The sleeper

If residential real estate continues to lay an egg, first in TO, then everywhere else, you might be getting a margin call on your house.

Home equity lines of credit are huge. There are thirteen million households in Canada, and three million of them have HELOCs. That’s 23% of the population. Sheesh. And of those people, 40% don’t make regular payments. By the way, eight in ten have their lines of credit linked to the mortgages, which means their available credit grows with every payment.

The amount of debt that residential real estate has credit is without precedent. Two-thirds of the $2 trillion we owe are mortgages, and billions more are lines of credit backed by houses. In the latest three-month period for which we have stats, mortgage debt rose 7% while lines of credit bloated by eight times. Most of that debt came in the form of HELOCs, which are backed by homeowner equity.

So what? Why’s it even remotely interesting to have more evidence Canadians are undisciplined, credit-snorfling debt addicts?

Well, if what happened in the GTA last month keeps on happening for a while (prices down 6%, sales lower by 20% and listings up by half), a lot of the people with HELOCs might be surprised. It’s important to understand a home equity line of credit is a demand loan. There is no term for it – in theory it goes on forever – but the lender can demand payment in full at any time, and for any reason. The interest rate isn’t fixed, but floats with the prime rate, and can be raised by the lender if conditions change.

Banks are allowed to lend up to 65% of the equity in a property as a HELOC and in return for doing so, have a charge against your deed. So you can’t sell the property without triggering full repayment of the debt. It’s possible to borrow up to 80% of your equity (and lots of people so) but the final hunk needs to come as an amortized mortgage. So, you’re forced to make blended payments (principal and interest) on that portion, but on the main amount all you need do is pay enough interest so your loan limit isn’t breached.

And that’s what most people do. A quarter make interest-only payments and, as mentioned, 40% don’t make any until they hit the credit limit.

Now all of this moist, fecund, multiplying, spreading, heady pile of debt was no issue while everybody’s equity was going up with real estate values romping higher. Fatter prices made the debt look skinnier. Sleeper debt. Homeowners could ignore it. The bankers were happy. Everybody kept piling on.

But those days may be ending. If we have, say, four more months of 6% declines then it’s conceivable average equity could fall by a third, putting a mess of borrowers offside with their loan-to-value ratios. More important, if the banks start getting nervous about declining equity and the quality of the massive loans they’ve made against it, they might start demanding some of it back.

Imagine what a shock that would be for someone whose house is falling in value. They could be asked to reduce their HELOC balance by $10,000 or may $100,000 – triggering them to sell their home into the teeth of a declining market. If enough households were affected, the market plop could be made that much worse by sellers without options.

This is not a remote worry. On Wednesday an agency of the federal government raised the alarm (finally) saying: “Falling housing prices may constrain HELOC borrowers’ access to credit, forcing them to curtail spending, which could in turn negatively affect the economy. Furthermore, during a severe and prolonged market correction, lenders may revise HELOC limits downward or call in loans.”

In 2000, Ottawa reminds us, home equity loans totaled $35 billion. In 2012 they were $186 billion. Now we are over $200 billion – an annual swell of about 20%. A third of these loans were used to invest in more real estate (much of it through the Bank of Mom) and 40% of the total went into renovating houses or was piddled away on consumer spending.

Yes, I know. Blah, blah, blah. Debt, debt, debt. It’s boring.

But when 23% of all households owe $200 billion, much of it spent and gone, are making no payments and could blow up if their loans are called, we have a timebomb ticking. Of course, the first HELOCs for which repayment is demanded will be those on which no regular payments are being made.

That wouldn’t include you, would it?

225 comments ↓

#1 For those about to flop... on 06.07.17 at 6:50 pm

Pink Pollen falling in Vancouver.

This is one of the cases that I asked any realtor on here to update me on last week as it was taken down.

Well it is back up and has had a mighty haircut.

Let’s look at the timeline on this one.

23rd Jan. 2107 asking 5.68

23rd Mar 2017 asking 5.38

1st April 2017 asking 5.58( back up as a April Fools joke ,I guess)

7th June 2017 asking 4.98

They’re on the hook for 5 million.

Like a lot of people in Vancouver at this price point, they are trapped until some more gasoline gets poured on the bonfire.

Weaver and Horgan want the fire to die down so they can do the s’mores thing without losing their eyebrows…

M42BC

4006 w 34th ave Vancouver.

https://www.zolo.ca/vancouver-real-estate/4006-w-34th-avenue

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMEpaSw==

#2 Mark Baum on 06.07.17 at 6:55 pm

Is Toronto’s housing market decline for real?
Why sales and prices seem likely to continue to fall for at least the next two or three months:

http://www.macleans.ca/economy/realestateeconomy/is-torontos-housing-market-decline-for-real/

#3 Doug t on 06.07.17 at 6:55 pm

Let’s just blow this thing up already – it’s quite apparent this country is going to the hurt locker for at least next ten years. But don’t worry it looks more and more likely that a major war is coming to distract us.

RATM

#4 Tyler Lankin on 06.07.17 at 6:56 pm

First!

#5 Angela on 06.07.17 at 7:02 pm

Is my math wrong that $2B divided among 23% of 13M (2.99M) households is around $650 each? This blog is getting more “dramatic” by the day.

$200 billion. — Garth

#6 I'm stupid on 06.07.17 at 7:03 pm

What was it that you wrote Garth? Rich people hold assets poor people hold debt. I’ve said it before but debt is like a noose, a lot of Canadians are going to feel it tighten.

#7 Raj on 06.07.17 at 7:04 pm

New listings in GTA today alone: 1616 to be exact !!

Desperation is in the air !!

#8 Bill Grable on 06.07.17 at 7:06 pm

The listing at 4006 W. 34th Ave Vancouver…is $5million.
*(Gimme a break).

People are hallucinating.

Vancouver has been destroyed – everything is being ripped up and it’s so noisy from construction, here in the West End (*most densely populated part of North America, BTW) that it’s getting ridiculous.

Traffic is a horror.

Time to leave.

I used to love it here – but those days are long gone.

I DETEST it now.

#9 TrumpForTheAges on 06.07.17 at 7:07 pm

Now this is a funny post. We need to come up with a term that would represent the same sentiment used when we refer to bullion lickers as we do on this blog when it applies to real estate.

The HELOC is based upon the difference between the current mortgage balance and the appraised market value. The appraised value of the property is somewhere between the MCAP value and real market value. So there is absolutely zero reason for a margin call unless properties shed massive value and fell below appraised value. While possible it could happen we are so far away from that today. The only real driver of a margin call would’ve sustained increases in rates whereby the payor could no longer service the debt.

Your fear mongering is unbecoming for someone trying to provide financial education.

The warning is coming from the Feds. Go rag on them. — Garth

#10 anonymous on 06.07.17 at 7:09 pm

Quite a few “reduced” price on Zolo, esp. for semi’s and condo’s.

#11 Yeah Baby on 06.07.17 at 7:11 pm

Declining access to credit just what the middle class needs to smack them back into reality. Let blow this baby up!

#12 Pretentious Hipster Bicycles on 06.07.17 at 7:11 pm

Wowzers Gartho that $200B works out to an average of $66k per HELOC household. Crazy. No wonder there’s so many BMWs, Mercedes and Range Rovers on the Streets of Vancouver these days.

#13 PGer on 06.07.17 at 7:12 pm

No – doesn’t include me,or the misses, thankfully. But it seems like we’ve seen a couple of generations of Canucks (at least) who have not only seen debt as very cheap, but also as something completely normal to accumulate. Why save if you can have it right away?

This is why the same people have no trouble voting in governments who pile on the debt as well (as long as I get what I want, whats a little more Fed or Provincial debt?).

It will be very interesting (and schadenfreudian in a way) watching it all unwind.

#14 Pete on 06.07.17 at 7:15 pm

$211 billion outstanding home equity loans for 3 million Canadian households, or $70,000 for each household

#15 Been there on 06.07.17 at 7:19 pm

Thanks Garth – we’ve been there. Good business income, $200K HELOC. Extended to the max as we bought a rental property with the dough. BMO got nervous about my industry and pulled the plug. Gave me ten days to pay it back. I’d never missed a payment.

I negotiated 2% plus the 8% (+) interest / month payment. No idea to this day how I managed to make those payments, but I know not to ever touch a HELOC again. Any young ‘uns out there – you’ve been warned. Ten days.

#16 Warned Friends about them but... on 06.07.17 at 7:19 pm

…they never listen…RE always goes up in value they say.

From what Garth says about 416 RE, Flop on YVR RE and Ross Kay the other day on both, people are going to be in a heap of trouble financially.

3/13 million households or 23%. Consider that 69% of those households are owned, the rest are renters.

So the true number of owner households with a HELOC is about 33%.

Staggering as to what will happen if prices plummet and/or we get hit with an economic shock that worsens the economy.

What a mess it will become.

#17 Jr on 06.07.17 at 7:20 pm

Looks like Smoking Man cashed out at the top.

The guy needs to write a financial advice book as well!

#18 jas on 06.07.17 at 7:21 pm

Excellent post Garth.
I did not know the HELOC can be demanded back! I was under the impression that as long as the interest is being paid on time, all is well.

Holy! And it is even more scary to know that the funds taken against HELOC are used either to buy more of the same, or to renovate (I guess in the hope that it si going to add enormous value..) or simply thrown away on consumer goods. (on consumer goods?! How stupid!!)

You are right, as long as the party is going on, no one cares…
I own my home but can’t wait to see RE coming down crashing. The sooner the better.
Masses can be so ignorant, I never realized!

#19 Pete on 06.07.17 at 7:25 pm

bank of Canada data shows in April 2017, Canadians have $1.454 trillion in mortgage, $571 billion in consumer credit, did not say how much of that is HELOC.

There are 13 million Canadian households, 4 million are renting, 9 million own property. about one third has no mortgage, so 6 million Canadian households have $1.454 trillion mortgage plus $220 billion home equity.

Each Canadian household is carrying on average $558,000 housing-related debt. That is very pretty.

#20 FOUR FINGERS WATSON on 06.07.17 at 7:25 pm

You see ? That is why the governments will do everything in their power to keep the bubble from bursting. They just wanna hit the pause button for a while.

#21 Mac on 06.07.17 at 7:26 pm

Yup…In the 2009ish downturn my marriage went south and we were forced to sell our acreage in a down market. Add the fat LOC on the house and we ended up owing $5,000+ when the dust settled. We bought the acreage after we sold our previous house for over twice what we built it for – I would have invested that flat out if I knew then what I know now. Won one and lost one big time. I rent now and have money in the bank and couldn’t be happier.

#22 crossbordershopper on 06.07.17 at 7:26 pm

i have no idea who gets these loans, i cant even get a $1000 increase on my visa. There are milllions of us regular canadians scrapping by with no debt. you think its a good thing, well, its constraining. we all want things, kids etc, what do you tell them, well son six years ago when i lost my job i fell behind and my credit score sucks, so you cant have it because we are paycheck to paycheck so basically when i can scrap together 300 extra bucks you can have it.
reality for millions of people, basically, if you dont have the cash you cant buy. its just a little jealousy for many many people i know who want a bigger house, would glad to have some half million dollar mortgage if they can get one. many people only make 18 to 22 bucks an hour, net, after tax, minus gas to get to work , tim hortons coffee you take home crap, then you pay some billls and your at nothing again.
low end slavery, but many want that million dollar house, why, well it looks nice and shinny, in the end i dont see the difference between heavy debt big house, and smalll house no debt, we both go to work every day, same time hortons coffee, same junky car.
i think debt is good, i dont have any, not by choice, but because the powers in charge dont trust me to repay them a lousy thousand bucks.
which banks are the most liberal, i dont care about interest rates or anything, can anyone advise.

#23 Smartalox on 06.07.17 at 7:27 pm

Simple Math:

Take the outstanding amount on your mortgage, plus 20% to account for agents fees, and mortgage pre-payment charges, plus the outstanding balance on your HELOC, plus any other debts (cars, toys, credit cards, student loans).

If this total is more than three times your gross household income, SELL NOW!

#24 Long-Time Lurker on 06.07.17 at 7:28 pm

Another great article, Garth! I don’t think anyone else is covering these topics like you are.

#231 n1tro on 06.07.17 at 4:33 pm
@Long-Time Lurker

Thanks for that link. That CNN shill got owned. As for climate change debate, let real scientist peer review each other and come to solutions to help the planet. No input from non-scientists required.

As to every story having 2 sides, I respectfully disagree. Every story has exactly 3 sides. Your side, my side, and somewhere hopefully in the middle is the TRUTH.

III Sides to Every Story, how Extreme!

III Sides To Every Story – Extreme (FULL)
https://www.youtube.com/watch?v=MjZHeD4bC4Y

#25 Wrk.dover on 06.07.17 at 7:29 pm

So, live like that, get cancer, or the heart tackle then die.

The alternative is to not have so much consumption, and die with money that you can’t take with you.

I prefer not to have debt and defer my spending as savings, but I am very eccentric to say the least.

#26 CL on 06.07.17 at 7:30 pm

Good post. However, I’d have to disagree with what loans would be called first. This is Canada after all where the more responsible are punished for, well, being responsible. What I mean is that I’d wager those that have made payments on credit lines would be called first. Why? Because the banks would most likely say, as they have before in past recessions, “we’re calling your debt because we know you’ll pay it”.

This has happened in the past to people I know. Time will tell.

#27 ShawnG in TO on 06.07.17 at 7:30 pm

as it was said in the spooky novel, those who got hit first were the lucky ones.

#28 I thinks I know something on 06.07.17 at 7:30 pm

“If residential real estate continues to lay an egg, first in TO, then everywhere else, you might be getting a margin call on your house.” – Garth

—————————————————————

Honestly Garth. Nobody is scared. The politicos have already started to pave the path to bailouts. Homeowners in financial trouble will be bailed out in large numbers. That is for sure.

It is impossible. — Garth

#29 Victor V on 06.07.17 at 7:30 pm

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/economy/toronto-and-vancouver-housing-markets-threaten-canadas-rapid-economic-growth-oecd-says&pubdate=2017-06-07

The OECD said Canada faces several potential downside risks, chief among them the possibility of a “disorderly” decline in the Toronto and Vancouver housing markets.

“Such a correction would reduce residential investment, household wealth and consumption. A sufficiently large shock could even threaten financial stability,” it said.

#30 @careeraftschool on 06.07.17 at 7:31 pm

Anyone know of any cases where a financial institution has
called in a HELOC loan? I am sure there are many readers of this blog who work in banking who might have a few stories. Just curious.

#31 I thinks I know something on 06.07.17 at 7:33 pm

“But when 23% of all households owe $200 billion, much of it spent and gone, are making no payments and could blow up if their loans are called, we have a timebomb ticking.” – Garth

———————————————————

Nothing will blow up for a long time. The politicos will not let the banks suffer. Bailouts galore resulting in more debt for the nation. But hey, nothing really matters anymore and nobody cares anyway.

#32 ali_b on 06.07.17 at 7:35 pm

Just a coincidence, nothing to see here, don’t be a xenophobe and think foreign investment has warped our markets:

https://www.theglobeandmail.com/real-estate/the-market/montreal-posts-record-home-sales-in-may-up-15-per-cent-from-2016/article35212205/

#33 Wrk.dover on 06.07.17 at 7:41 pm

There is no money to be made in interest on savings. Savings need to be in stocks. No money to be made there either, just more shares of stocks printed. Eventually shares are the only currency, as soon as the last hold out parts with his actual money to buy shares.

#34 I thinks I know something on 06.07.17 at 7:42 pm

Listen Garth, it’s very clear that debt is now the Canadian way. Hell, it’s the way of the whole western world! Eventually, when the whole crooked house of cards that is our financial system, finally collapses under the weight of it’s own chicanery, it’ll be replaced by a new currency. Or, maybe it’ll just be revalued (downwards). Regardless, the credit crazy borrowers will be rewarded and the savers screwed.

#35 DebtFree on 06.07.17 at 7:43 pm

I think everyone underestimates the way the current government loves to spend like there’s no tomorrow.

They keep it up and it will be literal. Bailing out homeowners who were subject to ‘unnatural’ market forces and ‘immoral’ speculation would be a great way to gain favour in socialist Canada.

When’s election time again?

#36 Penny Henny on 06.07.17 at 7:46 pm

Boy oh boy Garth it seems like you laid an egg yesterday. I just got through the comments.
And if I may say there is no reasonable explanation for owning a pier de terre (or whatever you call it) in the city unless prices are appreciating. If prices were stagnant or dropping to do so would be shear madness.
Obviously you would be much better off, by far, to rent.
So we have been told hundreds of times.
But I guess you knew that. I don’t know how many dozens of comments like mine were not published yesterday, but that is on you.

#37 rental property math on 06.07.17 at 7:46 pm

average freehold sale price in Hamilton april 2017 $574,829
average freehold sale price in Hamilton may 2017 $571,642

no 6% drop in the hammer.

some trendy restaurants opening on barton street.
pushing out crack smoking hookers should add value..
prices won’t be going down in hammer town.

#38 bigtowne on 06.07.17 at 7:46 pm

To “CrossBorderShopper”: The best credit card in Canada is “Capital One Mastercard” as they are not one of the Canadian Big Six banks and their agenda and/or criteria is “American” as opposed to Canadian. Play safe.

#39 SI2K on 06.07.17 at 7:50 pm

Talk to us about borrowing to invest in the TFSA. Should we be paying those unsecured lines back and pocketing the profits right about now? TIA for input.

#40 Cottingham a bargian on 06.07.17 at 7:50 pm

#5 Angela on 06.07.17 at 7:02 pm
Is my math wrong that $2B divided among 23% of 13M (2.99M) households is around $650 each? This blog is getting more “dramatic” by the day.

$200 billion. — Garth
——-

You are Italian right Angela? After all the ” drama ” surrounding an impossible decline in housing prices is absurd to an Italian .x

#41 Andrew Woburn on 06.07.17 at 7:52 pm

Could be a feeding frenzy coming for shylock second mortgage lenders.

I grew up with survivors of the Depression. They were traumatized by even the thought of debt. I suspect we will have a new generation of credit averse kids who will amplify the longer term drop in spending power that results from the housing crash.

#42 Freedom First on 06.07.17 at 7:53 pm

That could be a photo of a younger Garth. It sure fits him, and in a good way too.

In fact, I would consider a photo like that worthy of a space on the wall of a man living a freedom first lifestyle.

Debt, what debt? That is the money of slaves.

Sadly Canadians have followed the same debt insanity that the Americans, the Japanese, some European countries, etc., which financially hog tied millions of their citizens. Many who have yet to recover.

Freedom First
Master of Freedomonics

#43 Lumpia on 06.07.17 at 7:53 pm

buh buh buh but interest rates remain low… House prices would keep going up. Heloc is life! Renovate the kitchen, buy iphone 8 and fly to the Dominican. #Canadianlife

#44 DeLeverage on 06.07.17 at 7:53 pm

When the DeLeverage starts there will be bailins. Was slipped in by F, RIP. Remember “registered” has a meaning, it’s not free.

#45 Once a Boss, always a Boss on 06.07.17 at 7:54 pm

No significant decline…no negative effect on the economy.

Big yawn : () Wake me up when there is something interesting to report

#46 Pete on 06.07.17 at 7:54 pm

Sorry, computed wrong. Each Canadian household is carrying on average $279,000 housing-related debt. By comparison, US households on average have US$150,000 housing related debts.

#47 So glad I sold on 06.07.17 at 7:56 pm

It happened to me a few years ago regarding the heloc. The bank called it and I had to add it to the mortgage when it came due 2 months later.
Glad I sold last year and am renting and investing.
Have a co-worker whose mortgage came due, and the bank asked if she had additional collateral.
They attached something to her investment account.
I think she has additional property but thinks in metro Vancouver, prices will always go up.
When I said the bank can call a line of credit or heloc, she disagreed and said as long as people can make the payments there shouldn’t be a problem.
She even talked someone into applying for the free (her words, not mine) 5 percent loan that the Liberal Government was offering. The person said he probably wouldn’t qualify because he was self employed. She said “no worries, I have a mortgage broker you can use.”
What can I say- another FOMO.

#48 Deplorable Dude on 06.07.17 at 7:59 pm

#243 A Reply to #108 Deplorable Dude on 06.07.17 at 6:03 pm………Have you read Comey’s seven-page prepared statement for tomorrow’s testimony? To me (and to many legal experts), it looks like obstruction of justice.

Obstruction of what Justice? The FBI had already cleared Flynn when Comey/Trump spoke. Comey clarifed in his release thats what he took Trump to be referring to.

Look…if Special Council Muller thought it was an impeachable issue he would’nt have let Comey release this or allow him to publically testify.

Besides CNN have removed their Comey testomony ‘countdown’ clock…so even they know its a nothingburger :-)

Read this for what is actuall happening right under your nose…Comey trying not to implicate himself over the illegal unmasking American citizens…

https://theconservativetreehouse.com/2017/06/07/comeys-cya-paragraphs-substantiating-the-unmasking/

#49 JustMe on 06.07.17 at 7:59 pm

Why Ottawa should bail out homebuyers if house prices tank

http://www.macleans.ca/economy/economicanalysis/why-ottawa-should-bail-out-homebuyers-if-house-prices-tank/

#50 Anna on 06.07.17 at 8:00 pm

We have a HELOC that we used instead of a traditional mortgage when we bought our most recent house; but unlike what you described it has a fixed term and rate loan within it. Should be all paid off by 2019.

#51 just say no on 06.07.17 at 8:01 pm

so over in Montreal property taxes are high and keeping prices from soaring….if they lower the tax rate like they did in Winnipeg you will see “Montreal property values soar” Have you seen the amazing homes there for 1,000,000 but those pesky taxes just keep it there….12,000 year for property tax? Anyway I see the Montreal is getting attention for the new “hot market” so watch closely and see taxes come down to increase gains. They can collect it back in land transfer tax….

#52 Daughter of Ponzy on 06.07.17 at 8:04 pm

Garth,

Thanks for the great post and comments yesterday. Kudos for showing us your true colours! Keep them coming.

#53 JustMe on 06.07.17 at 8:04 pm

BC Greens to protect home buyers from price declines.

“Work with financial institutions and the federal government to develop protections for recent homebuyers who are negatively affected by market cooling initiatives.”

http://www.bcgreens.ca/housing

#54 crdt on 06.07.17 at 8:10 pm

#37 rental property math on

“some trendy restaurants opening on barton street.
pushing out crack smoking hookers should add value..
prices won’t be going down in hammer town.”

I grew up in the “Hammer” live on the coast now. Hamilton is not the place to be because of the crack smoking hookers, I would say the crack smoking hookers will outlast the trendy restaurants… There is just too much of the steel town legacy that a few restaurants could change. Once the RE madness is over, people will flee the “hammer” taking much value to more valuable places..

#55 Smoking Man on 06.07.17 at 8:13 pm

#17 Jr on 06.07.17 at 7:20 pm
Looks like Smoking Man cashed out at the top.

The guy needs to write a financial advice book as well!
…….
I thought about it. After dismal sales on my fiction novel why bother.

Although no one on wall street or bay street picks trend reversals better than me.

PhD Herdonomics.

I’ll think about it.

#56 Entrepreneur on 06.07.17 at 8:16 pm

So far the people who went into debt for a house more than they can afford have been awarded so far if sold. And the people saw that and jumped in. The responsible ones (who the government should have acknowledged) earned and saved to buy within reason if can.

But even the government cannot function without going into deficit. And they have to keep themselves up and running as they feel so desired. So they think.

Ignoring the savers (who probably are the ones who are the foundation of the system) and rewarding the debtors is obviously wrong. Maybe our great leaders are not true leaders is this testy time? Their way or the highway like in NATO.

Is this the “straw that breaks the camel back.” We are people that live in Canada, pay our taxes for the system to work and when ignored so much/pushed aside time to get a government in that works for us.

And technology seems to be the talk but when an election needs to recounted this system seems backwards.

#57 young & foolish on 06.07.17 at 8:22 pm

Dishonest money ….

#58 Myra Andrews on 06.07.17 at 8:24 pm

Vancouver stats June 7
New 276
Price Change 55
Sold 210

TI:9071

http://www.clivestevepaul.com

#59 BC_Doc on 06.07.17 at 8:26 pm

When we paid off our mortgage, our banker at RBC encouraged us to leave a mortgage set up as a HELOC just in case we needed it down the road (“It will cost you money to set one up later if you need it.”). I declined for two reasons:

1) I wanted RBC off my title.
2) As the son of an insurance agent, I knew that getting RBC off my title would lower the price of my home-owners insurance policy (the insurance company sent me a refund of a couple of hundred dollars once I supplied proof the title was clear).

#60 Stone on 06.07.17 at 8:27 pm

Also, understand that a HELOC is normally secured by an all indebtedness mortgage. That means that if you don’t pay it when called, they can take your other assets if the equity isn’t there anymore in the home (ie: bank account balance, non registered investment, first born, etc). Home first, other assets after that if it doesn’t cover the debt. Good lucky to those suckers. Wouldn’t want to be ya!

#61 MoneyFromA$ia on 06.07.17 at 8:27 pm

Who cares about all this debt, our beloved rich immigrants will prop up our home prices and save us all. Garth, no disrespect here but you are dead wrong about immigrants only having a 5-10% effect on the market. Here at ground zero, even realtors admit it’s foreign money.

BNN today in contrary to your post say TO and YVR are not dropping and still supported.

Can’t wait till your right…..still waiting…

#62 Bgirl on 06.07.17 at 8:28 pm

Could totally happen! An alternative would also be hitting people at mortgage renewal.

Happened to me when I relocated from Winnipeg back to Ontario in early 2008 I ported my mortgage over to a new property I purchased with 5% down. In 2009 when I renewed my mortgage the bank ordered a new appraisal, which obviously reflected a drop in value from the original purchase price. To renew I had to come up with $16K to cover the underwater plus another 5%.

#63 Ken From Vancouver on 06.07.17 at 8:29 pm

#5 Angela

I’m sure your bankers love your math skills. What’s a couple of decimal points? Borrow on girl!

#64 Cto on 06.07.17 at 8:29 pm

#34 I thinks I know something

At first I just thought you were another real estate shill.
But now I understand your thinking. You are just as bitter and untrusting of our government and our society as I am.
I have seen fears of a bailout as you do whether they have the money or not they will socialize the ensuing disaster, somehow some way!

#65 Lead Paint on 06.07.17 at 8:30 pm

Hold me Garth, I’m scared…

#66 WUL on 06.07.17 at 8:31 pm

L’huile de Alberta est kaplooey. $45.XX. And Shell has abandoned the oil sands and will invest more in renewables. Time for the rest of us to get with the program perhaps.

Zut alors!

#67 waiting on the westcoast on 06.07.17 at 8:45 pm

#28 I thinks I know something on 06.07.17 at 7:30 pm
“If residential real estate continues to lay an egg, first in TO, then everywhere else, you might be getting a margin call on your house.” – Garth

—————————————————————

Honestly Garth. Nobody is scared. The politicos have already started to pave the path to bailouts. Homeowners in financial trouble will be bailed out in large numbers. That is for sure.

It is impossible. — Garth”

The amount owed is too large for the government to pickup the tab. They may prop a bank or pump money to create liquidity but the debtors will pay. It will be worse than what the US faced as most homes there were locked in for 30 years and people had the option to just walk away and buy the house next door at a substantially reduced value a few years later in a worst case scenario…

#68 Wild roasted nutz on 06.07.17 at 8:48 pm

#66 WUL on 06.07.17 at 8:31 pm
L’huile de Alberta est kaplooey. $45.XX. And Shell has abandoned the oil sands and will invest more in renewables. Time for the rest of us to get with the program perhaps.

Zut alors!

.
AB’s budget hasn’t been balanced in 10 years. Even with $100/bbl they were dipping into the contingency fund for 4-5billion/yr. Now we are totally hooped with 10-12 billion deficits for years. Hey want to buy my house?

#69 SimplyPut7 on 06.07.17 at 8:48 pm

Wow, that first margin call.

When debt addicts realize, their banks never cared about them as much as they thought they did. And a house can’t be worth a million dollars without someone actually having a million dollars to pay for the home.

Can you imagine how these people will feel when they realize they have to pay back all the money they spent on upgraded kitchens, bathrooms, basements, expensive vacations, syndicated mortgages and private loans, flipping houses or speculating on new developments, down payments for their broke kids or luxury vehicles; and not be able to pay off all the debt by raising the home price indefinitely and passing it on to the next fool?

Bahahaha!

Oh when that day comes, I want all those smug fake millionaires to tell me about how home prices are going up forever and how they would never sell their home for less than a million dollars! Go ahead keep it!

You’re going to wish your bank loved you enough to give you a loan like Home Capital when they get through with you.

Happy Housing Crash Everyone!

#70 Susanna on 06.07.17 at 8:50 pm

#42 Freedom First on 06.07.17 at 7:53 pm

That could be a photo of a younger Garth. It sure fits him, and in a good way too.

In fact, I would consider a photo like that worthy of a space on the wall of a man living a freedom first lifestyle.

Debt, what debt? That is the money of slaves.

Sadly Canadians have followed the same debt insanity that the Americans, the Japanese, some European countries, etc., which financially hog tied millions of their citizens. Many who have yet to recover.

Freedom First
Master of Freedomonics

You go girl! All women should look up to you Mrs. Freedom.

#71 toronto1 on 06.07.17 at 8:50 pm

40% read that again 40% !!!!
MAKE NO PAYMENTS AND JUST ROLL IT OVER

That in itself is mind blowing- as every monthly roll over accrues more and more interest- no wonder banks are pulling down billions in profits- i mean come on, how stupid can you be??

So it gets rolled until it cant and then they only pay the interest only portion

If this was a university kid rolling over their very first credit card to other cards to live large for a summer- we would chalk it up to a life lesson but there are actually grown adults- with kids and professional jobs that do this?

Folks this is insanity- pure financial suicide- when this RE market rolls over for good its going to be a massive, massive recession as the only thing giving us lackluster GDP so far has been this insanity that pulled future demand forward.

to the dreamers— um banks make margin calls every day- ask any trader – when the underling collateral is less then the amount owed you better beleive they will place that margin call on your HELOC.

#72 Boombust on 06.07.17 at 8:53 pm

It is usually the “marginal buyers” who drive RE prices UP during a bubble expansion and who then drive it DOWN when things go south.

The 20/80 “Pareto Principle Rule” is alive and well; it only takes about 20% of “players” to affect 80% of most markets.

So, IMO, the HELOC folks will also be the ones to tip the scales in the TO and Vancouver markets.

#73 Nonbuyer on 06.07.17 at 8:55 pm

So then Garth, what’s the play? I’m just a young hardworking guy trying to invest/hedge but I don’t see how I can trust the feds with a big TFSA… The globalists own the stock market but hate Trump and the market’s been rallying… Smells like a head fake to me. Something is brewing, perhaps you don’t agree.
Just seems too risky with time on my side. Surely you’ve covered hedging but I’d love a cliffsnotes/summary of what you think the right play is. Maybe you could keep it on your site somewhere.

#74 Rob D on 06.07.17 at 8:56 pm

Angela – your math is very wrong…..it’s $200BILLION in HELOCs outstanding.

That’s an average of close to ~$70,000 per HELOC on top of the mortgage…on top of the car loan…on top of the student loan…on top of the credit card debt….on top of whatever other damn crazy loans canadians are carrying!

#75 dr. talc on 06.07.17 at 9:02 pm

if someone has a house with no mortgage on it they should put a heloc on it, as a protection against some types of mortgage fraud, an alternative to title insurance

#76 Paul on 06.07.17 at 9:05 pm

My realtor friend today told me her brokerage sent text messages to all Realtors offering a 20k bonus on the next deal with a close date prior to July 1… very interesting. Caught them all off guard

#77 ANON on 06.07.17 at 9:07 pm

Yes, I know. Blah, blah, blah. Debt, debt, debt. It’s boring.

No, it’s not! Got my 5gal pail-o-popcorn right here. :)
Debt is wealth, always was. But that’s just my humble theory for explaining bubbles, which works for me (although one can test it by trying to live debt free as a working stiff for a practical confirmation).
Acceptance is bliss, although I fear it will get at least as bad as I think it will get. Won’t end well, for sure.

#78 Stock picker on 06.07.17 at 9:16 pm

Keep those expensive vacation pictures close……once the repo man has taken the cars and you’re afraid to turn the lights on for fear of the collection agents knocking….you’re going to need some fond memories to keep the suicidal thoughts at bay.

#79 Tim Barrett on 06.07.17 at 9:18 pm

Angela your math is wrong.. it’s about $66k average per household with HELOC. $200B ÷(13M x 23%)= $66k

#80 Trojan House on 06.07.17 at 9:24 pm

I heard an interesting interview on CBC radio today. The guest was talking about why kids, especially teens, want the latest, greatest gadget, product, etc. Apparently it has something to do with the frontal lobe of the brain, which controls impulses, emotions – if I heard & understood her correctly.

A question from the host was, “what about in adults?” The response was, absolutely adults have the same issue, however, she said to a much lesser degree.

However, after seeing the numbers in Garth’s post today, apparently she was wrong – adults are worse than teens!

#81 Dee on 06.07.17 at 9:28 pm

#17 Jr on 06.07.17 at 7:20 pm
Looks like Smoking Man cashed out at the top.

The guy needs to write a financial advice book as well!
…….
I thought about it. After dismal sales on my fiction novel why bother.

Although no one on wall street or bay street picks trend reversals better than me.

PhD Herdonomics.

I’ll think about it.

———————

Pretty good with his timing but not on that one. He plays both sides – “I’m selling at the top”, next day “I’m selling too soon”, then “rally in september”

#82 tkid on 06.07.17 at 9:39 pm

For anyone who wonders if the banks can revoke helocs, credit cards, etc, here is a link to a Frontline documentary, Close to Home, for you. It’s about the US during their recent recession, and the impact that the economy had on the average joe. Many had credit cards revoked, helocs revoked, lines of credit closed, etc.

https://www.youtube.com/watch?v=xaCiiD_6j74

#83 JustMe on 06.07.17 at 9:39 pm

DELETED

#84 tkid on 06.07.17 at 9:42 pm

Another good video, https://www.youtube.com/watch?v=T6sWplZNbzg, Frontline’s The Card Game, from the same season as Close to Home.

#85 Asterix1 on 06.07.17 at 9:42 pm

#61 MoneyFromA$ia, you say”BNN today in contrary to your post say TO and YVR are not dropping and still supported”

Wow! I have no idea what you were reading or who was speaking on the tv. Here is the front page of their site for Real Estate.
http://www.bnn.ca/real-estate

BNN headlines:

-“Toronto housing market at ‘turning point”
– “More Canadians ‘use their homes as ATMs’: Consumer agency”
– “Fitch puts Canada’s banks on watch as housing prices remain elevated”
-“OECD urges Canada to do more to cool hot housing markets”
– “Canadians banking on their homes for retirement”
– “Consumer watchdog warns against using home equity to fund unaffordable lifestyles”
– “18% of Canadian first-time homebuyers had help from their parents, CMHC survey finds”

Oh yeah! Everything is alright!

#86 OttawaMike on 06.07.17 at 9:44 pm

Seriously?

HELOCS not covered by CMHC in the amount of 200 billion plus and the CAD banks are all cool right Garth?

What gives?

#87 Dave on 06.07.17 at 9:46 pm

Will this effect be huge for the developers….cripple them and everything falls

#88 maka on 06.07.17 at 9:46 pm

Garth, Next time can I moderate Angela’s commemts?

#89 I love Trump on 06.07.17 at 9:48 pm

US Paid $1B to Green Climate Fund, Top Polluters Paid $0

http://insider.foxnews.com/2017/06/03/paris-climate-accord-green-fund-america-paid-billion-united-nations

#90 InvestorsFriend on 06.07.17 at 9:49 pm

The Models Tell The Banks There is No Problem

But the models are the problem

The banks see very low delinquency rates and conclude there is no problem. They fail to see that the reason there are so few delinquencies is that it is dead easy to borrow HELOC money to make the payments.

How many unemployed people are running up HELOC debt and not telling the bank they are no longer employed? The bank’s computer sees all is well since payments are being made.

If credit tightens for any reason and delinquencies soar will we then see the banks sue anyone for not informing the bank when they became unemployed? I bet such a requirement is in the fine print of that HELOC agreement.

Everything is great as long as we have low unemployment, ultra low interest rates and easy credit leading to stable or rising home prices. Should any of these factors deteriorate, well then watch out.

#91 I thinks I know something on 06.07.17 at 9:51 pm

#67 waiting on the westcoast on 06.07.17 at 8:45 pm

The amount owed is too large for the government to pickup the tab. They may prop a bank or pump money to create liquidity but the debtors will pay. It will be worse than what the US faced as most homes there were locked in for 30 years and people had the option to just walk away and buy the house next door at a substantially reduced value a few years later in a worst case scenario…

————————————————————–

I honestly wish that it were true. And time will tell, but I still believe the attempt will be made (regardless of the cost) to bail out the banks in the guise of bailing out the poor underwater (no fault of their own) homeowners. What a laugh! Trudeau will earnestly tell us all that we must help our neighbours for the good of all.

#92 Smoking Man on 06.07.17 at 9:51 pm

I love it.

Andrew Sheer has the Libs going crazy. This young quick witted dude is scoring millennials like no tomorrow.

Look at the clip, Bill Morneau is white as a ghost, read the body language, watching selfy-boy vs Sheer.

http://www.huffingtonpost.ca/2017/06/06/andrew-scheer-trudeau-qp_n_16971070.html

Butts has got to be shitting himself.

#93 Ret on 06.07.17 at 9:53 pm

Unfortunately, most of that HELOC money has already been spent on wants, and not needs.

If borrowers can’t come up with the funds to reduce their HELOC indebtedness, the banks will probably downgrade their credit worthiness and raise their HELOC interest rate to reflect the borrowers declining ability to repay.

Pay what we demand or you’ll be out on the street!

#94 InvestorsFriend on 06.07.17 at 9:54 pm

Bank Delinquencies

The banks also legally hide delinquencies by such things as forgiving payments for four months offering skip a payment. (But most people probably just use the HELOC and never inform the bank of job loss)

You are not technically delinquent if the bank excuses you from making the payment.

The average person will shaft the bank long before they ever let their kids go without necessities.

#95 John on 06.07.17 at 9:55 pm

So many jobs tied to real estate, and consumption related to real estate. Anything happens to those jobs and lights out. Those jobs have been an engine to the Toronto real estate bubble.

#96 mike from mtl on 06.07.17 at 9:58 pm

#51 just say no on 06.07.17 at 8:01 pm
so over in Montreal property taxes are high and keeping prices from soaring

////////////////////////////////////////////////////

Right, not to mention days on market are normally quite long 1-3mth+ Sellers are very stubborn but very few actual qualified buyers. So an actual true ‘market’. Also the taxe de bienvenue is just a reminder who owns what.

The specuvestors are largely confined to the unliveable 50m2 condos that nobody normal actually lives in. For now this is not an issue in terms of zoning as montreal runs quite the gamut rental stock… for better or worse.

Perhaps we should elect the PQ again just to keep the fear again of the encroaching canadianisms…

#97 Smoking Man on 06.07.17 at 9:59 pm

DELETED

#98 I thinks I know something on 06.07.17 at 10:00 pm

#64 Cto on 06.07.17 at 8:29 pm

At first I just thought you were another real estate shill.
But now I understand your thinking. You are just as bitter and untrusting of our government and our society as I am.

I have seen fears of a bailout as you do whether they have the money or not they will socialize the ensuing disaster, somehow some way!

——————————————————-

Maybe I am bitter, but not because I’m not doing well. I have been very lucky and I am, in fact, doing very well. Actually, have “done” well because I’m retired now. However, I still have a low tolerance for irresponsible spendthrift morons who think money comes from thin air. And that’s just our political leaders. The simple fact is that there are too many of us living in a financial dream world and in the end we’ll all have to pay for this stupidity when it blows up.

#99 MPAC on 06.07.17 at 10:08 pm

@#22CROSSBOARDERSHOPPER

CIBC is bar far the most liberal of the big six banks.

#100 Fish on 06.07.17 at 10:10 pm

the banks are going to give you a free pen

#101 InvestorsFriend on 06.07.17 at 10:13 pm

Bad Bank Loans

U.S. Mortgage backed securities were supposed to be safe partly because of geographic diversification. House prices would not drop in all areas. Whoops they did because the lax lending was everywhere.

Canadian banks could also find that if the credit taps are tightened the delinquencies will pop up everywhere.

Canadian banks unlikely to get into serious trouble. But price to book ratios of over 2.0 could fall to 1.0.

#102 InvestorsFriend on 06.07.17 at 10:19 pm

Banko Popular so called bail out

This bank was so-called bailed out today when bought by another bank for one slim euro.

The shareholders get NOTHING so they are certainly not bailed out. I believe the lenders and depositors to the bank are bailed out as well as management.

So yeah, a bail out but cold comfort to share owners who get nothing.

Same thing happened in some of the U.S. bank bail outs like I believe Wachovia and Washington mutual. The share owners got NOTHING but have to put up with hearing the bank was bailed out.

#103 Chumpy le chump on 06.07.17 at 10:22 pm

I used to be one of those. $800k mortgage, $75k heloc, never paid more than the monthly interest. No savings, constant stress.

Sold it all and live on the cheap now.

I can’t imagine how many people are out there living the way I used to live.

#104 Centre Wing on 06.07.17 at 10:25 pm

Well crap. Did we do the wrong thing? Instead of upsizing to make room for another baby, we got approved for a $40k HELOC to do some renos (including add a BR to the basement).
Someone be honest here.
Combined household income: 90-100k
Outstanding mortgage: 215k
Student Loans: 25k
HELOC: 15k (will probably end up 30-35)

If we had moved it would have added a god 100k to our mortgage. Not to mention realtor fees, lawyer costs, land transfer….

#105 The Great Gazoo on 06.07.17 at 10:27 pm

Odds of a Fed Hike next week 98%.

http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html

#106 Smoking Man on 06.07.17 at 10:28 pm

A billion dollar idea just popped into my head. Sucks I have no work ethic.

#107 Bonhomme Carnaval on 06.07.17 at 10:32 pm

@ #51 just say no
12K on a 1950’s house, that’s not been sold often.

$ 1M evaluation on a recent build is more like 20K per year in property tax + 2K per year in school tax (not included in the municipal levy).

Lastly, land transfer tax ~ 11K on a $1M evaluation.

Despite all the taxes, Montréal is a prime destination for HAM (Hot African Money).

Every African ‘dictator-du-jour’ is buying up dozens of down town condos in one swoop…

http://www.journaldemontreal.com/enquetes/filiere-africaine/afrique

#108 OnlyTheBankersLaugh on 06.07.17 at 10:33 pm

Come on, Smoky. We need more calls on the market more often. Put down the JD or pick up the JD but make more calls!

#109 Pete from St. Cesaire on 06.07.17 at 10:34 pm

I’d wager those that have made payments on credit lines would be called first. Why? Because the banks would most likely say, as they have before in past recessions, “we’re calling your debt because we know you’ll pay it”.
——————————————————-
I agree. Since the overall plan is to destroy the middle class, they would rather go after the consistent re-payers because they have the funds to make the payment, and the banks can still go after them later on to take their house during the economic collapse. If they start by going after those with no money, the banks won’t get any repayments and the debtors may just go bankrupt, triggering a downwards spiral which may get out of control fast.

#110 Pete from St. Cesaire on 06.07.17 at 10:39 pm

Honestly Garth. Nobody is scared. The politicos have already started to pave the path to bailouts. Homeowners in financial trouble will be bailed out in large numbers. That is for sure.
———————————————–
I feel like one of the Gods of the Copybook Headings who must limp up and explain it once more, here goes.
The only bailout/bail-in will be of the banks. Don’t you realize what happened in 2008. It was the banks that got bailed-out of their subprime fiasco, not those homeowners with underwater mortgages. The banks got their money back and were still allowed to forclose on peoples houses. The bailout should have gone to the burdened homeowners to pay their mortgages; that would have saved the banks as well as the middle class. But since the overall plan is to destroy the middle class that sort of bailout wasn’t about to happen.

#111 Keith on 06.07.17 at 10:42 pm

The investment genius on borrowing:

If you are going to drive 10,000 pound trucks across a bridge repeatedly, it is well to build one that can withstand 15,000 pound loads rather than one that can withstand 10,000 pounds… It is a big mistake to have lots of financial obligations and no cash reserve… Personally I have never used more than 25% borrowed money in my life, including when I had only $10,000 and had ideas that made me wish I had $1,000,000.00.
Warren Buffett

#112 cramar on 06.07.17 at 10:44 pm

Yes, I know. Blah, blah, blah. Debt, debt, debt. It’s boring.

———————

Maybe boring, but timeless and significant to those who have it!

1. “The rich rule over the poor, and the borrower is slave to the lender” (Prov. 22:7 NIV).
– attributed to Solomon roughly 3000 years ago.

2. “What has been will be again, what has been done will be done again; there is nothing new under the sun” (Eccle. 1:9 NIV).
– attributed to Solomon roughly 3000 years ago.

#113 Smoking Man on 06.07.17 at 10:47 pm

#108 OnlyTheBankersLaugh on 06.07.17 at 10:33 pm
Come on, Smoky. We need more calls on the market more often. Put down the JD or pick up the JD but make more calls!

Bay Street tossed me to the curb. Cause I said too much on here.

I’m living on credit card cards now. Selling free software, obviously, no self-esteem left.

No way I’m publicly giving away the market shit I see at the bottom of an empty JD bottle. Why should those cowards on Bay Street that don’t have my back give them freebies

Short the big five.

Cap markets lost their nerve, head office totally insane.

#114 Kilt on 06.07.17 at 10:52 pm

3 million people with 200 billion in debt. Not something I am at all worried about. Seems fear mongering to me.
Kilt

#115 Kilt on 06.07.17 at 10:53 pm

Although the growth rate at 20% is a bit shocking.
Kilt

#116 n1tro on 06.07.17 at 10:55 pm

Up the north in Brampton, it takes awhile for information to travel so you can excuse the following actions.

25 Sir Michael Place – originally listed for $899,999. Didn’t sell. So now relisted at $969,900!

https://www.realtor.ca/Residential/Single-Family/18256201/25-SIR-MICHAEL-Place-Brampton-Ontario-L7A1Z4-Fletchers-Meadow

A few doors down at 15 Sir Michael Place, saner heads are working. Originally listed for $939,999 but didn’t sell after a week. Was taken off the market and relisted at $939,999!

https://www.realtor.ca/Residential/Single-Family/18214106/15-SIR-MICHAEL-Place-East-Brampton-Ontario-L7A1Z4-Fletchers-Meadow

#117 Pete from St. Cesaire on 06.07.17 at 11:02 pm

So far the people who went into debt for a house more than they can afford have been rewarded so far if sold. —————————————————–
I know many who did just that by moving to T.O. I encouraged them to in many cases. I said ‘just don’t be too greedy at the end and you’ll make out like a bandit over a 10 year period’. I myself missed out because there was no way I was going to leave rural Quebec to live in ‘the big smoke’ or the ‘lower mainland’ for 10 years flipping and renovating houses. Life is too short and quality of life is paramount.

#118 Smoking Man on 06.07.17 at 11:03 pm

#99 MPAC on 06.07.17 at 10:08 pm
@#22CROSSBOARDERSHOPPER

CIBC is bar far the most liberal of the big six banks.
……

RBC desperately trying to catch up. The lion with its paw on the globe realized it’s not right, going left. Booked an appointment to get it removed.

I sold every stinking share but one.

Me and DM will have words at the next AGM

#119 young & foolish on 06.07.17 at 11:05 pm

“Ignoring the savers (who probably are the ones who are the foundation of the system) and rewarding the debtors is obviously wrong.” …..

” I still have a low tolerance for irresponsible spendthrift morons who think money comes from thin air.”

Evidence that many today do not understand what makes our economy function. Well folks, the days of Honest Money are long gone, and you never want to see them anyway since it would mean you would never get credit and likely be living like a serf.

#120 waiting on the westcoast on 06.07.17 at 11:06 pm

HELOC reductions will happen prior to outright closures. Many of my friends in the US would have unused room on their lines reduced to a few thousand above what they were currently using. In fact, it quickly went around that a smart play would be to take all the money out and put it in a different bank as a reserve for liquidity.

Someone pointed out earlier that interest rates in HELOCs would increase as a first act as well. That also happened in the US as well.

#121 45north on 06.07.17 at 11:07 pm

centre wing: Did we do the wrong thing? Instead of upsizing to make room for another baby, we got approvedfor a $40k HELOC to do some renos (including add a BR to the basement).

no the HELOC doesn’t mean anything until you draw on it but there is a point of no return. A 6% drop in Toronto in one month is without precedent – it’s disastrous! Sales should double in May instead they’re down.

#122 Karma on 06.07.17 at 11:07 pm

#156 NoName on 06.07.17 at 6:22 am
“Interesting read

https://www.theatlantic.com/business/archive/2017/06/can-americas-farms-survive-the-threat-of-deportations/529008/?single_page=true

Great way to stir inflation.

#123 Mark on 06.07.17 at 11:08 pm

“Anyone know of any cases where a financial institution has
called in a HELOC loan? “

Absent egregious cases where owners are obviously trying to damage or impair the underlying collateral, or are otherwise in actual or technical default, I haven’t heard of any cases. However, there are plenty of cases where people went to bed one night with manageable HELOC rates and their ‘cashflow’ situation seemingly under control, and awakened the next day to find that their rate went up to a rate that they could not manage.

This is what I would expect to happen as RE prices decline. Letters will arrive in the mail, with 2-4% increases to HELOC rates. Available credit will be severely reduced. The Canadian banks clearly have their customers over a barrel here, which basically will produce a windfall of profitability when the banks deem that there’s no more credit to be emitted.

#124 Smoking Man on 06.07.17 at 11:17 pm

Grasshoppers, when your feeling down, the world is out to get you, delusions of I’m not worthy.

Put this bitch on the buds.

https://www.youtube.com/watch?v=JRfuAukYTKg

#125 Hans on 06.07.17 at 11:17 pm

Why all the talk about bank bailouts….it’s the gov’t that would need the bailout, not the banks, because CMHC covers a substantial portion of losses no? Gov’t bailouts are easier to figure out if your country isn’t Greece…..raise taxes, reduce spending – which shouldn’t be that big an issue here with our complacent cud-chewing population.

#126 Hiding On the Backstreets on 06.07.17 at 11:19 pm

@ #24 Long Time Lurker

Thanks for that Extreme blast from the past. That was one of my most anticipated album (CD) purchases, after driving around a couple years in my Z 28 with Pornagraffitti blasting from the tape deck hair blowing with the windows down.

Hair’s long gone, but – one of the great guitar albums ever committed to vinyl! Numero Nuno.

#127 conan on 06.07.17 at 11:25 pm

Middle East going to pieces. Iran now accusing SA of masterminding a terror attack. An attack , that opened a lot of eyes, around the World. Qatar is now WTF status.

This is all happening, very soon, after Donald’s Saudi Arabian orb grabbing extravaganza. Coincidence?

No idea on the British election, maybe the Conservatives lose a few seats?

#128 Karma on 06.07.17 at 11:27 pm

“In Q1-Q3 2016, BC’s inward migration was 50,000 people, which combined with a sub-1% vacancy rate pushed the marginal demand for rentals and housing in general up significantly.”

For context, the 10-year average for BC is 40,000 per year, while Metro Vancouver is about 30,000.

In Q4 2016, only 3,000 people moved to BC, which coincided with a slow down in house price appreciation, unsurprisingly.

#129 Mark on 06.07.17 at 11:29 pm

“Why all the talk about bank bailouts….it’s the gov’t that would need the bailout, not the banks, because CMHC covers a substantial portion of losses no? “

CMHC covers nearly all of the losses. And yes, the banks will be glad to lend the government $$$, at interest. Maybe expanding the CMHC’s subprime mortgage insurance program was, in hindsight, Stephen Harper’s way of ensuring that government couldn’t get out hand in the future in its spending plans.

Back of the envelope math here, but CMHC’s subprime mortgage guarantees probably are only viably leveraged 5X. CMHC has $900B of insurance and re-insurance outstanding. So figure CMHC needs $180B of capitalization. CMHC currently has around $25B, so the minimum sort of bailout they’re going to need is $155B. That’s an incredibly significant fiscal straitjacket on a government that usually only runs a $20-$30B/year deficit (as Harper did in his last calender year in power!).

#130 Blacksheep on 06.07.17 at 11:35 pm

“Ignoring the savers (who probably are the ones who are the foundation of the system) and rewarding the debtors is obviously wrong.”
———————————-
Where the hell is Shawn of the banks when you need him….

While savers may stabilize the system, they do not function like debtors, by creating new $’s at chartered banks based solely on their signature and their mortgage given to a bank.

New $’s are what drives the economy, not $’s frozen in low return investments.

#131 Smoking Man on 06.07.17 at 11:37 pm

Rivet Buckers home page

https://www.youtube.com/watch?v=sHQ_aTjXObs

#132 Ignorance Is Bliss on 06.07.17 at 11:45 pm

A couple of stories.

I’m [email protected] I definitely see a lot of maxed out credit cards and HELOCs. Once everything is maxed, then the customer inquires about cashing in a mutual fund (even one with less than $1K in it) & asks, how soon can I get the money? Even had one guy who’s credit card went to collections. Shortly after, he complains that THE BANK has “ruined his credit” because his credit rating is shot.

The second story is a personal one. A relative’s husband passed away at 69 years of age. I was shocked that between the 2 of them, they had amassed $70K in debt on a HELOC in their advanced years. Lo and behold, their stupidity saved them, as the “insurance” they’d (over)paid on the HELOC completely wiped out the debt. If he’d died at 70 or older, it wouldn’t have been covered. Part II of the story is that 7 years later, in her early-70’s, she’s racked up another $75K in debt on the HELOC! She doesn’t even consider it “debt”….I caught her once saying she was debt-free, I said “what about the line of credit you have” and she said, “well, it costs almost nothing”…..

That’s the mentality, I guess.

#133 Newcomer on 06.08.17 at 12:18 am

@ #16

3/13 million households or 23%. Consider that 69% of those households are owned, the rest are renters.

So the true number of owner households with a HELOC is about 33%.
—————————-

Of the 69% of homeowners, about 45% hold no mortgage (they paid it off long ago) so 60% of people with mortgages have HELOCs.

#134 Ponzius Pilatus on 06.08.17 at 12:21 am

Great Picture.
Man and dog equal in the wilderness.
Covering each other’s back.
Not like the other pictures of toy poodles sucking up to the master.
People, animals are not toys.
All you do is feed the puppy mills.

#135 Deplorable Communications on 06.08.17 at 12:25 am

#131 Smoking Man on 06.07.17 at 11:37 pm

Rivet Buckers home page

https://www.youtube.com/watch?v=sHQ_aTjXObs
..
I thought you were in charge of engineering development…….

#136 SWL1976 on 06.08.17 at 1:11 am

#68 Wild roasted nutz on 06.07.17 at 8:48 pm
#66 WUL on 06.07.17 at 8:31 pm
L’huile de Alberta est kaplooey. $45.XX. And Shell has abandoned the oil sands and will invest more in renewables. Time for the rest of us to get with the program perhaps.

Zut alors!

.
AB’s budget hasn’t been balanced in 10 years. Even with $100/bbl they were dipping into the contingency fund for 4-5billion/yr. Now we are totally hooped with 10-12 billion deficits for years. Hey want to buy my house?

———-

I made hay when the sun was shinning their, but I also know lots of people will be in deep on the housing situation, that makes me sad for them. Little do many know that the system has not got their back… Nothing could be further from the truth… For the truth is a long sad answer that’s about to smack many people right in the face

#137 akashic record on 06.08.17 at 1:14 am

#231 n1tro on 06.07.17 at 4:33 pm
@Long-Time Lurker

Thanks for that link. That CNN shill got owned. As for climate change debate, let real scientist peer review each other and come to solutions to help the planet. No input from non-scientists required.

===

For sure.

http://www.cbc.ca/news/technology/bogus-science-paper-reveals-peer-review-s-flaws-1.2054004

“A bogus scientific paper about a new anti-cancer compound was accepted by more than half of 300 scientific journals it was submitted to in the past year, despite having obvious and serious scientific flaws.

CBC Radio’s The Current explores what that means about the peer review and science publishing system, and what the implications are for public confidence in science.”

“It could be the whole peer review system is just failing under the strain of the tens of thousands of journals that now exist.

… He added that if peer review isn’t working, then people with what amounts to fraudulent scientific credentials and publication records ‘are slowly filling university departments and government offices, making important science-based policy decisions.’ In addition, ‘terrible science’ is polluting the global pool of knowledge.”

http://www.cbc.ca/radio/thecurrent/the-current-for-may-24-2017-1.4127815/may-24-2017-full-episode-transcript-1.4130081#segment2

“.. drug companies had been trying to reproduce work that had been done in academic labs and they were having a terrible time trying to just get the same results that the academic labs had reported. One in particular was a drug company called Amgen, in which the chief scientist there involved in cancer research, a guy named Glenn Begley was really interested in 53 studies that he thought if these studies pan out these could be really good important leads for new drug. So he tried to reproduce those 53 studies and he discovered that only six of them could work. In fact, even when he enlisted the help of some of the scientists who did the original studies. So that’s 11 percent.”

#138 Rocky Mountain on 06.08.17 at 1:16 am

I find it puzzling that HELOC actually went down after 2012. Between 2012 and 2016 only 40 billion borrowed against HELOC. Which works out to be 10 billion per year. Compare that to 2000-2012 and 151 Billion were borrowed which works out to be 12.5 Billion per year.
Why this slowdown after 2012? Real state jumped significantly after 2014 summer. Detached home prices doubled in Vancouver between 2013-2016.
If this is all domestic speculation then where did this money come from? Is there any other financial instrument people can borrow to speculate that I am not seeing?
I was expecting HELOC would have accelerated after 2013.

#139 Dan.t on 06.08.17 at 1:26 am

Debt pigs. You see it everywhere.

What a lovely cycle this has been. And make no mistake, it is ending.

Funny thing is, Canadian real estate would have done well even if government didn’t pimp, push, and give massive incentives for every Canadian to gorge on it.

Canadians took it to extremes and now with housing at nosebleed levels and bubble territory and massive debt in the system, things should get interesting. Bailout coming. Just wait. Why didn’t you dumb savers and renters follow the herd?

It is a good thing that Canadian Real Estate never goes down and only ever ever ever rises indefinitely because leveraging an investment is awesome when prices only ever go up, but buy and investment on margin that goes the other way and you better have a good exit plan or it can wipe you out.

But that is not the case in Canada, townhouses double every couple years, and 400k 1 bedroom apartments, rise 20% a year and soon cost 750k-800k, and the average detached house in Burnaby or Surrey will soon cost 8 million, it’s just what happens in Canada, prices only ever go up and then up some more.

Don’t you know Garth, what the thinking is, it’s “debt is how you get rich”. Take on as much debt as you can get, borrow from Bank of Mom, use credit cards, buy real estate and get rich. Debt is money and the only way you can get rich.

The more debt you have, the richer you are, because you can buy more real estate with it. And once you have your house bought with 5% down, you can take out a home line of credit and use debt to buy a new 45,000k+ SUV and other fun toys you never would be able to afford based just on average income.

So essential debt is the only way to really enjoy life anymore, because saving for things sucks.

It is really a simple strategy. Houses only ever go up so the more leverage you can use, the better, I mean, richer you are. Ask one of the banks, everyone is “richer than they think”, just keep borrowing.

Prices make very little sense now, only because of massive amounts of debt is still being flogged by banks and the credit taps are still flowing, and the cost is well, still basically free money.

I have been baffled by this for years, but to me it seems like the whole economic text book has been rewritten when it comes to Canadian thinking.

Debt is your only way to financial freedom and a good life. The more debt the more stuff you can buy (as long as it is real estate) and the more debt the better you look to your neighbours and peers, that is important too (gotta keep up with the Jones), massive amount of debt is somehow a good thing.

I guess I’ll just keep watching and see how that works out.

#140 DON on 06.08.17 at 1:48 am

#127 conan on 06.07.17 at 11:25 pm

Middle East going to pieces. Iran now accusing SA of masterminding a terror attack. An attack , that opened a lot of eyes, around the World. Qatar is now WTF status.

This is all happening, very soon, after Donald’s Saudi Arabian orb grabbing extravaganza. Coincidence?

No idea on the British election, maybe the Conservatives lose a few seats?
**************
Big story a couple of days ago – In one of May’s former job roles she was responsible for slashing 20,000 police officers. In light of the recent terrorists attacks this has become a liability for Theresa May. Was 17 points ahead and down to one two days before the election.

Definitely closer than she thought it would be.

#141 Dan.t on 06.08.17 at 2:01 am

This article makes me want to puke but it is exactly what is in the works….bail out.

http://www.macleans.ca/economy/economicanalysis/why-ottawa-should-bail-out-homebuyers-if-house-prices-tank/

That is how bad it is, we have now negative news and rising listings and some price drops and already calls for government to bail out owners. I mean there is hardly a crash going on, but even a hint at a down turn and look what gets printed in the “news”.

What about the savers who got screwed the last 15 years or the renters who get screwed with rent increases and evictions so greedy speculators can flip condos? They don’t matter, just home owners who did exactly what the government wanted them to do, buy at any price.

I can see it now, nice family of 4 on the front page “Sun” or “Province” newspaper, crying about how the bank said we could afford it and prices only ever go up and now, we are underwater and boo hoo boo hoo, looking for sympathy, and ” we never thought our place would be worth less”, I mean, “real estate only ever goes up”. Yes, we deserve a bail out because….fill in the blanks.

It’s coming.

#142 Joe2.0 on 06.08.17 at 2:17 am

Que the helicopter.
A continuation of devaluing physical cash.
Ever heard of Pierre Trudeau?
The apple doesn’t fall far from the tree.

#143 tim shackle on 06.08.17 at 5:54 am

Mortgage rates at alternative lenders inch higher since Home Capital crisis

http://www.cbc.ca/news/business/alternative-subprime-mortgages-1.4150023

#144 unbalanced on 06.08.17 at 6:04 am

Look. The banks are in business to make money. Why would they call you on your HELOC? You make the payments thats all it is. They don’t want your house. What are they going to do with all these houses. Even during the 1950’s or 60’s you had a 4% mortgage. Banks made money. Scare tactics that all it is. Live within your means.If you like paying interest on all your toys go ahead. Nothing to read here, MOVE ON !

#145 Freedom First on 06.08.17 at 6:20 am

#70 Susanna.

You reminded me of a couple of Freedom First women I have known. 1 in particular. Got to know her recently. We really hit it off. Spent quite a bit of time together for a couple of months.

We had no physical intimacy in that time, and she ended up telling me I was too old for her, being 12 years older, but that she loved me as a friend. I said fair enough, saw her a couple of more times, and then had to let her know I was too emotionally and physically attracted to her to just hang out and that she needed someone else.

Sadly, her lifestyle was very similar to mine, as she would like a boyfriend, but had no intention of ever living with anyone.

Now, after not seeing or hearing from me for a few weeks, she is phoning me, messaging me she loves me, misses me, and that age doesn’t matter. No reply from me.

Now, I was never friend zoned before in my life. Found it disrespectful. Her loss. It’s how I roll. The end.

Freedom First
Master of Freedomonics.

#146 Spending cutting on 06.08.17 at 6:22 am

People in the GTA stopped taking Uber. I wonder why. At the same time 20000 real estate agents are getting ready to become Uber drivers. It is going to be so much fun!

#147 Freedom First on 06.08.17 at 6:41 am

#113 Smoking Man

Smoke, you got steel balls to short the big 5.

Me. I’m waiting for the sale on Preferred’s.

#148 maxx on 06.08.17 at 6:58 am

#20 FOUR FINGERS WATSON on 06.07.17 at 7:25 pm

“You see ? That is why the governments will do everything in their power to keep the bubble from bursting. They just wanna hit the pause button for a while.”

You mean, like a “payment vacation” on a credit card, or that gubbmint will always and forever have borrowers backs?
Gubbmint can try to hit the pause button for as long as it wants but its “powers” will never go as far as repaying stupid consumer debt and that debt will ALWAYS be repaid.
The debt bubble, or any other bubble for that matter, rarely bursts in one big conflagration, but rather in a series of individual fires that eventually turn into one. I see a lot, a seriously large number of individual, very nasty mini-bubbles that will start the process.
Cracks in a structure don’t often make a lot of noise until it’s too late.
Debtors could take a very valuable lesson from today’s post and get rid of consumer debt pronto.

#149 Trumpocalypse2017 on 06.08.17 at 7:06 am

THIS IS IT!!!!

D-Week is here, and TODAY the implosion of the western world is upon us.

UK will tip over into chaos.

Comey will devastate Trump.

By this evening, Trump will have retreated into his bunker. He will be seeking global military distraction by the weekend. Maybe today.

Stay in touch with family hourly today. Be prepared to take your kids out of school early today and tomorrow.

Prepare.

#150 Victor V on 06.08.17 at 7:20 am

Australians Have So Much Debt They’re Becoming Afraid to Spend: Big personal debts and spending worries are a gathering storm over Australia’s economy

https://www.wsj.com/articles/australians-have-so-much-debt-theyre-becoming-afraid-to-spend-1496827275?mod=e2fb

#151 maxx on 06.08.17 at 7:22 am

#31 I thinks I know something on 06.07.17 at 7:33 pm

“Nothing will blow up for a long time. The politicos will not let the banks suffer. Bailouts galore resulting in more debt for the nation. But hey, nothing really matters anymore and nobody cares anyway.”

In the realm of money lending, you can bet the house on the fact that everything matters to lenders and that the only one who (stupidly) might not care is the borrower.
No one and nothing will repay anyone’s loans. Banks and creditors WILL come after all borrowers. Directly or by way of a collection entity.
Daddy gubbmint won’t “protect” idiots who garrote themselves with debt.
Banks and creditors monitor the health of loan portfolios by the second and make provisions for loan losses.
Rates ought to have gone up a long time ago. That way, we wouldn’t be in the dunce chair we’re in today.

#152 maxx on 06.08.17 at 7:39 am

#41 Andrew Woburn on 06.07.17 at 7:52 pm

“Could be a feeding frenzy coming for shylock second mortgage lenders.

I grew up with survivors of the Depression. They were traumatized by even the thought of debt. I suspect we will have a new generation of credit averse kids who will amplify the longer term drop in spending power that results from the housing crash.”

I hope so………there is no net benefit to continuing to spin increasing debt, not even close. Interest payments only increase – even at these moronic rates.
We need to reset the bar, and our leaders need to take a close, long and hard look at where we are, however, there is no political will to do so.
The only light coming through the cracks is with the young as their parents and gubbmint are shamefully stupid.

#153 maxx on 06.08.17 at 7:55 am

#49 JustMe on 06.07.17 at 7:59 pm

“Why Ottawa should bail out homebuyers if house prices tank

http://www.macleans.ca/economy/economicanalysis/why-ottawa-should-bail-out-homebuyers-if-house-prices-tank/

Dumbest thing I’ve ever read.

#154 crowdedelevatorfartz on 06.08.17 at 8:10 am

@#103 Chumpy Le Chump
“I can’t imagine how many people are out there living the way I used to live.”
******

Unfortunately……lots.

#155 crowdedelevatorfartz on 06.08.17 at 8:16 am

@#132 Ignorance is Bliss

Yep.
Had a friend who has ALWAYS been in way over his head.
25 years ago he declared bankruptcy for the 2nd time.
He has a credit card mailed to him within months….
Within 4 years he had 14 credit cards with a total of 48k of debt. He used money from one card get cash advances to pay the minimum balance on other cards.
He always has new, leased cars, Harleys, goes on awesome vacations, etc.
Doesnt have a pot to pee in or a window to throw it out of.
When asked about his looming retirement.
“The govt will look after me”

#156 Unbelievable idiot liberals on 06.08.17 at 8:36 am

Why dont you just let china run the country Trudeau??…. oh wait….

https://www.theglobeandmail.com/news/politics/liberals-waive-security-review-for-chinese-takeover-of-high-tech-firm/article35246673/

#157 Xbox Economist on 06.08.17 at 8:54 am

“More important, if the banks start getting nervous about declining equity and the quality of the massive loans they’ve made against it, they might start demanding some of it back.”

That’s never going to happen and you know it. The banks may call a loan here and there but there will be no mass margin calls on Helocs because of a housing downturn. Instead, the banks will wait until the loans are non-performing and then sell them to the government, who will initiate some sort of troubled asset purchase program in the name of providing liquidity in the financial markets. The banks will be paid 100 cents on the dollar for each bad loan and the future tax payers of Canada will be on the hook for the losses. Of all the similarities you relate back to the US housing crisis, why would you think the rescue would be any different?

Ah, because the feds are broke – $30 billion deficit per year. There will be no bailouts. — Garth

#158 dogbert on 06.08.17 at 9:16 am

who cares? home prices always go up

#159 Tater on 06.08.17 at 9:20 am

#99 MPAC on 06.07.17 at 10:08 pm
@#22CROSSBOARDERSHOPPER

CIBC is bar far the most liberal of the big six banks.
———————————————————————–

CIBC has perfected the art of poking themselves in the eye. With a sharp stick. With a barb on it.

#160 Susanna on 06.08.17 at 9:35 am

#144 Freedom First on 06.08.17 at 6:20 am

#70 Susanna.

You reminded me of a couple of Freedom First women I have known. 1 in particular. Got to know her recently. We really hit it off. Spent quite a bit of time together for a couple of months.

We had no physical intimacy in that time, and she ended up telling me I was too old for her, being 12 years older, but that she loved me as a friend. I said fair enough, saw her a couple of more times, and then had to let her know I was too emotionally and physically attracted to her to just hang out and that she needed someone else.

Sadly, her lifestyle was very similar to mine, as she would like a boyfriend, but had no intention of ever living with anyone.

Now, after not seeing or hearing from me for a few weeks, she is phoning me, messaging me she loves me, misses me, and that age doesn’t matter. No reply from me.

Now, I was never friend zoned before in my life. Found it disrespectful. Her loss. It’s how I roll. The end.

Freedom First
Master of Freedomonics.

————————————————————-

That’s what I love best about you Mrs. Freedom, you know how to treat the women you love right. You’re a regular Billie Jean King, if you know what I mean ;)

#161 CV5 on 06.08.17 at 10:00 am

“Wowzers Gartho that $200B works out to an average of $66k per HELOC household. Crazy. No wonder there’s so many BMWs, Mercedes and Range Rovers on the Streets of Vancouver these days.”

Oh yes…the irrational fantasy bubble money (existing only in the minds of those involved, then magically conjured into 3 dimensional reality) is more high octane
race fuel for the economy. This IS truly “money created out of thin air” in the manner so often debated.
And it is ONLY sustained by greater fools. When that supply runs out, or banks tighten credit, or govt reverts
to something closer to sanity, or any number of other factors prevail…..this Ponzi WILL collapse. And there will be losers and a long bout of dismal economic depression.

Wash rinse and repeat is how the faux debt-money scheme works. And it works the same everywere.

For the alternative I recommend a study of the “Bank of Canada Act” and the C.O.M.E.R. lawsuit. It is an eye opener.

And good luck everybody we are going to need it.

#162 IHCTD9 on 06.08.17 at 10:15 am

“…40% don’t make any [payments] until they hit the credit limit.”
_____

Insane!

#163 Deplorable space dust on 06.08.17 at 10:24 am

#158 Susanna on 06.08.17 at 9:35 am
#144 Freedom First on 06.08.17 at 6:20 am

#70 Susanna.

You reminded me of a couple of Freedom First women I have known. 1 in particular. Got to know her recently. We really hit it off. Spent quite a bit of time together for a couple of months.

We had no physical intimacy in that time, and she ended up telling me I was too old for her, being 12 years older, but that she loved me as a friend. I said fair enough, saw her a couple of more times, and then had to let her know I was too emotionally and physically attracted to her to just hang out and that she needed someone else.

Sadly, her lifestyle was very similar to mine, as she would like a boyfriend, but had no intention of ever living with anyone.

Now, after not seeing or hearing from me for a few weeks, she is phoning me, messaging me she loves me, misses me, and that age doesn’t matter. No reply from me.

Now, I was never friend zoned before in my life. Found it disrespectful. Her loss. It’s how I roll. The end.

Freedom First
Master of Freedomonics.

————————————————————-

That’s what I love best about you Mrs. Freedom, you know how to treat the women you love right. You’re a regular Billie Jean King, if you know what I mean ;)
..
Not sure where you picked up on his/Her tennis skills… but would seem a switch hitter is in the cards. … the dudette has really got the hots for SM

#164 JustAThought on 06.08.17 at 10:25 am

re: #144 ” Now, after not seeing or hearing from me for a few weeks, she is phoning me, messaging me she loves me, misses me, and that age doesn’t matter. No reply from me.Now, I was never friend zoned before in my life. Found it disrespectful. Her loss. It’s how I roll. The end.”

Being ‘friend zoned’ at least once in a lifetime helps build character. That someone finds it disrespectful might mean they have none. In my opinion this woman made the right call.

#165 JustAThought on 06.08.17 at 10:26 am

Re: my previous comment, I meant she made the right call ‘friend zoning’ and should have stuck with her original decision.

#166 n1tro on 06.08.17 at 10:49 am

Listening to Comey testimony…

Why is there so much ass kissing. Just ask the questions!

#167 RP on 06.08.17 at 11:06 am

Article is 2 days old but worth a read:

https://seekingalpha.com/article/4079012-torontos-housing-bubble-pops-the-frenzy-over

#168 Bottoms_Up on 06.08.17 at 11:07 am

#104 Centre Wing on 06.07.17 at 10:25 pm
———————————-
Seems you have a manageable debt load <3x gross income. And likely why the bank gave you the heloc.

#169 Capt. Serious on 06.08.17 at 11:10 am

#156 Xbox Economist
Of all the similarities you relate back to the US housing crisis, why would you think the rescue would be any different?

Um, because there are significant differences, most notably the much maligned and misunderstood bail-in provisions that would cannibalize equity from the bank to cover losses. In that worst case scenario you might not be too happy with the performance of your bank shares, but the taxpayer is not on the hook.
Also, the CDO market is small in Canada relative to the gong show in the US leading up to their correction.

#170 InvestorsFriend on 06.08.17 at 11:14 am

Banks Monitor and Look for bad loans

#150 maxx on 06.08.17 at 7:22 am said:

Banks and creditors WILL come after all borrowers. Directly or by way of a collection entity.

Banks and creditors monitor the health of loan portfolios by the second and make provisions for loan losses.

**********************************
I totally agree that banks will come after people who default on loans.

But I suspect they are NOT able to monitor the financial health of borrowers.

My experience is they jump on late payments (if you forget to make a payment for any reason they call you).

But if you make the payment from a line of credit nothing seems to get flagged. As an experiment, I took a cash withdrawal from a line of credit and instantly put that back into the bank machine as a payment on that same line of credit. This triggered no call from the bank.

If someone loses their job and makes all their payments on time from a line of credit for a year does the bank flag that? Any experience out there?

The line of credit could be from a different bank.

40 years ago if you lost your job the bank knew about it pretty quickly since you pretty quickly had no cash to make that car and mortgage payment. No so today.

Are the banks actually flagging it when your direct deposit pay cheque stops coming in? Any experience out there?

#171 IHCTD9 on 06.08.17 at 11:15 am

#144 Freedom First on 06.08.17 at 6:20 am
#70 Susanna.

You reminded me of a couple of Freedom First women I have known. 1 in particular. Got to know her recently. We really hit it off. Spent quite a bit of time together for a couple of months.

We had no physical intimacy in that time, and she ended up telling me I was too old for her, being 12 years older, but that she loved me as a friend. I said fair enough, saw her a couple of more times, and then had to let her know I was too emotionally and physically attracted to her to just hang out and that she needed someone else.

Sadly, her lifestyle was very similar to mine, as she would like a boyfriend, but had no intention of ever living with anyone.

Now, after not seeing or hearing from me for a few weeks, she is phoning me, messaging me she loves me, misses me, and that age doesn’t matter. No reply from me.

Now, I was never friend zoned before in my life. Found it disrespectful. Her loss. It’s how I roll. The end.

Freedom First
Master of Freedomonics.
____________________________________________

FF, if this woman makes more $ than you – take a chance. If things progress, get her to sign an ironclad prenup and let her move in. Make sure she keeps working, don’t have kids with her, all should then be well if a split takes place for whatever reason.

You could even see a Lawyer to see if there is any way to permanently separate your finances legally, even if common-law or married.

#172 Bob on 06.08.17 at 11:17 am

Garth, don’t you know by now that house price only go up in Canada? Yes Toronto is down 6%… they are just digesting the tax. It will be roaring back up in a couple months just like in Vancouver.

It only goes up in Canada. Up Up Up just like bitcoin. And if it were to ever go down for real the government is going to step in.

#173 +700% on 06.08.17 at 11:18 am

In the latest three-month period for which we have stats, mortgage debt rose 7% while lines of credit bloated by eight times.

Whoa! LOC actually grew +700% in three months?

That is an astounding number.

Or do I need to read this differently?

Typo maybe, where “times” should have been “percent” or something?

Or does “8 times” refer to 8 times 7, being 56% which is major also?

A link maybe?

In that three month period the growth was $8.5 billion, to a total of $9.5 billion. — Garth

#174 Keith in Calgary on 06.08.17 at 11:19 am

Ah, because the feds are broke – $30 billion deficit per year. There will be no bailouts. — Garth

——————–

If the politicians see a way to buy a whole lotta votes, you can rest assured they will, if they really, really need to.

That’s my two cents. In the early 80’s the PC government in Alberta instituted a mortgage interest rate subsidy program via monthly cheques for distressed homeowner who qualified.

Alberta had money. Ottawa does not. Will not happen. — Garth

#175 Chris on 06.08.17 at 11:51 am

Another way to think about it is how many of those HELOC’s are being used to buy equities or other assets. I have a decent sized HELOC and it’s used for that purpose. I tend to buy nice stable long term hold equities with that money, collect the dividends and write off the interest. So in my case, and probably many others, if I did get the call from the bank, I would be selling equities, not my house. Now if the stock market goes to zero, I’m in trouble, but so is everybody else.

#176 still learning on 06.08.17 at 12:05 pm

#158 Susanna – you’re killing me!!

Garth – wow so many angles to this play… so glad we didn’t buy.

Just talked to a friend who is mortgaged to the hilt ($3000 a month payments) along with all the other payments. Looks like a developer will be coming along to bail them out. I wonder tho when this development is going to come to a halt? Vancouver is absolutely INSANE right now with almost every block under construction. traffic is a mess and everyone’s allergies are sky high – not just from the pollen but probably all the dust and who knows what in the air.

I drove past a site yesterday that screamed ‘Vancouver’s last waterfront!’. It’s always about it being the last chance… puts that fear into folks. it’s stupid.

Other friends of mine rent a renovated but likely moldy basement for double what we pay for our 3 story walk up. However we are lucky. our place got taken over by a longstanding Vancouver prop management co and they’ve been doing all kinds of renos so we know we’re good for a while but I know a few folks now who’ve been renovicted.

Vancouver’s lost its charm for sure.

#177 People are Strange on 06.08.17 at 12:19 pm

This puppy started sputtering a month before the G-men got involved. It didn’t need any help. Sticker shock was quickly sweeping the land. Rent controls didn’t help though.
If I was thinking of buying another home in the GTA right now, I’d have someone whack me across the head.
Anyway…it appears the Specs have moved on to Montreal, and likely Quebec City. Check out New Brunswick…you can get a dozen homes in some places for the price of a Toronto WWII shack.

#178 Casey on 06.08.17 at 12:26 pm

#106 Smoking Man

You are officially my favourite… thx for bringing levity to such a dire topic of conversation.
We are part of the gen X generation, we live debt free and make a point to live below our means. I am incensed that I may have to pay (and we will in one way or another) for all those that have made monetary choices without care or thought as to what the catastrophic consequences may mean down the road!!
What can those of us like minded, responsibley fiscal Canadian citizens do to fight back??

#179 Hans on 06.08.17 at 12:32 pm

“That’s never going to happen and you know it. The banks may call a loan here and there but there will be no mass margin calls on Helocs because of a housing downturn. Instead, the banks will wait until the loans are non-performing and then sell them to the government, who will initiate some sort of troubled asset purchase program in the name of providing liquidity in the financial markets. The banks will be paid 100 cents on the dollar for each bad loan and the future tax payers of Canada will be on the hook for the losses. Of all the similarities you relate back to the US housing crisis, why would you think the rescue would be any different?

Ah, because the feds are broke – $30 billion deficit per year. There will be no bailouts. — Garth”

Just out of curiosity…..with inflation so low (at least on paper), what’s stopping the gov’t from inflating through the printing presses. If a bailout was needed….ramp up the presses and create more money until it start to show up in terms of inflation. I can’t see how banks would need bailouts with the CMHC backstopping losses…..so it would be CMHC types that would need the bailout.

#180 bdwy sktrn on 06.08.17 at 12:34 pm

1315 LAKEWOOD DRIVE, Vancouver, British Columbia V5L4M7

https://www.realtor.ca/Residential/Single-Family/18260568/1315-LAKEWOOD-DRIVE-Vancouver-British-Columbia-V5L4M7

built 1 year ago. builder built 2 side by side detached identical units

sold one, lived in one. now he’s selling his, likely a gst thing.

ask/sale price last year 1.4m
current ask 2m – he will get close to this price.

#181 For those about to flop... on 06.08.17 at 12:43 pm

#16 Warned Friends about them but… on 06.07.17 at 7:19 pm
…they never listen…RE always goes up in value they say.

From what Garth says about 416 RE, Flop on YVR RE and Ross Kay the other day on both, people are going to be in a heap of trouble financially.

//////////////////////////////

Yeah,um…… thanks for the support ,but the two dudes you grouped me in with I guess could be considered experts in their fields.

The technical term for myself is a meathead with some extra time on his hands…

M42BC

#182 For those about to flop... on 06.08.17 at 12:45 pm

#16 Warned Friends about them but… on 06.07.17 at 7:19 pm
…they never listen…RE always goes up in value they say.

From what Garth says about 416 RE, Flop on YVR RE and Ross Kay the other day on both, people are going to be in a heap of trouble financially.

//////////////////////////////

Yeah,um…… thanks for the support ,but the two dudes you grouped me in with I guess could be considered experts in their fields.

The technical term for myself is a meathead with some extra time on his hands…

M42BC

#183 Johnny Boy on 06.08.17 at 12:46 pm

#135 Deplorable Communications on 06.08.17 at 12:25 am
#131 Smoking Man on 06.07.17 at 11:37 pm
Rivet Buckers home page
https://www.youtube.com/watch?v=sHQ_aTjXObs
..
I thought you were in charge of engineering development…….
………………………………………………………………………………………………..
Now that is truly hilarious, Smoking Man in charge of engineering development. A person in charge of engineering development would have been in Aerospace engineering is an interdisciplinary branch of engineering that deals with the design, development, testing and
manufacturing of aircraft, spacecraft and missiles. Aerospace engineering provides knowledge of aerodynamics, control engineering as well as avionics. In order to do this he would have to have attended
a university and graduated with a B.Eng in Aerospace Engineering. Smoking Man does not believe in schools or education in any way shape or form.
Now ask yourself would you ever get into an aircraft that Smoking Man was in charge of. Not on your life, ever!

#184 Tweetless Trump on 06.08.17 at 12:50 pm

Donny Senior is eerily silent, but Donny Junior is tweeting up a storm!

“Lordy, I hope there are tapes!” said Comey.

#185 Damifino on 06.08.17 at 12:57 pm

The Bank of Canada released a report today. Same as previous reports. Same as future reports. Summary:

Personal debt is at unheard of, utterly madhouse levels and that is very concerning, BUT… other nebulous, poorly defined factors are moderating the risks so, on balance, we are cautiously optimistic that everything will be just hunky dory going forward.

There. I saved you some time. You may ignore any future BOC reports because they will be identical.

You’re welcome.

#186 Cto on 06.08.17 at 12:59 pm

98 I thinks I know something.

Well put, my feelings exactly.

#187 Howard on 06.08.17 at 1:06 pm

#132 Ignorance Is Bliss on 06.07.17 at 11:45 pm

The second story is a personal one. A relative’s husband passed away at 69 years of age. I was shocked that between the 2 of them, they had amassed $70K in debt on a HELOC in their advanced years. Lo and behold, their stupidity saved them, as the “insurance” they’d (over)paid on the HELOC completely wiped out the debt. If he’d died at 70 or older, it wouldn’t have been covered. Part II of the story is that 7 years later, in her early-70’s, she’s racked up another $75K in debt on the HELOC! She doesn’t even consider it “debt”….I caught her once saying she was debt-free, I said “what about the line of credit you have” and she said, “well, it costs almost nothing”…..

———————————-

Can you explain why it would not have been covered had he died at 70+? If there were paying an additional insurance fee to their interest payments why does the age of the debtor matter?

I had the same sort of thing years ago when I took out a LOC to pay for graduate school. I bought “insurance” which was tacked on to monthly interest payments. The idea was that if I died, the debt would be wiped out so my family wouldn’t be on the hook for it.

#188 Growth of Growth on 06.08.17 at 1:08 pm

Ok, I get it now.
That $9.5B figure you mentioned is the growth, not the balance.

Apparently the balance is $200B+

So sure, “8-times” (or more accurately: 9.5 times) refers to the growth of the growth.

Yeah, when talking 2nd order derivatives, you are going to see some wild swings that are not necessarily anything dramatic.

Going from 0% growth to 1% growth, would be infinitely times more growth, yet meaningless.

#189 People are Strange on 06.08.17 at 1:11 pm

From a TD economist 3 hours ago:
“This week’s Toronto Real Estate Board’s data makes official what we expected: the GTA market is following in Vancouver’s footsteps,” TD Economists Michael Dolega and Diana Petramala wrote in a recent research note. “Tighter housing policies have helped to kick-start a soft landing in the GTA housing market, while gradually rising interest rates later this year are likely to help solidify it.

#190 Howard on 06.08.17 at 1:16 pm

#154 crowdedelevatorfartz on 06.08.17 at 8:16 am
@#132 Ignorance is Bliss

Yep.
Had a friend who has ALWAYS been in way over his head.
25 years ago he declared bankruptcy for the 2nd time.
He has a credit card mailed to him within months….
Within 4 years he had 14 credit cards with a total of 48k of debt. He used money from one card get cash advances to pay the minimum balance on other cards.
He always has new, leased cars, Harleys, goes on awesome vacations, etc.
Doesnt have a pot to pee in or a window to throw it out of.
When asked about his looming retirement.
“The govt will look after me”

—————————————-

The more I look into these issues, the more I realize how utterly defective Canada is.

Take France. Bigger welfare state than Canada. Everyone is “taken care of” in their dotage. But in France there are significant restrictions on the amount of debt people can take on. Credit cards aren’t even a “thing” in France; everyone pays with a bank card.

It seems Canada adopted the worst capitalistic, keeping-up-with-the-Joneses excesses of the US, coupled with the worst taxation and Nanny Statism of Europe. Parasites like your friend love that arrangement, but productive Canadians are endlessly penalized.

#191 maxx on 06.08.17 at 1:29 pm

#69 SimplyPut7 on 06.07.17 at 8:48 pm

“Wow, that first margin call.

When debt addicts realize, their banks never cared about them as much as they thought they did. And a house can’t be worth a million dollars without someone actually having a million dollars to pay for the home.

Can you imagine how these people will feel when they realize they have to pay back all the money they spent on upgraded kitchens, bathrooms, basements, expensive vacations, syndicated mortgages and private loans, flipping houses or speculating on new developments, down payments for their broke kids or luxury vehicles; and not be able to pay off all the debt by raising the home price indefinitely and passing it on to the next fool?”

The instant I saw the first “look in your attic!! See all that money just sitting there waiting for you!” ad, I immediately knew that it was time to double down on saving.
I’ve been a super-bargain, mega-saver since I got my first job at the golden arches at 15.
I can’t emphasize enough that we live in an age of economic irony – money continues its journey to devaluation by way of ultra-low rates, it’s disrespected and spent like running water, yet never has it been so valuable due to social and economic conditions, such as dwindling jobs with decent pay and nearly nonexistent benefits.
I once told a financial planner that we save as much as we pay in total taxes and he looked as though he was going to faint.

Get out of debt and SAVE!!!!

#192 Xbox Economist on 06.08.17 at 1:35 pm

#167 Capt. Serious on 06.08.17 at 11:10 am

Um, because there are significant differences, most notably the much maligned and misunderstood bail-in provisions that would cannibalize equity from the bank to cover losses. In that worst case scenario you might not be too happy with the performance of your bank shares, but the taxpayer is not on the hook.
Also, the CDO market is small in Canada relative to the gong show in the US leading up to their correction.
_____________________________________________

So you think the BoC will just sit back in the midst of a liquidity crisis, institute bail-in provisions and allow L&D operations to grind to a halt? Canadian banks’ have a much greater reach and the BIS would never allow it. You’re being naive if you think the BoC doesn’t already have a plan ready to go should this unlikely event occur.

#193 Mattl on 06.08.17 at 2:28 pm

I get that HELOCs are cheap money but to me the whole RE play is to pay off your damn house, and a HELOC doesn’t help achieve that purpose. The real beauty in home ownership is one day never having to make payments, can’t imagine stretching that day out to buy a boat or a quad

#194 Deplorable Dude on 06.08.17 at 2:30 pm

Well think I’m full from all the nuthinburgers after Comey’s hearing.

Think McCain had a mini stroke….he’s a good argument for term limits..

So we have an FBI director politicizing his role by leaking to the Media, and refusing to publicly confirm the President was not under any investigation.

Interesting to see if the new FBI director pursues possible obstruction by the previous DOJ head Lynch.

#195 IHCTD9 on 06.08.17 at 2:55 pm

I caught her once saying she was debt-free, I said “what about the line of credit you have” and she said, “well, it costs almost nothing”…..

That’s the mentality, I guess.
______________________________

Sounds like she is into interest only payments, who cares about the principal.

My friendly neighbourhood [email protected] commented that we’d be surprised how many past 65’s are still working because they haven’t nuked the Mortgage yet. This is in a small town, and concerning folks who undoubtedly paid 20-30K for their houses back in the 70’s.

When we were paying off our mortgage, she said we were “a breath of fresh air”. Scary to hear this kind of stuff in an area where life is pretty low cost.

I guess it does explain the hoards of $75-80K pick up trucks driving around. I’ve never seen so much money cruising along the highways as I have in the last couple years. Everyone from 25-75 has a 50K+ 4×4 quad cab 10mpg monster truck.

#196 He Said, He Said on 06.08.17 at 3:08 pm

Trump’s outside counsel, Marc Kasowitz, said that Comey lied about Trump expecting loyalty from Comey.

So, deplorables, who is more likely telling the truth: Comey or Trump?

Hint: Comey kept detailed notes about their private conversations, and was testifying under oath.

#197 IHCTD9 on 06.08.17 at 3:17 pm

#190 Mattl on 06.08.17 at 2:28 pm
I get that HELOCs are cheap money but to me the whole RE play is to pay off your damn house, and a HELOC doesn’t help achieve that purpose. The real beauty in home ownership is one day never having to make payments, can’t imagine stretching that day out to buy a boat or a quad
____________________________________________

Ha, I bought my quads after the house was paid off. Great decision as it turns out. I ended up buying 3 in one calendar year. Plunking down almost 10G’s for the first one – after over a decade doing exactly the opposite was hard to do, and I think I suffered a mild case of PTSD :). The second one was much easier. The third one was actually fun.

In 3 quick purchases, I seem to have lost 15 years worth of frugality. Spending does not bother me much at all now. My attitude has completely changed.

It would have been bad news if this had happened to me 10 years ago…

#198 Smartalox on 06.08.17 at 3:19 pm

Mortgage Insurance? HELOC Insurance? Balance Insurance?

Insuring your debt with the banks that hold it is the biggest scam out there. Better to have independent life insurance policies, if you feel compelled to have life insurance.

Term life insurance may be more difficult to buy (often, you have to submit to a medical to qualify) and may be more expensive, but these are good incentives to help you limit how much debt you have to insure, and to reduce that debt, so that you (eventually) require less insurance. Also good incentive to stay healthy.

By comparison, those bank-issued ‘insurance’ policies are tailored specifically to get you to take on MORE debt, (what the hell, you’re ‘covered’ anyway!). These plans also typically add the monthly premiums to the mortgage or HELOC principle to increase the balance (and as a result) the amount of the interest payments. Most people never see it coming.

And then, of course, these policies only pay out pay out if you actually die, and only enough to cover the debt. Nothing left over after paying your debt to benefit your estate, your family, or to cover any of your funeral costs.

No payout for you if you get sick, can’t work, or lose your job, and of course, no opportunity to cash out or borrow against accrued equity in those policies if you need to, say in order to cover a margin call.

Debt insurance is one of those clever ‘products’ that bank sales people get rewarded for pushing onto their clients. It’s a debtor-paid profit centre, and a juicy one, too; just another way that bankers laugh at debt-ridden suckers… all the way to the bank.

#199 Figure it out on 06.08.17 at 3:26 pm

#189 Xbox Economist — “So you think the BoC will just sit back in the midst of a liquidity crisis, institute bail-in provisions and allow L&D operations to grind to a halt?”

Oh, the BoC would certainly provide liquidity, and banks would stay open to handle people’s day-to-day banking fees, I mean needs. But just try getting a loan from any bank in any country in the immediate aftermath of a financial crisis in that country, and you’ll be told the same thing: “Uh, we’re rebuilding our balance sheet just now. Can you come back in four years?”

The best description for central bank easing in a desperate, unsuccessful attempt to get deposit taking banks to make loans is “pushing on a string.”

#200 Smartalox on 06.08.17 at 3:28 pm

@ Deplorable Dude #191:

Re: Comey’s refusal to confirm publicly that the president was not under investigation.

Comey first said that there was no reason to charge Hillary Clinton with respect to her email server.
Then when new information came to light, he was compelled to state that publicly, and he did.

Couldn’t you imagine a similar situation if he had stated publicly that that Trump was not under investigation?

How loudly would you have HOWLED if he’d later gone public to say ‘New information has come to light, and the President is NOW the subject of an investigation’?!?

Don’t you think that it would have been better to complete the investigation, with all the facts documented, and then be able to say, on the record, ‘The President was not personally under investigation at any time.”

#201 Comey Quotes on 06.08.17 at 3:31 pm

“The nature of the person — I was honestly concerned he might lie about the nature of our meeting so I thought it important to document.”

“The administration then chose to defame me and, more importantly, the FBI by saying that the organization was in disarray, that it was poorly led, that the workforce had lost confidence in its leader. Those were lies, plain and simple.”

“I was so stunned by the conversation that I just took it in.”

“Lordy, I hope there are tapes.”

“Our judgment, as I recall, is that [Jeff Sessions] was very close to and inevitably going to recuse himself for a variety of reasons. We also were aware of facts that I can’t discuss in an open setting that would make his continued engagement in a Russia-related investigation problematic. So we were convinced — in fact, I think we’d already heard that the career people were recommending that he recuse himself, that he was not going to be in contact with Russia-related matters much longer.”

#202 Simplyput7 on 06.08.17 at 3:36 pm

#188 maxx on 06.08.17 at 1:29 pm

One time I called Canadian Tire to make a drive clean test appointment. The person on the phone was confirming my vehicle information and was looking at the age of my car on the computer and said – “that can’t be possible…. well, I guess it can”

I was shocked, the car is 10 years old, not 20. Don’t people keep vehicles to the end of its life anymore? The majority of the vehicles I see on the road are suvs and luxury sedans that are 5 years old or less. Who wants to go into debt with new car payments, just to have a shiny new toy to show off to all your friends?

There is a peace that comes with being debt free, that many people in Canada have forgotten. Until people realize they have to pay back all the “free money” they spent on their HELOC, they won’t understand how true that statement really is.

#203 n1tro on 06.08.17 at 4:07 pm

#193 He Said, He Said

Comey kept detailed notes which he showed to no one. He plays the whole situation like it is obstruction yet did nothing because he wasn’t that “strong of a man”.

As for being under oath and telling the truth, those are 2 separate things.

James Clapper was under oath too when he said there was no unauthorized mass spying of Americans.

#204 n1tro on 06.08.17 at 4:23 pm

What Trump did was to imply/influence Comey to quickly “investigate” and close off the Flynn investigation like with Hillary’s misuse of classified docs. He gave a pass for Hillary, why not Flynn?

#205 Ole Doberman P. on 06.08.17 at 4:28 pm

Looks like the housing correction is called off – HCG is coming to life – sheet!

#206 Johnny Boy on 06.08.17 at 4:28 pm

#197 Smartalox on 06.08.17 at 3:28 pm

@ Deplorable Dude #191:

Re: Comey’s refusal to confirm publicly that the president was not under investigation.

Comey first said that there was no reason to charge Hillary Clinton with respect to her email server.
Then when new information came to light, he was compelled to state that publicly, and he did.

Couldn’t you imagine a similar situation if he had stated publicly that that Trump was not under investigation?

How loudly would you have HOWLED if he’d later gone public to say ‘New information has come to light, and the President is NOW the subject of an investigation’?!?

Don’t you think that it would have been better to complete the investigation, with all the facts documented, and then be able to say, on the record, ‘The President was not personally under investigation at any time.”
……………………………………………………………..
Comey is a professional as well as a DC Lawyer. So he know his stuff quite well and can smell a rat from a mile away. Smart Lawyers are good at documenting things to protect them selves. He new that Trump was a sleazy liar and was going to throw him under the bus, being the Crazy Nut Job He was. Per Trump Verbatim “I just fired the head of the F.B.I. He was crazy, a real nut job,”
Now who is calling the kettle black?

#207 Deplorable Dude on 06.08.17 at 4:59 pm

#193 He Said, He Said “So, deplorables, who is more likely telling the truth: Comey or Trump?”
————–
Trump has the tapes…..you’d think his lawyer would have explicitly made that point otherwise?

#198 Comey Quote….”“Our judgment, as I recall, is that [Jeff Sessions] was very close to and inevitably going to recuse himself for a variety of reasons. ”

Ask yourself this…..How did Comey know Sessions was going to recluse himself….2 weeks before the event that precipitated the said reclusal occurred?

Maybe it’s because of this…….

https://theconservativetreehouse.com/2017/06/07/james-comey-timeline-on-not-informing-jeff-sessions-doesnt-add-up/

#197 Smartalox on 06.08.17 at 3:28 pm
“Couldn’t you imagine a similar situation if he had stated publicly that that Trump was not under investigation?”
—————-

HaHaHa…..as was pointed out it was about the only FACT that wasn’t leaked by Comey…..

I guess we’re back to ‘muh tax returns’ now…..

#208 Entrepreneur on 06.08.17 at 5:05 pm

#130 Blacksheap… look at the mess our country is in now because of the debt especially signing onto mortgages. Houses do not do justice for the economy in the long term, small business are the engine of an economy. Debt for small business is justifiable (and now that is hard to get because of?).

As for saying that savers are stabilizers that is like saying that they are the stupid ones for not getting into debt and the mess in are in now. Savers have a head on their shoulders and can afford to eat.

Banks should be controlled because look at the trouble the country is in.

#209 Tony on 06.08.17 at 5:31 pm

Re: #174 People are Strange on 06.08.17 at 12:19 pm

There is zero speculation in Montreal and Quebec City. The report is complete and total utter bullshit.

#210 Howard on 06.08.17 at 5:31 pm

Hung parliament in the UK. Looks like the British public don’t know what the hell they want. Last year, big surprise Brexit victory. This year, they’ve given 30+ more seats to the Official Opposition led by a hard-left whack job who hates Brexit, and hobbled the minority Conservative government from securing any sort of positive agreement.

#211 Gentle ,Loving Kindness on 06.08.17 at 5:35 pm

#92 Smoking Man on 06.07.17 at 9:51 pm

Butts has got to be shitting himself.
——————————————————————————-
Pun, Right?

#212 Mark on 06.08.17 at 5:50 pm

“As an experiment, I took a cash withdrawal from a line of credit and instantly put that back into the bank machine as a payment on that same line of credit. This triggered no call from the bank.”

Of course. And with your likely credit rating and overall relationship with the bank, it wouldn’t. Your employment profile with the bank is coded as “ENGINEER” or “CIVIL SERVANT”, which tend to be some of the most honest folks in society. So with those facts in mind, there’s likely no reason to initiate a contact with you. Might be a different story if your occupation was listed as “OIL RIG JACKSCREW” or “BRICKLAYER”.

However, make no mistake, there are likely computer programmers at the banks who are heavily into “risk analytics” who are developing code to detect that sort of activity. That of withdrawing cash, and re-depositing with identical serial numbers (which are recorded these days by the envelope-free ABM’s), or sequentially. A higher perception of risk will mean a higher interest rate. Lenders, for proprietary and competitive reasons, may not even tell you exactly why they’re quoting you a higher rate (or changing your existing rate) when you apply for or use credit.

#213 jess on 06.08.17 at 5:52 pm

Exit poll Shock as poll points to hung parliament

Live Election results: exit polls predict hung parliament

#214 };-) aka Devil's Advocate on 06.08.17 at 5:52 pm

Real estate cannot
be lost or stolen,
nor can it be carried away.
Purchased with common sense,
paid for in full,
amd managed with reasonable care,
it is about the
safest investment in the world.

Franklin d. Roosevelt

#215 Mark on 06.08.17 at 6:02 pm

“Just out of curiosity…..with inflation so low (at least on paper), what’s stopping the gov’t from inflating through the printing presses.”

They can try. The problem with such is that eventually all that newly inflated money causes interest rates to rise significantly, which in turn, makes the problem of asset deflation even worse in real estate.

The best governments can do is hope that other sectors will rise out of the ashes and create enough demand to fill in for the cratered demand due to oversupply of an asset class such as RE.

For instance, in Canada, if the TSX went to, say, 60,000 due to multiple expansion (ie: expansion to a multiple similar to that of RE), eventually people would sell their stocks and buy distressed real estate.

This is actually what happened in the GTA in the 1990s. The RE market that had collapsed in the early-mid 1990s didn’t regain vibrancy in the GTA until the folks working for BCE/Nortel and other tech companies, rich with stock option wealth and capital gains, started cashing in and buying RE.

#216 Dean Gable on 06.08.17 at 6:12 pm

Big Shift in UK Politics. Big Surprises coming to the fore!

#217 Mark on 06.08.17 at 6:14 pm

“No payout for you if you get sick, can’t work, or lose your job, and of course, no opportunity to cash out or borrow against accrued equity in those policies if you need to, say in order to cover a margin call. “

Why would there be any equity accumulated in a term life insurance policy? That’s the whole point of purchasing term life insurance; one is insuring against events that occur in the term, not trying to distort “life insurance” into some sort of savings and investment plan (usually with very high fees).

Having said that, unless the family co-signed on a loan, they are not responsible for debt in excess of the equity of a deceased. The Estate can (and would) simply go bankrupt, leaving nothing available for distribution to any named or statutory beneficiaries. Unfortunately some marketing along these lines seems to incorrectly imply that a family would bear responsibility. If there are dependents, of course, its much better to get a real (term) life insurance policy with the dependents named as the beneficiaries. In which case, money flows directly to the beneficiaries, bypassing the Estate, and any creditor claims against the Estate.

#218 Lahdeedah on 06.08.17 at 6:21 pm

That would definitely include someone I know of. His friends giggle over the fact that he tries to be such a “baller”, buying a $600K house in north west ‘sauga (which at the time, sounded like a lot of money, but now that’s a bargain), as well as him upgrading his mercedes every 3 years or so and then lumping in that auto debt into his mortgage debt…that’s really the first time I heard of such a scheme. And this guy’s an IT admin.

I grew up as a 1980 millennial who was never schooled on how to accrue debt, so I’m quite naive as to these debt strategies to “have more”. It just seems silly to me. Its not your money. You’re going to have to pay it back eventually. Having debt just makes you look more poor than you are because you’re trying soooo hard to hide your wage…so “act your wage”.

#219 jess on 06.08.17 at 6:41 pm

“More than 130 imams and Muslim religious leaders in the United Kingdom have said they will refuse to perform funeral prayers for the Manchester and London terrorists as a rebuke to the “dastardly cowardice” of the “vile murderers.”

#220 Bonhomme Carnaval on 06.08.17 at 6:48 pm

@ #205 Tony on 06.08.17 at 5:31 pm

I have to disagree Tony. It might not be at the same level as Vancouver & Toronto, but (some) foreign money has been driving the Montréal market.

I believe it’s a good thing. It keeps locals working. Construction is a big part of Québec’s economy.

Besides, most Quebecers (except French hipsters) don’t care to live in down town shoe boxes in the sky with *bleu blanc et rouge* branding…

#221 newbie dog on 06.08.17 at 8:54 pm

I have a $25k unsecured line of credit with $0 owing/used. How much does it contribute to the $2 trillion of debt Canadians owe, $25k or $0?

Zero. — Garth

#222 A Reply to #203 Deplorable Dude on 06.08.17 at 4:59 pm on 06.08.17 at 9:00 pm

“Trump has the tapes…..you’d think his lawyer would have explicitly made that point otherwise?”

Are you referring to the pee-pee tapes? Comey has testified today saying, “Lordy, I hope there are tapes [of his conversations with Trump]!”

“Ask yourself this…..How did Comey know Sessions was going to recluse himself….2 weeks before the event that precipitated the said reclusal occurred?”

Recluse? Reclusal? Did you mean to write the words “recuse” and “recusal”? To which event are you referring? The meetings between Sessions and Kislyak in 2016? Or the recusal by Sessions on Mar. 2, 2017? Comey said he knew on Feb. 14, 2017 of compromising information about Sessions that still has not been shared with the public and that once presented to Sessions would likely result in his recusal. You might want to consider reading Comey’s 7-page statement.

Comey said he met with the FBI leadership after each meeting with Trump. Are you saying that not only did Comey perjure himself but that the FBI leadership are prepared to perjure themselves?

#223 A Reply to #200 n1tro on 06.08.17 at 11:28 pm

“Comey kept detailed notes which he showed to no one.”

Comey said that after each meeting with Trump he met and discussed his concerns with the FBI leadership. I’m sure the Senate Intelligence Committee chairman, Richard Burr, will ask the FBI leadership to testify if any of the committee members doubt Comey’s veracity.

I am confident that American democracy will prevail, and truth will out.

#224 paulo on 06.09.17 at 4:19 am

#218

Ummm JFK also thought the same……..

#225 n1tro on 06.09.17 at 4:09 pm

Large sums of (smart?)money went out of big name stocks which are in a lot of people’s mutual funds and ETFs. 1 day profit taking or reversal of the Nasdaq?