.5 years running now. More than a third of their corn now goes toward ethanol blends. As a consequence, trade deficits continue to shrink as energy imports shrink. Pipeline infrastructure has been pushed to the max from all the development and struggle to keep up.

The consequences of continued shrinking U.S. trade deficits shouldn’t go unnoticed to anyone who understands macroeconomics. The U.S. dollar should strengthen weakening commodities as a consequence and in particular, gold which will drag down the mining sector for years to come. Couple this with reduced demand for Canadian energy and lower prices for WCS (due in large part to the U.S. being the only customer for Western Canadian oil, how corrupt and dumb is that? Its not like Harper and western premiers don’t know the Obama playbook) and the loonie falls.

Banks are saying the loonie could hit .90 cents by years end because they know what’s coming. From there, if I’m right about America’s continued energy renaissance, next year the loonie will be in the .80’s and falling while rates creep up to offset. As the loonie drops and rates creep up, hard assets deflate while imports inflate and a viscous downward cycle begins in Canada’s economy. Just a guess, but 2015 looks bad for Canada with anything backed by credit as rates “normalize” and we realize the ugly consequences to all that debt. 10 year mortgage terms are looking real cheap right now considering this very realistic future scenario. (and some truly thought we are Japan)

Keep the faith, Garth. Canada needs you.

#65 Canadian Watchdog on 05.14.13 at 9:50 am

#58 economictsunami

Perhaps our own Fannie/Freddie (CMHC) need to be audited; more appropriately, the entire system.

Even if they were, the public and parliament wouldn't be able to obtain any audited financial statements. Nobody has legal jurisdiction over CMHC other then HRSDC and the Governor-General.

#66 BillyBob on 05.14.13 at 9:56 am

@33 Chickenlittle

“If I was a Canucks fan I’d be used to this feeling right now.”

Please. Even the Canucks have never lost so embarrassingly, blowing a three goal lead in the last ten minutes. NO ONE ever has. Add THAT to your trophy collection.

And at least the Canucks regularly make it into the playoffs, such that it’s expected, not the bloody Second Coming like even getting in, is for Toronto…

I could almost feel sorry for such an epic, monumental choke if it weren’t for fans like this…

#67 Naber Tac on 05.14.13 at 9:58 am

Anyone here any insight into SFHs and apartments in Montreal, downtown and the more urban areas close to downtown (atwater, monkland, victoria village, plateau and mile end, outremont, etc)? People here keep claiming it is different in Montreal and especially these areas (aside from downtown condos) but I find this hard to believe?!

#68 thiscountryisgoing down the toilet on 05.14.13 at 10:04 am

The net result of the change will be a further dampening on speculative property. Anyone expecting prices to fall is deluding themselves. Instead, expect a sideways glacial grinding for a decade or so.

Joe Lunchbox will continue to pay his mortgage…there will be little incentive to build….and inflation will eventually suck up the panic phase…..nuff said….say good bye to sexy……in the next cycle 12 to 14 years from now no one will read real estate blogs anymore…..they will have forgotten the excitement and roadkill of this cycle and that will be the time to buy again.

Adieu realtards…..the end has come.

#69 Post Haste on 05.14.13 at 10:10 am

Aussie Roy – regarding your reply to my post yesterday – can I buy you a pair of glasses or better yet – read the post, understand what I am trying to say before you open your blow hole –

I was just simply commenting that there are legions of homeowners who are renewing with those tasty 2.89% rates ….I bought before the bubble as I explained I was nearing the end of my mortgage monster. For those like me – who are saving thousands on interest cost due to the fact the economy is barely beating – I have shaved years off my mortgage strickly on the lower rates being offered –

I quoted my Uncle’s remark about rates being 15% in the 80’s as so much of your mortgage payment went to interest alone – 2nd mortgages were a huge thing back then. Your such a simpleton that it makes me laugh at your stupidity!

#70 dave b on 05.14.13 at 10:14 am

WWGS (what would Garth say)
http://www.thestar.com/business/personal_finance/spending_saving/2013/05/14/teens_give_up_hockey_to_help_family_pay_off_mortgage.html

#71 refinow on 05.14.13 at 10:24 am

http://business.financialpost.com/2013/05/13/the-price-of-taxpayer-support-for-canadian-banks/

Does the sentence in the following article…….

“It appears to us that the CMHC is reasonably well capitalized and positioned to meet the challenges from a housing slowdown,” Mr. Reucassel said in his May 10 comment.

make you feel all warm and cozy?

Reasonably……. Reasonably…… What does that mean ?

It means CMHC, the Cdn Government and the Bank’s are scared that they have painted the Canadian tax payers into the Mother of All Corners.

#72 Penny Henny on 05.14.13 at 10:40 am

it’s 10 am and less than 70 comments. WTH??
Is everyone out making offers on a condo?
Penny Henny

#73 bill on 05.14.13 at 10:46 am

good morning all
it appears ozzie jurock and associates have to pay 750,000 to the plaintiffs…..

#74 frank le skank on 05.14.13 at 10:54 am

#63 HalifaxEd on 05.14.13 at 9:39 am
If I was shopping around for a house, I would pay $29 per month to get access to that info. In the same way, if I’m buying a second hand vehicle, I would pay for carproof. I don’t like having to rely on a RE agent to provide information that could save me money but at the same time cut into his commission.

#75 Rational Optimist on 05.14.13 at 11:32 am

64 daystar

I think that your prediction for a weakening Canadian dollar, leading to inflation and higher interest rates, is a very good guess. Note that 2015 is only eighteen months away now, though, so think about how fast the Canadian dollar can really sink, and how fast interest rates can really go up.

The Canadian dollar is very close to par today. A few questions: where would/should the Canadian dollar be if the American energy renaissance continues as predicted, and commodity prices suffer? If the Canadian dollar were at 90/80/70 cents, what impact would that have on inflation? How much of our inflation is determined by import prices?

Also, how would a falling Canadian dollar contribute to job creation in export sectors here? To what extent would that offset the drag of lower commodity prices and asset deflation?

#76 what crisis on 05.14.13 at 11:42 am

Can that be that F again is just trying to scare cute naughty bankers and in fact not going to do anything practical?

#77 Saint Herb on 05.14.13 at 11:51 am

#64 daystar

Should we be saving our money in US dollars? I’m not a good investor, is this simple and effective or a waste of time?

#78 ronthecivil on 05.14.13 at 11:56 am

Clearly the solution is to simply sell the CMHC! I wouldn’t be concerned about asking for a lot!

Then we would have something to short and investors instead of taxpayers could eat the losses.

And if that means the banks take a beating too so be it.

Time to turn off the moral hazard and let market forces get back to work. Then we won’t have to worry about them complaining about OFSI getting on their case about risk tolerance!

#79 bigrider on 05.14.13 at 12:11 pm

We need a finance minister and a central banker here in Canada with Italian backgrounds.

It would be interesting to see what would happen to lending requirements / rules with regard to housing purchases and GDP as it relates to construction activities.
I also wonder what would happen to Cdn equity prices and whether the TSE would continue to exist at all…LOL

#80 Van guy on 05.14.13 at 12:22 pm

Can someone explain the vix today?

#81 Edmontontian on 05.14.13 at 12:36 pm

One thing I always wonder: Why did F create this asset housing bubble in the First place? The Real Estate market was inflating nicely on it’s own as Canada rode the wave of the US credit bubble. ANd, at the peak of their bubble he introduces a 40 year nothing down mortgage? In my opinion I feel it’s almost treason to introduce something like that, then pull it away. How could anyone be so stupid?
We are in deep trouble to have someone that stupid being the finance minister, wasn’t he a key player piling on all the debt in Ontario?

#82 Asse on 05.14.13 at 12:59 pm

#35 Inglorious my friend
Gofish

#83 Holy Crap Wheres The Tylenol on 05.14.13 at 1:05 pm

#64 daystar on 05.14.13 at 9:48 am

Hey Unc!
As you know Garth, U.S. energy corps are poised to produce more oil & gas at home and abroad than the U.S. consumes at home by years end. The U.S. has drilled more drill holes on U.S. soil than the rest of the world combined for a solid 3.5 years running now. More than a third of their corn now goes toward ethanol blends. As a consequence, trade deficits continue to shrink as energy imports shrink. Pipeline infrastructure has been pushed to the max from all the development and struggle to keep up.

Another good reason to get off of our oily a$$e$ and build pipelines across this entire country. Buy out the tree huggers and indigenous peoples. Throw the right cash at them and they will dance. Forget USA (No offense USA I’m actually a dual citizen and love the USA) we don’t want to put all of our beans in one basket! Diversify Canada, I hear the Europeans are often held hostage by the Big Bear. Sell them our oil, forget the oil for crying out loud build a dam refinery on the east coast (bigger than the one we currently have) and sell refined fuel. My god has no one ever thought of the difference in selling value added rather than crude! Stupid people here not willing to build the pipelines we need. If the tree huggers don’t want pipelines across the country then build it to the Lake-head and Cargo it via ship through the Great Lakes. Threaten that and they will see the light of day that a well engineered pipeline will not only provide good jobs but it is a future for our resources in which we can freely sell with out being handcuffed to USA. If the government got off their donkey hinds and sold bonds on this project I would purchase in a heartbeat!
I just can not believe we are waiting for Mr Obama to OK a pipeline.

#84 Daisy Mae on 05.14.13 at 1:10 pm

Quite a number of people have told me that they have voted in advance here in BC, alright. But had to hold their noses while doing so….

#85 In my Spam box on 05.14.13 at 1:14 pm

STOP THE CITY OF TORONTO FROM DOUBLING DEVELOPMENT CHARGES!

One of the largest contributors to the escalating costs of new condominiums is the myriad number of city based fees and levies. Currently, developers are required to pay the following:

construction permits
development charges
Section 37 charges
art contribution levies
park levies
education levies, among others.
These charges now add up to well over $20,000 for a small 500SQFT suite. While the developer initially pays these fees, the buyer ultimately pays for all of this either in the price or in closing adjustments. Either way, it is getting totally out of hand. Keep in mind the city also levies their 2% land transfer tax on all sales.

CITY COUNCIL HAS NOW PROPOSED TO DOUBLE DEVELOPMENT CHARGES! Essentially, a two bedroom development charge will go from approximately $12,412 to $25,000.

THIS HAS TO BE STOPPED!

Our condo market is under siege with massive levies and charges.

SHOW UP TO THE MEETING – MAY 13TH – ROTUNDA AT METRO HALL – 55 JOHN STREET, 7-9PM TO FIGHT THIS MASSIVE INCREASE IN DEVELOPMENT CHARGES. MAKE YOUR VOICE HEARD!

#86 This is wonderland on 05.14.13 at 1:27 pm

I was perusing MLS today, and my God if I lived in Milton I would be very worried.

http://www.realtor.ca/map.aspx?&vs=VEResidential

#87 Sunshine123 on 05.14.13 at 1:34 pm

To #42 Van guy
Can you stop for a second and think before you write, you comments are racist and google your name and you will see a picture of an idiot…

#88 Rational Optimist on 05.14.13 at 1:41 pm

Holy Crap Wheres The Tylenol for PM.

#89 Mike T on 05.14.13 at 1:47 pm

Mr Smoking Man,

Have I got a link for you.

http://www.sportsbet.com.au/betting/novelty-bets/alien-life/First-Country-to-have-contact-424834.html

Make a bet!!

(contact happened a LONG time ago FYI)

#90 Victor V on 05.14.13 at 1:51 pm

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/in-canadas-housing-market-the-other-shoe-has-already-dropped/article11908008

For those who have been waiting for the other shoe to fall in Canada’s housing-market slowdown, I have news for you: It already has. It just hasn’t hit the ground yet.

As sales and construction have slowed dramatically in recent months, home prices managed to resist slumping along with them. This curious phenomenon had the optimists talking about a soft landing for the sector; but the pessimists (realists?) saw this as a Wile E. Coyote-esque illusion, certain that as soon as the market noticed that the ground beneath it had fallen away, it would plunge through the thin air inexplicably holding it aloft.

#91 Dorothy on 05.14.13 at 1:52 pm

#35 – “F should return the markets to a solid regulatory footing, based on sound financial principles, and then F off. Government should stop playing with the markets. They always muck things up. And innocent people pay the price.”

I agree 100%.

#92 Loopback on 05.14.13 at 1:53 pm

Canadian politics to the very core . . . “The public consultation is a sham…decisions are already made.”

#93 Dorothy on 05.14.13 at 1:55 pm

#37 – if the Fed’s REALLY want to crush the housing market, all they have to do is raise the minimum downpayment back to 10% (which is where it should have been left in the first place). The fact that they’re not doing that has me wondering what they’re REALLY up to?

#94 not 1st on 05.14.13 at 1:58 pm

Garth hasn’t offended the gold hoarders and doomers for a while now, so his blog replies are going down. I suspect he will give them a few shots soon to wake them up.

#95 Dorothy on 05.14.13 at 2:01 pm

#58 – “Remember the lifeboat protocol: Bankers and politicians first…”

Ain’t THAT the truth!!!!!!!

#96 Daisy Mae on 05.14.13 at 2:03 pm

#57 VictorV: “Mr. Flaherty has tightened the country’s basic mortgage insurance rules four times since the financial crisis…”

**********************

You mean, Flaherty is in ‘damage control’ mode…since he’s the jerk who tampered with the length of the amortization periods and caused this problem? Those changes….?

#97 Van guy on 05.14.13 at 2:03 pm

#87 Sunshine123 on 05.14.13 at 1:34 pm

To #42 Van guy
Can you stop for a second and think before you write, you comments are racist and google your name and you will see a picture of an idiot…
—————————–
Huh?
It really does suck to be a leafs fan.

#98 Astounded on 05.14.13 at 2:19 pm

“Nobody has legal jurisdiction over CMHC other then HRSDC and the Governor-General.”

Please stop the mis-information and go do some reading about the governer-general and his duties. While you are at it maybe look up CHMC also because you are wrong on every count about both.

#99 TorontoBull on 05.14.13 at 2:41 pm

@85
city of toronto development charges are the lowest in the GTA…by a WIDE margin

#100 jess on 05.14.13 at 2:42 pm

confidence tricks

good example in this case
http://en.wikipedia.org/wiki/Firepower_International

=
update
Lack of money ends Firepower investigation
Updated Mon May 21, 2012 9:48am AEST

“… the difficulty of investigating the collapsed company highlights flaws in Australia’s business framework.”

#101 Dr. Hoof - Hearted on 05.14.13 at 2:54 pm

#92 Loopback on 05.14.13 at 1:53 pm

Canadian politics to the very core . . . “The public consultation is a sham…decisions are already made.”

====================================

ALEC ” American Legislative Exchange Council ”

http://en.wikipedia.org/wiki/American_Legislative_Exchange_Council

This non – elected ALEC group effectively drafts legislation…and has the politicians pass it.

#102 Shawn on 05.14.13 at 2:55 pm

Vix? Vix!?

Van guy at 80 asks:

Can someone explain the vix today?

*****************************************

All you need to know is that this VIX is something to ignore with great prejudice.

It’s of no use to investors. It is something that day traders use which helps them lose money to smarter traders and investors.

Doomers like it too!

#103 Herb on 05.14.13 at 3:08 pm

http://www.cbc.ca/news/business/story/2013/05/14/business-condo-rentals.html

Now go and buy a condo because you won’t be able to afford the rent!

#104 Tom Vu on 05.14.13 at 3:14 pm

#87 Sunshine123 on 05.14.13 at 1:34 pm

To #42 Van guy
Can you stop for a second and think before you write, you comments are racist and google your name and you will see a picture of an idiot…

==================================

No racism out here.
However, if you wish to be racist …..must get permit.

However, much sexism.

I was getting off my boat with bikini entourage.

I see this lady fishing off dock, and catches this real nice colourful bottom fish.

I ask her ” Hey , can I see your red snapper ” ? Then she punches me in mouth !

#105 The Grocer Of Despair on 05.14.13 at 3:16 pm

http://www.thestar.com/business/real_estate/2013/05/14/gta_condo_rents_hit_record_as_wouldbe_homebuyers_stay_on_sidelines.html

More outrageous lies?

#106 Steven on 05.14.13 at 3:21 pm

“Cost of the house is less than 2x our household income.”
That term household income is a problem because if it means two incomes your really paying too much for the roof over your head. The correct rule of thumb is to pay equal to or less than 3 times the husbands annual pay for a house and lot. That way the wifes income if any is a bonus and if it gets interupted for any reason it is not the end of the world and there is less risk of losing the home. It also puts a limit on home prices and that would be a good thing.

#107 panhead on 05.14.13 at 3:21 pm

#95 Dorothy on 05.14.13 at 2:01 pm
#58 – “Remember the lifeboat protocol: Bankers and politicians first…”

Ain’t THAT the truth!!!!!!!

———————————————————

I think you guy’s got it wrong … should be ….
Bankers and politicians last.

#108 prairie person on 05.14.13 at 3:29 pm

How desperate is the situation?
http://www.thestar.com/news/gta/2013/05/14/brampton_real_estate_agent_charged_with_stealing_from_listed_homes.html

#109 Humpty Dumpty on 05.14.13 at 3:36 pm

A man who went to Sochi….

Netanyahu, however, said that the volatile situation in the Middle East requires action to improve security. “The region around us is very unstable and explosive, and therefore I am glad for the opportunity to examine together new ways to stabilize the area and bring security and stability to the area,” he said. The prime minister’s bottom line was that “Israel will do whatever it takes to defend its citizens.”

http://www.timesofisrael.com/in-chat-with-netanyahu-putin-urges-restraint-on-syria/

Uncle Putin looking for allies….

Russian warship docks in Israel for first time

http://www.israeltoday.co.il/NewsItem/tabid/178/nid/23846/Default.aspx?utm_source=news&utm_medium=email&utm_campaign=781&utm_content=original

Didn’t someone say EU would stabalize…

German euro founder calls for ‘catastrophic’ currency to be broken up

Oskar Lafontaine, the German finance minister who launched the euro, has called for a break-up of the single currency to let southern Europe recover, warning that the current course is “leading to disaster”.

http://www.telegraph.co.uk/finance/financialcrisis/10039329/German-euro-founder-calls-for-catastrophic-currency-to-be-broken-up.html

Then there’s man who loves to speak with fork tongue…

Obama Hailed ‘World Press Freedom Day’ As His DOJ Was Seizing AP Phone Records

“We call on all governments to protect the ability of journalists, bloggers, and dissidents to write and speak freely without retribution and to stop the use of travel bans and other indirect forms of censorship to suppress the exercise of these universal rights,” Obama said in the May 3, 2012 statement.

http://cnsnews.com/news/article/obama-hailed-world-press-freedom-day-his-doj-was-seizing-ap-phone-records

#110 Spiltbongwater on 05.14.13 at 3:43 pm

DELETED

#111 Canadian Watchdog on 05.14.13 at 3:50 pm

#98 Astounded

Robert P. Kelly Appointed as Chairperson of CMHC Board

OTTAWA, May 3, 2013 — The Honourable Diane Finley, Minister of Human Resources and Skills Development and Minister Responsible for Canada Mortgage and Housing Corporation (CMHC), today announced the appointment of Robert P. Kelly as Chairperson of the CMHC Board of Directors for a five-year term effective immediately.

If that's not enough, watch or read Karen Kinsley's testimony telling elected Senators they'll be getting as much information as everyone on this blog gets here.

In summary:

Senator Tkachuk: CMHC is a government-owned operation, a Crown corporation, and it has large banking instruments to it as well as the social housing part. OSFI also, of course, looks after the federally regulated banks, which are private. Is there any difference in how OSFI will report to the public on CMHC versus, say, the Royal Bank? For example, if the Royal Bank was having problems, there would be an alert of some kind. It would be public.

Ms. Kinsley: Again, I would say to you that there is a difference in terms of our accountability regime because we are a Crown, and I spoke to that a bit in my opening remarks. We must follow the FAA and a variety of other legislative requirements that the private sector obviously would not be subject to.

—-

Senator Moore: Thank you, witnesses, for being here.

My first question was covered by Senator Tkachuk as I, too, thought that reports dealing with the activities of agencies handling public funds would be made public. I do not know why it was put under OSFI. I hope that was not done to avoid public scrutiny. I do not know that you have answered the senator's question about what you will include in your report in terms of what OSFI found. You may be limited in what you can say; I do not know. We will have to wait and see how that unfolds. Do you know how that will work? Have you had discussions with OSFI as to how much you will be able to say in your report with respect to their findings?

Ms. Kinsley: Not at this point, senator. Again, I would suggest that OSFI can give a more fulsome answer on this. I would expect that they will treat us similarly to how they would treat others they review, and the recommendations, to the best of my knowledge, are not particularly attributed to OSFI in annual reports and so on. That is not to say that the findings or the recommendations that they make will not be taken on board and will not in fact find their way into the annual report, corporate plans or other public documents. As to whether it would say that OSFI recommended this and CMHC did that, I do not believe it will be that specific.

In case you're wondering why she's evading the question: it's because CMHC oversight was not put under OSFI's jurisdiction. This was clarified afterwards when two directors from OSFI testified and stated they will only make recommendations to CMHC's board of directors.

Here's something else that may interest you written from The University of Alberta

Government-Owned Enterprises in Canada PDF

A Crown corporation has partial agency status if it has agency status for some purposes and non-agency status for others. The Bank of Canada, for example, is designated as an agent for fiscal purposes only. This means, for example, that if the bank is involved in a private-sector contract (e.g., the construction of a building), the contract would not bind the Crown. On the  other hand, if the bank, say, transacts in foreign exchange markets, it would be acting as an agent of the government and the Crown would be legally bound by the bank’s actions. Similarly, the Canadian Mortgage and Housing Corporation (CMHC) is an agent of the Crown except for its activities involved in the establishment of branches and the employment of agents. This means that agents employed by CMHC are not agents of the Crown.

—-

And so the same question that has been asked for many decades now remains: Who is CMHC? The last paragraph in the following 1972 article reveals all what is still today.

Montreal Gazette – Aug 18, 1972

#112 Dean Mason on 05.14.13 at 4:09 pm

To happy renter #40 If you like Japan’s economy I hope you like the TSX at 4,500 and real estate prices at 60%-70% lower compared to today’s prices.Nikkei 225 was 39,000 and now close to 15,000 a 62% drop.

If you like that 2.00% 5 year mortgage rate you will have to take the other parts of Japan’s economy.

#113 jess on 05.14.13 at 4:16 pm

the evasion of the smoothers

FDR “Let Me Warn You” (1936).

http://www.youtube.com/watch?v=S3RHnKYNvx8

#114 Dean Mason on 05.14.13 at 4:22 pm

To #85 In my Spam box

Real estate is coming to it’s final days of the 17 year price increase artificial boom.This is why they want to double these development charges in Toronto.Just let it go, it’s over.If you work in any job related to the Canadian housing market a mortgage broker,real estate agent,builder or developer,renovation company,furniture company,real estate lawyer,mortgage lender etc. I hope you have ample savings and investments to keep you going for at least 3-4 years.

All you guys were cheering and happy pushing lower interest rates being cut to the bone for the last 17 years.Now it’s your time to be affected by the economy and it’s well overdue.

#115 jess on 05.14.13 at 4:24 pm

FWD.us
Two tech executives quit Mark Zuckerberg’s Fwd.us political lobby group
http://en.wikipedia.org/wiki/FWD.us

charity write offs
======

Obama says he won’t tolerate political bias at IRS, calls targeting groups ‘outrageous’
Well wouldn’t this be considered outrageous? The misue of tax-exempt “charity” and”scholarship funds”
“http://www.alecexposed.org/w/images/2/2f/BUYING_INFLUENCE.pdf

http://www.sourcewatch.org/index.php/American_Legislative_Exchange_Council
http://www.taxanalysts.com/taxcom/taxblog.nsf/Permalink/UBEN-97JSMN?OpenDocument

#116 Old Man on 05.14.13 at 4:47 pm

#89 Mike T – shame on you, as Smoking Man is no fool, and could teach you a few lessons in life, as denial is a killer in life, unless with an open mind take a look at the darkside of reality. You might be amazed and shocked by it all.

#117 brainsail on 05.14.13 at 4:51 pm

“Full Recourse Loans Won’t Save Canada’s Housing Market”

http://www.cnbc.com/id/100736121

#118 Dr. Hoof - Hearted on 05.14.13 at 5:00 pm

#62 EXILED on 05.14.13 at 9:34 am
============

For all intents and purposes, its communist living at its finest.

Condo line-ups should have “Survivor ” reruns playing to give you the right ambiance

#119 Canadian Watchdog on 05.14.13 at 5:03 pm

#80 Van guy

The last time muppets were telling everyone to ignore the VIX the S&P dove 14% a few weeks afterwards. Today they'll say so what, the S&P is at record highs!

So are gas prices. Welcome to The Great Distortion.

#120 jess on 05.14.13 at 5:04 pm

Adobe changing to a subscription-only model “Adobe Cloud.”

…”Since the file formats in which customers’ work is saved are proprietary, customers lose the ability to open or edit their property without paying Adobe forever….the petition states

and perhaps a letterbox in luxembourg

#121 Dr. Hoof - Hearted on 05.14.13 at 5:16 pm

#85 In my Spam box on 05.14.13 at 1:14 pm

STOP THE CITY OF TORONTO FROM DOUBLING DEVELOPMENT CHARGES!

CITY COUNCIL HAS NOW PROPOSED TO DOUBLE DEVELOPMENT CHARGES! Essentially, a two bedroom development charge will go from approximately $12,412 to $25,000.

====================================

Expect more of this in the future.

That’s why the Gov’t loves all this ghost city building.
Its an ATM machine …but one that will soon kill the Golden Goose

Example:

DETROIT INSOLVENT, EM KEVYN ORR SAYS

http://republicbroadcasting.org/index.php?cmd=news.article&articleID=5252

QUOTE:

Calling it “a sobering wake-up call about the dire financial straits the city of Detroit faces,” Orr said he will use the report as a baseline for paring down the city’s $15.6 billion in debt and long-term liabilities.

Orr, a Washington, D.C., bankruptcy attorney, did not use the word “bankruptcy” anywhere in his report but said the city is “insolvent” and has “effectively exhausted its ability to borrow” after years of issuing long-term debt to pay its bills. Previously, he has said he hopes to avoid a Chapter 9 filing.

The report hints that city employees who were not hit by last year’s wage reductions could face pay cuts in the near future and that Wall Street bondholders will be asked to take a haircut to relieve a city that shelled out $133 million in debt payments last year on a $1.23 billion budget.

QUOTE:

Retiree health care benefits aren’t constitutionally protected and could be wiped out by the emergency manager, Bernstein said.

Ed McNeil, a representative for the city’s largest union, AFSCME Council 25, said the rising legacy costs are nothing new and as the city continues to privatize and reduce its workforce, it is losing funds that could have been paid back into the system.

“If you stop hiring people to pay into the system, then your money is gone,” said McNeil, whose union represents about 2,000 city workers. “This is a ‘set up to fail’ situation.”

#122 Smoking Man on 05.14.13 at 5:19 pm

#117 brainsail on 05.14.13 at 4:51 pm“

Full Recourse Loans Won’t Save Canada’s Housing Market”http://www.cnbc.com/id/100736121
…….
You and cnbc, just don’t know the herd up here..

Teranet posts 2 present gain in Canada yoy for April.

#123 More Pigg Propaganda on 05.14.13 at 5:27 pm

Another gem from the Pigg:

“The fact that rents have now reached record levels — with the average index rent now about $2.33 per square foot — means more would-be buyers are realizing it’s starting to make more financial sense to buy than to rent.”

http://www.thestar.com/business/real_estate/2013/05/14/gta_condo_rents_hit_record_as_wouldbe_homebuyers_stay_on_sidelines.html

#124 ValleyRenter on 05.14.13 at 6:28 pm

Garth, voted here on the Wet Coast. Voted for the party, not the local candidate, however the party I voted for is not running the local candidate I believe in! First past the post is what I hear for leadership. Feel like I need to take a shower. Any thoughts or insight greatly appreciated. Why can’t we vote for the premier we want and the local riding candidate we feel is the most competent for our little slice of the planet?

#125 Devore on 05.14.13 at 6:34 pm

#63 HalifaxEd

$29 per month or $3 per day.

But now it seems that knowledge is being snatched away and kept behind closed doors again.

How is it behind closed doors? If you’re shopping for a house, 29 bucks is peanuts. A proper house inspection will run you a $1000.

#126 Screwed on 05.14.13 at 6:39 pm

Why so shy about rates and amortization?

Go full retard. Give us max. 15 years amortization, min. 40% down payment and a federal property transfer tax of 10% straight up.

Geez, if you guys want to kill the real estate market than there are really easy ways to do it.

May I suggest that we also reduce all public service sector incomes by 30 to 50% and drop all welfare payments? Extend the eligible age for pensioners and retirees to 75. Yes, lads work hard until you drop dead or keep it up until you’re 75.

Who needs a mining or oil and gas sector anyway? Why bother manufacturing cars and trucks in Canada? Airplanes? Who needs airplanes when you’re too broke to fly anywhere.

Kill that real estate market. Please, please kill it for good. Let the real games begin!

#127 Devore on 05.14.13 at 6:54 pm

#92 Loopback

Canadian politics to the very core

You mean “politics to the very core”.

FTFY, as the cool kids used to say.

#128 Canadian Watchdog on 05.14.13 at 7:13 pm

#123 More Pigg Propaganda

Ok now she's just fabricating numbers out of thin air.

The number of condos leased via the MLS jumped 31 per cent in the first quarter of 2013 over the same period a year earlier.

Did they now?

#129 AK on 05.14.13 at 7:23 pm

..Renters discover landlord does not own home….

LOL…

Fake Landlord

#130 jess on 05.14.13 at 7:37 pm

how to turn taxes into thin air

…”Prisons and casinos have stooped to the level of calling themselves “real estate investment trusts” (REITs) to gain tax exemptions. Stooping lower yet, Disney and others have added cows and sheep to their greenspace to get a farmland exemption…”

http://truth-out.org/buzzflash/commentary/item/17960-the-biggest-takers-and-societal-parasites-are-the-rich-not-the-working-class-and-poor

#131 CrowdedElevatorfartz on 05.14.13 at 7:38 pm

@#25 NoBet

Sorry buddy , in the 30+ years I’ve lived in BC, I
( unlike you I suspect) have never had to resort to welfare. And just like you. I have zero debt. A healthy investment protfolio and a fascinating, well paying job that sends me around the province.

But yes you are correct. I voted for the non liberals. First time in my life I’ve ever voted NDP but I just couldnt bring myself to voting for a pathalogical liar with meglomanical delusional narcissism. (That means she’s so full of sh#t even when she practices in front of a mirror she believes the sewage she spews, “Families First! Balanced budget! you get the idea.).
Hopefully you voted Liberal.
Enjoy losing :)

#132 CrowdedElevatorfartz on 05.14.13 at 7:44 pm

@#25 Nob Det

What did you do with the Red Bull and the free puppy?

#133 AK on 05.14.13 at 7:45 pm

Expect 1,900 on the S&P 500: Laszlo Birinyi

S&P 500 going to 1,700

#134 Smoking Man on 05.14.13 at 7:47 pm

Central backs world over cutting rates
How long do you think before Canada does. May not spur a boom here with the daily F driven MSM gloom and doom.

Balanced market for the next two years.. Mind Longbranch New Toronto still got some catching up to d. .

#135 Old Man on 05.14.13 at 7:58 pm

I have no idea what some of you are talking about within the context of mortgage rates, as it is all about the cost of money which matters not to purchase a Real Estate asset that will deflate over the next 5 years or more. So, save your money, and worry not about buying this or that with a deal for a bargain that is nothing more than an illusion of reality. Sell out in the GTA, and take your pride, and park the cash for a better day, but in my humble opinion it might be too late, or sit back with hope to be hooped like a fool to go under water.

#136 Daisy Mae on 05.14.13 at 8:07 pm

#124 Valley Renter: “Garth, voted here on the Wet Coast. Voted for the party, not the local candidate, however the party I voted for is not running the local candidate I believe in! First past the post is what I hear for leadership. Feel like I need to take a shower.”

****************

I’ve heard that alot this time ’round. People voting….not happy with their vote…but feeling that they MUST vote…someone.

Dissatisfied. Disgusted. Disillusioned. Not good, not good at all!

#137 Canadian Watchdog on 05.14.13 at 8:09 pm

#134 Smoking Man

How long do you think before Canada does.

Canada's new Exporter and Chief, Stephen Poloz is ready to drop rates 25-50bps. F wasn't trying to stop banks from lowering mortgage rates; he just didn't want them doing it before a rate cut.

#138 BBallingsford on 05.14.13 at 8:13 pm

Just saw another Canada’s Action Plan on the Sens vs Pens game. Is it really almost 100 grand per ad? There goes my $20 grand that I paid in taxes this year to pay 1/5th of it.

Great value for money (sarcasm intended).

#139 Tom Vu on 05.14.13 at 8:17 pm

#131 CrowdedElevatorfartz on 05.14.13 at 7:38 pm

But yes you are correct. I voted for the non liberals. First time in my life I’ve ever voted NDP

================================

We will hunt you down… and weld the elevator doors closed.

bwhahahahahaha

#140 HalifaxEd on 05.14.13 at 10:30 pm

#125 Devore

How is it behind closed doors? If you’re shopping for a house, 29 bucks is peanuts. A proper house inspection will run you a $1000.

———————————————

When the information is not available unless you pay for it, then it is “behind closed doors”.

I never complained about the amount being charged. They deserve to make a buck for their efforts. I agree, $29 is a fair price if you are actively in the market. But free was better :)

For a little while, anyone who had an interest in the NS market, whether seriously looking or just curious, could view a level of detail that was previously out of reach. It was nice. It was empowering. It was like having a pass to the VIP room. It was obviously too good to last.

#141 Pulp Faction (Dorf) on 05.14.13 at 10:56 pm

I want Alicia.

#142 drydock on 05.15.13 at 2:49 am

http://www.testosteronepit.com/home/2013/5/13/japans-vacant-houses-visions-of-detroit.html

Above link about abandoned homes in Japan.

#143 Chickenlittle on 05.15.13 at 11:46 am

#42 Vanguy re: the Canucks and Canadian hockey.

Well said! :) I agree with you.

#144 Bob on 05.16.13 at 3:25 pm

Garth: Remember the breathing mask filters.

Did you just make fun of Hamilton? Driving into that city still reminds me of the scene from Blade Runner.