The ‘free-fall’

The housing market lives on borrowed time. That’s obvious enough. What most people don’t get is a crash would be an economic and political bomb. The bank regulator’s now trying to avert this with rushed new rules. Probably too late. The changes themselves, moreover, could push this all over the edge. Hard. Are you ready?

Two days ago, as the news broke, I told you about new regs that OSFI (the agency which sets banking rules) has published and will likely soon implement. Serious stuff. Banks would have to double-check house values and borrowers’ finances before handing over money, plus HELOCs would be more expensive and less available. The obvious goals would be to end bidding wars, and slow the use of home equity for more real estate speculation.

But this is just the start. Buried in the proposed guidelines are two which have the potential to make real estate the Nortel of our times.

* No more using cash-backs for downpayments.

Banks like Scotia and TD have been handing over as much as 7% of the amount borrowers have mortgaged, in cash, even when they’re footing 95% of the value of their homes. In effect, this is no-money-down financing which in the US was called “sub-prime” lending. The kids simply take the cash and use it to close the deal, which means they borrow 100% of the purchase price. It’s how horny young couples, barely in the workforce and without any savings or investments, buy $400,000 condos.

They don’t allow this in Phoenix or Miami. And soon, not in Toronto or Calgary either.

* No more automatic mortgage renewals.

Pay attention. You need to know this. Currently once you score a mortgage, it’s just automatically renewed it at the end of each term at the prevailing rate, whatever the house happens to be worth. Nobody bugs you if it’s decreased in value, perhaps turning a conventional mortgage into a high-ratio one requiring costly insurance. Virtually everybody gets a pass. But no more.

Ottawa has a new regulation which will force the banks to re-calculate the loan-to-value (LTV) ratio every time a home loan comes up for renewal.

What does that mean? Simply, if there’s a widespread housing correction and values fall by (for example) 20%, hundreds of thousands of people who bought recently with small downpayments could be in negative equity, owing more than they own. So in order for the LTV to be restored to the ratio agreed to in the original mortgage, owners would have to cough up money to pay the bank.

For example, a $400,000 condo bought with 5% down would have a 95% LTV. If, upon renewal, three years later the unit was worth $320,000, then the maximum mortgage amount offered would be 95% of the new value, or $304,000, instead of the original $380,000. In order to renew, the owner would have to hand over $76,000, less the small amount of principal paid.

And how many first-time homeowners have seventy grand in cash to give the bank? Right. None.

The consequence: A wave of listings as jilted, disillusioned, shocked and scared owners try to get the hell out. And this surge in supply will have exactly the same effect here as it did when this happened in the US – all prices will be brought down, creating lower valuations, more negative equity and more demands for cash payments upon renewing.

Add higher interest rates to this, of course, because they’ve only one direction in which to move.

There’s more, too.  No matter how big your downpayment, you’d have to qualify to borrow using the 5-year posted rate (the highest) if you wanted a VRM.  Debt ratio calculations would be more conservative. After five years HELOCs would have to be converted into regular loans or amortized, boosting payments. Home insurance would be factored into debt service calculations, reducing borrowed amounts.

It’s all tough enough to have the mortgage industry shaking. “If the government also decrees new insured mortgage regulations, and/or rates rise significantly, and/or unemployment unexpectedly spikes, it could form the proverbial perfect storm that blows over housing valuations,” says Canadian Mortgage Trends. “It’s one thing to induce a measured housing correction (which is probably needed in some regions), but a policy-initiated free-fall is another matter.”

And this is just one shoe to drop. There’s still the chance F will murder the 30-year amortization in next week’s budget, scaling the max back to 25 years. In doing so he’ll knock out a squad of virgins and raise the monthly for virtually every new condo buyer – just as sales plunge for new units and a sea of supply hits the shore.

But wait. Why would any newbie buy now, with all this talk of a housing correction and new rules which might make renewing a mortgage impossible? How could any responsible banker or parent suggest 95% financing with such a blade dangling over their succulent young necks? Are we already in the end game?

More tomorrow.

319 comments ↓

#1 thinker on 03.21.12 at 8:09 pm

Garth – making people cough up cash at renewal is a way to develop the 10yr mortgage market today. This way, folks will have decent equity at that point and can take rate shocks for 10yrs. On the ground, the grey market 10y rate is very very close to the 5yr and brokers are getting paid fat fee’s to get people to sign up. This will be the new new thing.

A long mortgage might help shelter you from rates, but not falling equity. — Garth

#2 Nostradamus Le Mad Vlad on 03.21.12 at 8:16 pm


“Hard. Are you ready?” — Ready as we’ll ever be, ‘coz there ain’t nuttin’ we can do about external events. Just take care of and look after ourselves, that’s it. Help when and where we can.

“Are we already in the end game?” — That is correct.
*
RE How to cripple the RE dinglenutz in five easy steps; The Pound We are not amused; Iran sanctions US exempts 10 EU states plus Japan; 2:40 clip US drivers heading to Mexico for gas; The Rothschilds and the plan for America; The Dallas Fed Does this have something to do with all the banxter resignations? China Good money, great food.
*
Ron Paul “A Special Thanks to RUSSIA TODAY for reporting the truth the American media dares not touch”, and Ron Paul is respected thruout the world; Toulouse murders “In less than 24 hours the story changed from the killer is a Neo Nazi to he is a Muslim Jihadist.” wrh.com; US Most powerful laser in history, and US Defense shield doesn’t work properly; ‘Quake and Shake Time Yesterday, Mexico. Today, 6.7 by Papua, New Guinea. Tomorrow ? 1:42 clip First Amendment rights can be terminated under Obomba; Blackwater Regime change in Syria. Possibly incl. Halliburton; Ofireama “In “One Nation Under Socialism,” President Obama holds the U.S. Constitution as it burns.”; 2:52 clip m$m dying? Probably; Sellimg Ammo, but not to the public; CIA and Mossad 1. Observe and dedeuce; 2. Follow the money; 3. By way of deception, thou shalt do war; Monsanto’s GMO corn. Don’t eat!

#3 Al on 03.21.12 at 8:16 pm

Banks will fight tooth and nail against implementation of the new OFSI rules.

#4 borrowedcarbon on 03.21.12 at 8:18 pm

Why don’t Canadian banks offer 25-year fixed rate closed mortgages?

Because they can’t (and don’t want to) fund it. — Garth

#5 thinker on 03.21.12 at 8:19 pm

Agree, but you don’t have a margin call for ten years, which is what they are trying to go by using a fixed LTV. Right now, no margin call at all, so no one needs to have cash on hand. But you are right, this will change things for many if pushed over the line.

#6 Stinky the Fish on 03.21.12 at 8:20 pm

Can someone say BOOYAH!!!

#7 Just Say No on 03.21.12 at 8:21 pm

the ‘free fall’ makes me smile!!! Am I a bad person? I was happy for them when they were all smug and so all that. It is different this time…….I noticed the increased banking charges coming in June at my bank. I can not wait to start paying more…maybe gas will be up too? This is going to be a great year! Now if I can just find a job….like that is going to happen.

#8 Sm_yyc on 03.21.12 at 8:22 pm

No wonder the media is controlled by the cartel. News like this would have wreaked havoc among the public and great panic.

garth – thanks for providing this update! Keep up the good work…Cheers!

#9 TurnerNation on 03.21.12 at 8:25 pm

Toronto: all libraries are now closed due to strike. City inside workers also voted for a strike. All of this due to the mayor’s inability to handle… anything.

World class city? :-(
Tax increase this year and forever, I’m sure.

#10 Doom on 03.21.12 at 8:32 pm

For example, a $400,000 condo bought with 5% down would have a 95% LTV. If, upon renewal, three years later the unit was worth $320,000, then the maximum mortgage amount offered would be 95% of the new value, or $304,000, instead of the original $380,000. In order to renew, the owner would have to hand over $76,000, less the small amount of principal paid.
—————————————————-

Very interesting…does that mean that upon every mortgage renewal time the owner would have to re-qualify? Show proof of current income, debt load etc?

#11 Condo Sucker on 03.21.12 at 8:33 pm

HSBC Financial, the subprime lending arm of HSBC, has shut down today, putting its 800 employees out of work.

http://business.financialpost.com/2012/03/21/was-hsbc-financial-a-victim-of-tougher-banking-rules/

This is following Wells Fargo’s decision to exit the subprime lending business in Canada last year. Who’s next, Citifinancial?

Looks like the taps on easy loans to those who can barely afford them are shuttig down. Last call…

#12 smartalox on 03.21.12 at 8:36 pm

Wait… Aren’t property values re-assessed at mortgage renewals already? Isn’t this how people got these sweet HELOCs?

Of course it’s different when values are going up, instead of coming down. And you’ve got to think that the banks are going to apply all the rules to reduce the risk in their favour.

Talk about getting caught between a rock and a hard place: a hefty IRD payment to break the mortgage, or a balloon payment upon renewal. Or price to sell quickly before your mortgage re-sets, I guess.

#13 Jon on 03.21.12 at 8:36 pm

Gotta double up that wake and get everyone off that tube!

#14 A lot of "if" on 03.21.12 at 8:37 pm

I could see a few of those coming to bear but can’t see them stepping on the market like this. Does not make any sense…..for anyone.

Cheers,

But interesting!

#15 not 1st on 03.21.12 at 8:40 pm

Didn’t even know we had a bank regulator. Where has he been for the last decade?

Anyway, some of this stuff should be phased in over a couple years shouldn’t it? Ending bidding wars for spekkers is one thing, sinking people who had no choice but to stretch to get a decent home is a little harsh.

Owning a home is not a right. — Garth

#16 Ex-Ex-Pat on 03.21.12 at 8:41 pm

These look like good regulations. The timing is a bit strange. Why wouldn’t they do this 2 years ago?

#17 FI Guy on 03.21.12 at 8:45 pm

It appears that credit checks will also be required upon renewal. When a new home buyer purchases a home, credit scores are immediately lower afterwords simply due to the size of the loan. Upon renewal, this could be yet another issue. Currently, many FIs do not necessarily bother to check credit scores and income upon renewal.

#18 These pretzels are making me thirsty on 03.21.12 at 8:46 pm

All this sounds much needed and great but what is the likelihood of the government imposing all these restriction? and in what time frame ?

I will believe it when I see it

#19 TRT on 03.21.12 at 8:47 pm

Garth, your post is 10 days too early.

That is just a wish list…lip service like F and C do.

only the 25 year likely to happen. No more.

But I like how the blog dogs are gonna salivate over this….

Talk to OSFI, not me. — Garth

#20 Can it be? on 03.21.12 at 8:50 pm

So… Part excited, part nervous for some that I know…personally a quick free fall might be less painful overall IMHO since it should have happened in 2008. Patiently waiting!

#21 Can it be? on 03.21.12 at 8:52 pm

Owning a home is definitely not a right… Easy come easy go.

#22 Willy H on 03.21.12 at 8:54 pm

OSFI can always be relied upon to protect our big banks (and insurance companies) from any exposure to the housing mess they most definitely had a hand in creating. Sadly they abandoned consumers decades ago. The only consumers being protected today are the greater fools that never should have been allowed a mortgage in the first place. What about all the greater fools with just enough to make it past these new reg’s?

#23 LS in Arbutus on 03.21.12 at 8:58 pm

Just looking through Realty Link in the Cambie area of Vancouver. Not that people don’t know this, but prices are absolutely NUTS!!! While this is the west side of Van, it’s right next to the east side.

The point I am making is that prices are just CRAZY EVERYWHERE! West side, East side, Burnaby, West Vancouver, North Vancouver, Victoria, and so on.

Not inflated. NUTS!

Even with no other changes, this baby is going to blow.

#24 jimboyyc on 03.21.12 at 8:58 pm

Typical, now the horse has left the barn door and is galloping away, OFSI figures the solution is to shoot the horse.
These regulations (for the most part) should have been in force long ago for any government insured mortgage. The real estate industry has co-opted CMHC so lending standards were thrown out the door.

Currently CMHC insurance is for the life of the mortgage including renewals. Requiring requalifying if values fall would severely intensify any downturn without an offsetting benefit. If the borrower were unable to qualify then what? Very few borrowers would have the cash shortfall on hand. Forced sales would further pressure the market. Foreclosures would result in shortfalls that CMHC (the taxpayers) would have to cover.
Renewing the mortgage and allowing the borrower to continue to make payments even if there is no or negative equity would allow the borrower to stay in the home and hopefully allow time for the market to recover over the course of the renewal term.

#25 Keeping the Faith on 03.21.12 at 8:59 pm

Stevenson …. Yooo-hooo Stevenson, where are you!?!?!

“You got some xplainin to do!”

LOL… LOL…LOSWER!!!!

#26 VT on 03.21.12 at 9:02 pm

Like it or not, the “S” word is coming soon…

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

#27 A Fan in Van on 03.21.12 at 9:02 pm

All of these proposed guidelines are so reasonable and conservative that it makes me furious that they have not been in place for years. What is it with politicians, especially those a particularly extreme ideology, that they only think to shut the barn door after they’ve set fire to it and chased the horses screaming into the night?

#28 kenken on 03.21.12 at 9:03 pm

will not happen!
all talk no action – will precipitate the price fall and the govt cannot afford this – they will try to maintain the bubble inflated until point of no return – but that is not gonna happen soon enough!
only reduction to 25 yrs will happen

#29 jack_the_lad on 03.21.12 at 9:03 pm

Garth, is there any hope for the future?

Only if you’re melodramatic. — Garth

#30 Lachesis on 03.21.12 at 9:04 pm

I’m suspecting that when this passes that this would effect every loan in existence out there right now. Thus if you’re up for renewal say in Vancouver in 6 months that if prices have fallen you’re already on the hook.

#31 Across the Pond on 03.21.12 at 9:06 pm

The double checking on home values sounds like there could be the potential for appraisers to provide a valuation that the bank/broker wants to hear – as I believe happened in the States before the crash.

Will be interesting to see which of these regulations they’ll manage to push past the bank’s protests.

#32 YYC on 03.21.12 at 9:10 pm

These rules could be effective for the soft landing that the Feds are trying for. Hard decline, but spread over a few years.
Long term a lot of people would still be losing their homes. Perhaps they didn’t really deserve to own, but still harsh.

What are the odds of these proposals to become official?

#33 Junius on 03.21.12 at 9:11 pm

I set my egg-timer to see how long BOPEEP takes to come here and tell us all that everyone in Vancouver buys with cash.

#34 Keeping the Faith on 03.21.12 at 9:12 pm

For all you folks questioning why this makes sense now, pull out your history textbooks or for the young crowd wikipedia ‘majority government’ and you will quickly understand why.

The cons have run the numbers 10 ways from Sunday, they know blood… thick, dark, viscous blood will be on the RE streets during their watch, no matter what they do. Their choice is simple: ‘Now’ or ‘Later’. Knowing how memories in this country become shorter with every Kardashian twitter, the cons are hoping that they clear the board and their conscience by pulling the trigger ‘Now’. By the time the next election comes, maybe the economy/RE will be done deflating and they can claim they caused the recovery.

The alternative is to let this Twister unwind at it’s own rate, slow and painful. Either way their fingerprints are all over the crime scene beginning with the 40 year mortgage, so this is not going to end well for them unless they can get the skeletons out of the closest and sell the proverbial house.

Good luck and I have to admit, it could be deemed a very savy move, time will tell, time will tell if this will end will in the con-land.

#35 MoneyAndWealth on 03.21.12 at 9:13 pm

Garth. What probability to you put on F killing the 30 year mortgage in the budget?

Ask me next Thursday. — Garth

#36 TS on 03.21.12 at 9:19 pm

Not a fan of all these mortgage changes. When the housing market tanks, I don’t want it to be because of a change in government regulations. I would rather the natural cycle of peaks and busts play a prominent role.

Government Induced Free Fall isn’t as satisfying.

#37 edmonton mortgage broker on 03.21.12 at 9:21 pm

i can tell you that these OFSI rules have alot of mortgage brokers pooping their pants. i say bring it! it’s about freaking time.

although i personally don’t feel that taking away the cashback option will have much effect (i don’t even recall doing a cashback of any sort in at least 5 years), if certain rules are enforced in combination such as:

1.re appraising at renewal and maintaining loan to value

2.qualifying all high ratio AND conventional mortgages using the 5 yr posted

3.HELOCs having to convert from interest only after 5 yrs

then my friends, make no mistake, there will be blood on the streets.

on a related note, private lenders must be rubbing their greedy greasy hands in glee. there will be a boom in business when all these suckers have to take out a 2nd mortgage at exorbitant rates to make up the difference at renewal.

#38 Elmer on 03.21.12 at 9:21 pm

Aren’t you required to show proof that you have not borrowed your downpayment? I seem to recall hearing something about this.

Proof to whom, when the bank hands it over? — Garth

#39 Ogopogo on 03.21.12 at 9:22 pm

New survey suggests that Kelowna realtors can look forward to even more free time at the beach:

“Kelowna falls to 144th on MoneySense magazine ranking of Canadian cities.”

“It’s even ranked worst among Okanagan cities, with Vernon being 127th and Penticton 132nd.”

http://www.kelownacapnews.com/news/143699736.html

Cue smug renter sense of security, as excremental RE matter hits proverbial fan.

#40 Ogopogo on 03.21.12 at 9:24 pm

In other news, my favourite Kelowna flipper has reduced the asking price on his crack shack again, by a whopping $2K! For those of you who’ve followed this farce since I first flagged it, this dolled up shack right next to one of the most drug-infested buildings in town was initially listed at $589,500.00. A few weeks ago, our intrepid flipper lowered it to $549,500.00. And now, this. Watch the desperation begin to mount. Stay tuned…

http://www.realtor.ca/propertyDetails.aspx?propertyId=11302648&PidKey=-340530024

#41 s on 03.21.12 at 9:27 pm

I agree, I hope what Garth’s saying is true about OSFI, but I’ll believe it when I see it.

Flaherty and Carney have been sitting on the side and hasn’t dared to do anything to stop the housing bubble I doubt OSFI will do anything significant.

#42 eagle eyes on 03.21.12 at 9:29 pm

Are you saying these measures are “proposed” but not estabished?
And may not be passed? this is huge for the RE in canada if its true.
Can you please tell me where I can find the publication?

Published here several times this week. Never miss a day… — Garth

#43 dutch4505 on 03.21.12 at 9:32 pm

has anyone else noticed the rash of layoffs the past couple of weeks?

more to come with the new federal budget?

good time to buy a condo in abbotsford, bc with a 95% high ratio mortgage and a cash advance from the mastercard for the 5% downpayment. guy in the office was quite happy with this recent decision.

#44 John G. Young on 03.21.12 at 9:38 pm

Possibly dumb question:

Will/are the new OSFI retroactive, particularly with respect to HELOCs?

It’s not for me, it’s for a friend of mine…

Unlikely. — Garth

#45 the skeptic on 03.21.12 at 9:39 pm

All this cheering is great , but I don,t see anything dropping or slowing down in realestate!

#46 Narrowgate on 03.21.12 at 9:40 pm

Oh please, I can’t take it anymore, waiting for this is agonizing! Enough already! Been waiting for this correction for years and years now. Yes, priced out of the market, damn straight! I have faith in Garth and believe what he says his true because it makes the most common sense. But the waiting, oh the agony!

I think you need something other than a house. — Garth

#47 Van guy on 03.21.12 at 9:41 pm

Sweet post!!

My wife’s friend just got suckered into a presale condo completing in 2014. After telling her not to do it, ah does it. I have no sympathy for idiocy.

#48 Johnny B Good on 03.21.12 at 9:41 pm

I feel sad that residents of Toronto, who pay 40%+ of their income in taxes, have to compete with citizens from China, Iran, and Russia, who pay 0% tax “back home”.

I, too, am an immigrant, and I earn 6 figures before taxes, but I CANNOT afford to buy a condo, let alone a house. It is frustrating that the government does not charge non-residents a higher stamp duty (land transfer tax) or property taxes like Switzerland, Australia, Florida, and countless other jurisdictions do.

So-called foreign “investors” (and I use the term lightly because you would have to be a complete moron to buy real estate here right now) buy dozens of condos at a time, and put in a lot of money for those $2 million teardowns. They are crowding out the locals who live and work here.

I am seriously considering a move to the United States. At least someone with a 6 figure salary can afford to buy a house and raise a family there.

If anyone of any sort of authority reads this blog, PLEASE do something to curb rampant real estate speculation, otherwise you will kill any chance of people wanting to live, work, and start a business in Toronto.

Let’s recap: you hate foreigners because they come here and buy houses. So you’re going to emigrate to the US and buy a house. Duh. — Garth

#49 eagle eyes on 03.21.12 at 9:43 pm

Forgot to say please and thank you. I look forward to your blog and really miss it on saturdays (well deserved day off). You insightfulness and intelligence is very sexy.

#50 ANONYMOUS on 03.21.12 at 9:47 pm

If anyone wants to get an idea of where stocks (equities) will be heading in the next few weeks, take a look at these two charts:

http://www.marketmonograph.com/a/goodman/201203/14derfCeridian.gif

http://www.marketmonograph.com/a/goodman/201203/14derfRefin.gif

from both of these it looks like the American economy is NOT recovering. Along with falling volumes on the exchanges, I have a feeling that stocks will start declining really really soon, possibly tomorrow.

I don’t. — Garth

#51 earlymidlifecrisis on 03.21.12 at 9:47 pm

So is there any date set or ETA for the OSFI changes? How speculative are they? I cant see it swinging so harshly from one extreme to another. But then who’d have thunk we’d have gone from pardoned sex offenders to no pardons for anyone ever- NEVER! (F-K Steven Harper >:-/ ) (Yes i know, somewhat different but havent vented today yet)

#52 Freedom first on 03.21.12 at 9:48 pm

Most unfortunate. Canadians may discover very soon what it is like to get jackbooted. Is there still Canadians out there unaware of what is going on? I mean only those with an I. Q. over 70 of course.

#53 Back East on 03.21.12 at 9:49 pm

It’s interesting to me that the guys busy sending out warnings are exactly the same guys responsible for setting this whole thing in gear.

You want consistency in government? Are you a socialist? — Garth

#54 Johnny B Good on 03.21.12 at 9:58 pm

Garth, you missed my point. It is the NON-RESIDENTS that piss me off. The ones who buy from far away and never step foot into the country. If someone lives and works here, I couldn’t care less where they’re from. Like I said, I am am immigrant as well.

If I move to the United States and buy a house there, I would LIVE AND WORK there.

Residential real estate should not be used for speculation, it should be used for living in.

#55 Devore on 03.21.12 at 10:00 pm

Hmm, what happens when the condo presale geniuses have to complete on their contracts, but find they no longer qualify for a mortgage?

#56 Virgin Toronto Couple on 03.21.12 at 10:00 pm

Bring on the regulations and tight lending rules. I’ve been sitting on a down payment for years, visiting dirt pile after dirt pile, incredulously watching the stupid bidding wars hosted by greedy agents. Let this insanity stop.

#57 LTNS on 03.21.12 at 10:00 pm

Is OSFI independent, or does it take its marching orders for DoF &/or BoC?

Any possibility that Flaherty tightens and OSFI tightens further or would they tend to work in concert?

#58 Westernman on 03.21.12 at 10:04 pm

Freedom first @ # 52,
Are there still Canadians out there unaware of whats going on you ask… I answer yes – about 99% of them.
They are busy watching T.V., playing golf, drinking beer, scratching lotto tickets etc. etc. etc.
They don’t have the slightest inclination to educate themselves as to what is moving under the surface… it’s way too disturbing for them. They much prefer the splendid blissful comfort of ignorance…
And as far as your inquiry regarding Canadians with an I.Q. over 70… there aren’t many in this country in that group ( maybe 1 or 2 % ) so their impact is minimal… plus they are busy fleecing the other 99%.

#59 Devore on 03.21.12 at 10:06 pm

#16 not 1st

Ending bidding wars for spekkers is one thing, sinking people who had no choice but to stretch to get a decent home is a little harsh.

had no choice

Please, do elaborate.

#60 earlymidlifecrisis on 03.21.12 at 10:07 pm

@ogopogo- Notice that ‘friendly people’ arent on the list? If it were the OK would shoot up a page. Van would slide.

#61 Dean on 03.21.12 at 10:08 pm

Too little too late. As a country we’ve already shot ourselves in the face, and they’re proposing a gun safety course. Record debt and home ownership backed by government guarantee. Basically we’ve replicated what the U.S. did, but we’ve pre-bailed out the banks.

#62 truth hammer on 03.21.12 at 10:12 pm

Garth, the banks have been flaunting the Bank Act for years with the full complicity of the government which has simply looked the other way for reasons of its own…mostly political pandering…but thats another story.

The Bank Act already disallows zero equity financing…which is why they created the ‘cash back’ scam in the first place…it has been used to skirt the letter of the law and no one in the State Finance Committee ever said anything about it so the scam proliferated in ‘cash backs and HELOC’s’ being used to finance de facto technically illegal mortgage lending by any other name.

The idea that they are not going to refinance at zero equity is also already on the books…same law…same section of the law……enshrined in both the Bank Act and the Real Estate Act. I didn’t get that far in that direction as a law stuedent but I’m sure we have plenty of ruminating grist embedded in the Commercial Lending Act as well.

I don’t believe for a second there will be blood in the streets….again …for the explicit reasons of political pandering that byt the way is costing this countries tax payers their pretty panties in hidden taxeas and increasingly onerous fee’s. Look at this example of creeping socialism…..do you think we’ll see families out in the street as in the US? Don’t bet on it…..we’ll all be paying for these underwater mortgages with some new scheme to increase taxes on the savers while the stupid get off scott free.

http://www.vancouversun.com/news/City+announces+rent+bank+vulnerable+residents/6338882/story.html

In the bizarro world of Canadian politics this will actually garner votes. The sheeple won’t be happy until they’re fleeced.

#63 D from the P-town on 03.21.12 at 10:18 pm

I predict a 40% correction in the Vancouver market.

#64 DJB on 03.21.12 at 10:20 pm

Some more fodder for the cannon from this arcticle posted at mortgagebrokernews.ca. Looks like lenders are making it more difficult for people that rely on rental income with 4 or 5 houses.

http://www.mortgagebrokernews.ca/news/breaking-news/investment-lending-about-face-hurts-brokers/123567/

I know of a few people that have 5 houses in Vancouver that rely on the rental income, when it comes time to renew the terms won’t be so favorable, crunching their cash flow.

#65 JB on 03.21.12 at 10:24 pm

Garth I once read that more than half of the new mortgages in the first half of 2008 were 40 year amortizations.. Any truth to this?

If F kills the 30, you know what happens to those in 2013 when they renew with 10 years less to play with… Ouch. For that reason alone I think F won’t do it. As much as I’d like to see it, it won’t happen.

#66 noodles 79 on 03.21.12 at 10:28 pm

Yesterday.Flyers to encourage continuous buying.Today. New ligislation to slow things down.Yes, we are screwed, when we have people driving who dont know which way to go.

#67 Devore on 03.21.12 at 10:29 pm

Draft OSFI recommendations: http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/guidelines/sound/guidelines/b20_dft_e.pdf

They’re recommendations. Some of them are bound to make it into law. I do not think it is entirely coincidental this document was released just days before the federal budget.

#68 FTP - First Time Poster on 03.21.12 at 10:31 pm

OFSI is no different than any bureaucratic establishment, they’ll do what’s best for the govt in power at the time and not rock the boat. My bet is they force the downpayment issue and 25yr issue and the rest is put on the back shelf til after the next election. Just my thoughts

#69 TurnerNation on 03.21.12 at 10:34 pm

In Soviet Russia, you finance the bank!

#70 live within your means on 03.21.12 at 10:36 pm

Haven’t read all of the comments, but it’s about time changes were made. What is highly laughable is that the vast majority of the MSM have given credit to F,C & H for gradually reducing the lengths of mtgs. & increasing down payments when in fact it was they who brought in 0/40 mtgs to begin with. Of course, few in the MSM would ever mention that in their articles.

#71 I was subprime on 03.21.12 at 10:37 pm

“* No more automatic mortgage renewals.”

Having a problem with that one, especially the need to preserve the LTV.

The purpose of the 20/25% DP is to protect the lender in case default occurred after a market drop. The purpose of the high-ratio insurance is to protect the lender from a
potential shortfall in the same circumstance. It has
existed in this manner for decades.

The bank really has no interest in owning your house. They would just rather be paid. Another blogger has already mentioned the carnage this would create even if the owners can meet their monthly payments, so I can see this guideline not being implemented.

#72 Smoking Man on 03.21.12 at 10:37 pm

Creativity, Inovation, the edge…………where does it come from.

My case a bottle and shear genus.

in a few years from now when scence cathes up to me, and discovers Universal shrinkage.

what will you all think,

If the GTA does not capitulate on RE will you all hate me for being right as always.

When my shrink has a nervous breaked down due to me f-kg with her head, will she jump.

Don’t know, what I do know is that teacher working in asia bosting about 3k a month.

You can’t save everyone

#73 Canadian Watchdog on 03.21.12 at 10:37 pm

FYI, the guidelines proposed are recommended from a consultation paper by The Financial Stability Board (FSB) PDF report here: FSB Principles for Sound Residential Mortgage Underwriting Practices http://tinyurl.com/7lvymny It’s important to note that Mark Carney was named chairman of the FSB on Nov 2011, one month after this report was published.

Regarding OSFI regulations (or deregulation), let’s not forget who allowed our banks to lend high LTVs in the first place, coincidentally, right before the 2008 crises.

Date Published:2007-06-27: http://www.osfi-bsif.gc.ca/app/DocRepository/1/eng/guidelines/capital/advisories/loan_value_e.pdf

“OSFI is prepared to allow federally regulated deposit-taking institutions to increase the qualifying LTV threshold from seventy five percent to eighty percent upon the coming into force of the amended statutory requirements.”

And like every regulator who was sleeping at the wheel and in bed with the banks, they propose ‘guidelines’ not ‘rules’ after the damage has been done.

#74 Hardassi on 03.21.12 at 10:43 pm

We have a government, led by a ‘practicing economist*’, which has had 6 years to manage a soft landing yet dithered instead, letting this gather speed until it will take us over the cliff. This will not end well for anybody.
* ‘practicing’ but never held a job as an economist.

#75 GeneticistX on 03.21.12 at 10:44 pm

I liked today’s blog, but this one made me think even more:
1. I still believe this is the high price of houses is the free market at work (however short sighted). The bank sent an “appraiser” over this past week. What can the appraiser say??? The house is worth what someone will pay for it. That’s the value.

2. I think it is responsible banking and the appropriate approach to convert HELOCs into interest + principle after a specific period of time. It just makes sense. I know friends without mortgages, just with a HELOC on their house.

3. I too thought that already rules existed one had to prove that a down payment wouldn’t generate more debt or come from a LOC or otherwise, and a letter had to be provided by parents, etc. if money was being given as a gift.

Oh lord, it’s a comin’

#76 Tim on 03.21.12 at 10:44 pm

It’s about time. These realtors and mortgage brokers don’t know how lucky they have been to do so well from jobs that take much less than a year of training and only basic math skills.

#77 Big Al New on 03.21.12 at 10:46 pm

Who gives a rats ass what the LTV is if the individual is able to service the loan. That’s a non starter and one that will get squashed like a bug. The last thing the Conservatives need right now is anything that will upset this fragile anemic recovery.Any implementation of stringent conditions will only serve to accelerate any downturn.That may give wood to some regulars on this blog, but makes no economic sense. The most you’ll see is some sort of Heloc changes minor tweeking of qualifying criteria and a possible killing of the 30 year. The Cons and F aren’t in power because of the hard choices they made as government and at this fragile economic time their not about to.

#78 dosouth on 03.21.12 at 10:47 pm

Unfortunately even bloggers that tell the truth are now running scared due to threats….reading his blog gives me more understanding of what you are up against Garth.

He is now closing his blog due to threats…..

http://albertabubbleblog.blogspot.ca/

#79 45north on 03.21.12 at 10:50 pm

jimboyyc: These regulations (for the most part) should have been in force long ago for any government insured mortgage.

there is no should have

edmonton mortgage broker: if certain rules are enforced in combination, then my friends, make no mistake, there will be blood on the streets.

suppose you live in Brampton, half the street put down 5% and the other half put down 10%, all on $400,000 houses – so you would figure that it should be pretty easy to organize opposition to these rules. Except that you would have to identify yourself as an underwater borrower.

#80 sid on 03.21.12 at 10:54 pm

I remember buying my first home 10 years ago. I put 10% down and the bank demanded proof that the money was not borrowed. I had to provide statements from 6 months prior showing where the money came from. I also required copies of my tax returns and a letter from my boss saying my job was not temporary. All this caution for a 150K mortgage. Amazing how much can change in 10 years!

#81 T.O. Bubble Boy on 03.21.12 at 10:58 pm

Didn’t OSFI also want significant reforms at CMHC? Did those ever get implemented?

These proposed changes are all very sensible, and should be implemented, but many of these policies dissapear into oblivion or have target dates 5+ years in the future.

#82 Deano on 03.21.12 at 10:58 pm

Oh Garth, you don’t have to be a socialist to want consistency in gov…try fascists. They’re everywhere and they love consistency…of a certain type.

#83 vatoDETH on 03.21.12 at 11:08 pm

The 4 Horsemen of the Mortgage-ocalypse are coming for you!

#84 Junius on 03.21.12 at 11:11 pm

DELETED

#85 Cash is King on 03.21.12 at 11:15 pm

Here is what I do not understand. Why would Harper & company want this to be enforced. If loans must be LTV’d at every renewal, the formerly house horny will be screwed, economy will slow, unemployment rise.

Come election time, Harper’s out, Pierre’s son is in as the former home owners will see red and vote red.

Just does not make any sense.

#86 NYCer on 03.21.12 at 11:16 pm

#37 TS on 03.21.12 at 9:19 pm

Actually for me, it’s equally satisfying considering how many home-“owners” claim that the government would never let the housing market tank.

#87 ozy - Lawyers are salivating on 03.21.12 at 11:19 pm

Lawyers are salivating because the guys with 40years 0 downpayment mortgage will be looking to S-U-E net year when renewal from 2007-2008 hits
Garth, who can they sue you think: RE Agent, Mortgage Broker, The Bank, CMHC, Government, Harpes, Flathetyy?

#88 Math is Fun on 03.21.12 at 11:24 pm

Epic.

#89 Mr Buyer on 03.21.12 at 11:34 pm

“It’s one thing to induce a measured housing correction (which is probably needed in some regions), but a policy-initiated free-fall is another matter.”
……………………………………………………………………..
So can I assume in this person’s estimation a policy initiated bubble is perfectly acceptable (a bubble could be considered to be the inverse if not the exact opposite of a free fall). BUYER BEWARE. NOW IS NOT THE TIME TO BUY A HOUSE. SALES ARE FALLING ACROSS CANADA.

#90 phil on 03.21.12 at 11:35 pm

You people act as if the Canadian buyer has anything to do with the real estate market. It is all set by the HAM, in Vancouver at least. If you dont understand this you will be reading this blog in 3 years still thinking it will collapse tomorrow. Hint: It doesnt collapse.

#91 Chris on 03.21.12 at 11:40 pm

DELETED

#92 D-Dawg on 03.21.12 at 11:40 pm

No chance that rules are set that would require somebody, whose mortage is in good standing, to “hand over $76,000” upon a re-up on thier mortgage.

‘Cman Garth. Even you don’t believe that. You just burn your street ‘cred when you write stuff such as this.

Sad face :-(

Do you know what LTV is? — Garth

#93 Guy_in_Regina on 03.21.12 at 11:41 pm

#40 Ogo – wow! Kelowna at 144. Regina came in at number 5. I feel oddly proud…

#94 Mr Buyer on 03.21.12 at 11:46 pm

I read somewhere that one of America’s founding fathers estimated that it will take a democracy about 200 years to figure out that they can pass whatever laws they want and have pretty much any style of life they wish. I think it was a warning to the power brokers at the time that they can have their way for the next two centuries but the great unwashed will awaken to the power they have and work together to provide a reasonable lifestyle for one and all. It seems democracy and socialism are not in fact opponents but synergystic in nature. Look at what government and a few simple policies did to our homes. Next it is our health care. The vast majority of voters have not benefitted to any degree that supports this bubble politicaly. The great unwashed must simply vote for those people promising and delivering a better life for them directly (not pie in the sky financial organisms spotting trickle down type nonsense). The financial class are not as all powerful as we or they themselves believe. One election can change everything.

#95 D from the P-town on 03.21.12 at 11:47 pm

Not sure if this has been posted before?

http://www.youtube.com/watch?v=DreC3IeHPk4&list=HL1331151887&feature=mh_lolz

#96 The Thing in the Basement on 03.21.12 at 11:55 pm

57 Devore – this issue arose awhile back when the completed units were appraised lower than at pre-sale.

I googled

“condo presale failure to obtain financing”

and got this “inter alia”

http://www.bcrelinks.com/articles/tide-may-be-turning-on-pre-sale-litigation.htm

#97 Keith on 03.21.12 at 11:57 pm

I can understand and support an income requalification. But this is simply irresponsible. The OSFI rules seem designed to engineer a crash. It would force homeowners who have no intention to move and whose only crime is holding negative equity to fork over tons of cash (cause everybody keeps thousands in cash lying around) or lose their homes. What purpose does this policy suit?

On the other hand, I’ve never understood how banks don’t ask for new income statements at times of renewal. Or review credit history, etc.

But forcing people to maintain a contracted loan-to-value ratio or realize paper losses? Wow.

#98 Mr Buyer on 03.21.12 at 11:58 pm

As for some sort of housing (apartment rentals and up) is in fact a prerequisite to life in this country along with food, clothing and medical care. A fast exit from these areas by profit taking entities would go a long way towards improving the quality of life for the greatest number of Canadians. There should be something for the layabouts that believe they are entitled to a livelyhood above and beyond their own resources based upon the fact they have amassed money. I am thinking the luxury sectors of our economy would be a nice place to ship them all (many things are not in fact luxuries in a technologically advanced society so that would limit the sector to high end cars properties and the like, in short they can get by gouging other layabouts like themselves and leave the great unwashed to the business of making Canada strong).

#99 foolish buyer on 03.21.12 at 11:59 pm

While I rent and bought REITs, good divident stocks and the income can cover almost of monthly rent, why I should buy a stupiiid house and slave myself to the bankers? Am i stupiiid? of course not.

#100 timbot on 03.21.12 at 11:59 pm

GAS PRICE FIXING
http://www.cbc.ca/m/touch/business/story/2012/03/21/ottawa-brockville-kingston-gas-fixing.html

#101 John on 03.22.12 at 12:01 am

No automatic renewal? so what you are saying is the gov’t will force CMHC to take an immediate loss even if the homeowner can still make the mortgage payments, that doesn’t even make sense,

#102 mikling on 03.22.12 at 12:03 am

What if the owner fails to requalify? and can’t get a mortgage? What happens? Power of sale by the bank? or does CMHC step in? Then we all pay??????

#103 Van guy on 03.22.12 at 12:04 am

#57 Devore on 03.21.12 at 10:00 pm

Hmm, what happens when the condo presale geniuses have to complete on their contracts, but find they no longer qualify for a mortgage?
___________________________

Look back at 2008-2009. People that bought presales ended up walking. This will happen again and mortgage qualification will not be the issue. It will get ugly and there will be lawsuits.

#104 City Slicker on 03.22.12 at 12:09 am

#54 Back East on 03.21.12 at 9:49 pm

It’s interesting to me that the guys busy sending out warnings are exactly the same guys responsible for setting this whole thing in gear.

You want consistency in government? Are you a socialist? — Garth
———————————————————
I’m telling ya it’s all controlled by the banks, including the politicians, the banks will be happy to take your home. So obvious this ploy is.

#105 GuyInBurnaby on 03.22.12 at 12:10 am

HSBC to close consumer lending business
http://www.theglobeandmail.com/globe-investor/hsbc-to-close-consumer-banking-business/article2376836/
HAM might be surprised.

#106 Mixed Bag on 03.22.12 at 12:11 am

Discussing with my mother, aunt and uncle about my younger cousin buying his condo – to be completed in 2014 – and the risk of the bubble we are in. The replies?

“He needs to learn responsibility”.
“He needs to move out on his own”.
“If not now, when?”
which devolves into accusations of a personal nature from mom when she doesn’t like my reponses.

Yes, these are the reasons to make the largest purchase of your life. He works as a security guard. I hope it works out for him.

#107 ACP on 03.22.12 at 12:14 am

Got a letter from the bank the other day, raising my interest rate on my personal LOC to 10.5%. Time to cash in my investments and pay it down. It was a nice party while it lasted. I did call a competing bank and negotiate a new LOC at a better rate to transfer to for a few months while I’m getting things in order to sell my positions. Can’t wait to call Bank #1 and tell them that because they’re such greedy SOBs they’ve lost my business and won’t be bleeding another cent of interest out of me, and while I’m at it I’ll be transferring my chequing account over to Bank #2 as well.

I find it interesting that while I was on the phone with Bank #2 getting the approval for the loan they asked if I owned my home or if we rent, because if we owned they could use the house as collateral. No, but I have substantial investments. Yeah, no, sorry, they said, we can’t use RRSPs or TFSAs as collateral. But if I’d loaded up on debt and over leveraged myself to buy a house they would happily give me what I was asking for at a great rate! Go figure.

#108 Mr Buyer on 03.22.12 at 12:18 am

We are hockey players. Not ballerinas, soccer players or whatever other game there is. We created a game and became the best in the world at it. This strategy has laterally transferable elements that can serve us well. We,the people of the second largest country on the planet with more resources per person than most (if not all) other countries will forever be punks if we continue to play against a stacked deck. The abandonment of the stealth fighter project in favour of a homegrown unmanned drone project has a much greater upside for us as a nation (we could even become world leaders heaven forbid, but we should not become arms dealers, just protectors of our nation and its resources). Jump in ahead of the curve, absorb a degree of the costs of being a first implementer by folding them in with the costs of developing the industry within our borders from the ground up. But how should I know?

#109 Alberta Ed on 03.22.12 at 12:30 am

OMG… banks… responsible? What’s next: CMHC? OMGx2!!

#110 Newbien Goat on 03.22.12 at 12:35 am

Where is Bopeep today Jason? Did the sheep get out of the basement suite after reading todays blog?

#111 deja view? on 03.22.12 at 12:38 am

RE values are insane! say Vancouver natives with memory chips intact.
Like many, I emerged from the ’80s clutching a tattered shirt. But that was different. Then it was stratospheric interest rates that shook us out of the trees. Brokers used to say we would NEVER see single digit rates ever again.
25 yrs later the playing field is global and rates are lower than ever.
With the world’s ‘richest’ all wanting a piece of Vancouver, and with Vancouver willing to sell it’s soul to the development devil, how is this going to end in a massive correction.. short of ‘the whole global economy’ doing a meltdown.

#112 Nostradamus Le Mad Vlad on 03.22.12 at 12:41 am


#71 TurnerNation — “In Soviet Russia, you finance the bank!” — Yes, Comrade Turner!

BC stands for Broke ColumbiaLandMass. Would you arrange for someone else to bail us out? We need all the help we can get!
*
UK Another chain closing? and another one; Comet; Budget time in UK, and another version; US hold on World Bank questionable; Turkey’s economic cycle has changed; Banxters Long way to go before they reach this ideal; Brussels Penny for your thoughts; Another Day, Another Prediction US Treasury bubble about to ex- / implode; GS Stocks best opportunity in a long while, but Doug Kass stocks overvalued; US$200 / brl. English crude (supplies dry up), and Long Term Rise; US exporting? “Canadian and Mexican production is soaring too, which is why Citi calls North America the new Middle East.”; Existing homes sales fall as supply increased.

China Ugly numbers; Beverly Hills has nothing on this (India); Cdn. crooks; False Optimism in Euroland; Dudes and Dudettes This Bud’s 4 U; Utility Bills (Cdn.) Saving money eight ways; College / University costs Not worth it; Don’t drink Coke, buy the stock; 2:49 clip Payday loans in UK; Saudi supply Ho hum; Goldbuggism Save the date.
*
Smoking Man You are right. Education (the curriculum) sucks; Marx, Soros and Obomba Picture Soros. the rest are all there. Soros also admires China’s political / economic base, and Obomba’s in charge; 3:37 clip Same strategy Harper uses successfully to turn the country upside down; Spat could cost UK aircraft carrier(s); US – NATO Extensive war crimes in Syria (and Libya); India Instead of going with a nuke power plant (like Iran and Pakistan are), should have investigated thorium more; Japanese forfeiting their right to live; Smashburger Not the same as Smashmouth; US Mercenaries From either Blackwater or Halliburton; Mother Earth is pissed, as Father Time has run off.

#113 Ogopogo on 03.22.12 at 12:43 am

#61 earlymidlifecrisis on 03.21.12 at 10:07 pm
@ogopogo- Notice that ‘friendly people’ arent on the list? If it were the OK would shoot up a page. Van would slide.

You’ve got a point there, earlymidlifecrisis. Say what anyone will about the OK, we are a friendly bunch all in all. Mind you, I post such a link not to gloat, as I’m a Kelownian myself, even if transplanted from Ontario. But there is a sense of superiority here that I’ve never quite have got used to, mostly from ill-travelled folks whose idea of going abroad is going to Phoenix.

My main problem with Kelowna is the fact that the average income cannot, will not, ever support present housing prices. And I talk here of current prices already de-bubbled from the high in 2008. This town needs a correction almost as badly as Bubblecouver and Bubbleronto do. I still foresee a few years of denial among the die-hard greedy before they thrown in the towel.

#114 ANONYMOUS on 03.22.12 at 12:52 am

FOR ALL MEN WITH WIVES : READ THIS AND YOU WON’T WANT TO BUY THAT HOUSE AFTER ALL !

If you are thinking of buying a house because your wife or girlfriend has been nagging you, then read this and you will think twice about doing it.

If you are being pressured to pay your hard-earned cash for some overpriced house/townhouse/condo, all for your stay-at-home sweetie, better go get your head read by a Psychologist because this is what the women REALLY ARE DOING while you are working your butt off to pay for the mortgage !

Read this :
http://tinyurl.com/8x6rnes

Its not pretty, but at least you are learning about it NOW instead of after the divorce !

#115 Mr Buyer on 03.22.12 at 12:56 am

The top 1%. That means there are by definition 99 others not benefitting to the same degree. While it can be argued the well worn divide and conquer strategy has lead to as many as 30% benefiting to a degree that they would in fact experience a decrease in quality of life if subordinates were to experience a rise in quality of life, that still leaves 60 out of a hundred that could directly benefit from a new political structure. The right person just has to say the right things at the right time. The decimation of home ownership is an opportune time to make a massive change. One party is over but a better party could start right about now. Do not worry so much about the MSM, we have witnessed first hand how easily they can be lead around. They will serve one master as readily as another. As for reprisals by the financial organisms in country and out, well their credibility is laughable at best. How anyone can accept death and suffering in the form of austerity when these massive debts are a worldwide phenomena is beyond me. Debt has become meaningless, absolutely meaningless. So simply ignore it, default, bankrupt or whatever. There is no credible rational to continue along this path of selectively ignoring abstract numbers. Rocks, sticks, stones, water, oil, energy, food, land, these are real and true assets. Every Canadian has won the lottery simply by virtue of citizenship. Troubled times are ahead and I am not talking financial instruments or fiat money collapse but rather hand to mouth eating. Just over the horizon by 3 or 4 decades awaits a historic bottleneck never to be seen again. Canada can do well or be trampled over. We have the resourses and technology to prosper. It is a choice for us while it is not for many if not most other countries.

#116 Paul on 03.22.12 at 1:01 am

At 5.30 I posted a link to todays blog. By 8.30 it was locked by the moderators due to personal attacks. I missed it all due to going out for the evening.

http://forums.castanet.net/viewtopic.php?f=23&t=38772&start=210

#117 Ex-Cowtown on 03.22.12 at 1:09 am

GT: you’ve crossed over to the dark side and become a Doomer. Normally, I think that I’m a pessimist compared to you. After reading today’s blog, I think you blew right past me.

I have a tough time believing the Feds will implement all of this, as it would be not just blood in the streets, but carnage on the whole economy.

But then again, I couldn’t believe that the Feds were stupid enough to let this RE bubble develop into what it has, so maybe it’s not much of a stretch to see if they are stupid enough to blow everything up as well.

But I agree, the memory of the average voter is measured in twitter-seconds, so they may forget about being evicted by the next election.

#118 Bill Gable on 03.22.12 at 1:17 am

This quote from Doug Casey is stark – ready?

y friend Frank Trotter, president of EverBank, was just telling me that the net worth of the median US citizen is only $6,000. That’s the median, meaning that half of the people have less than that. Most people don’t even have enough stashed away to buy the cheapest new car without going into debt. It used to be that people bought cars out of savings, with cash. Now they have to finance them over at least five years… or lease them – which means they never ever have even that trivial asset, but a liability in the form of a lease.

Yikes.

#119 Van guy on 03.22.12 at 1:19 am

Garth,

If F does can the 30 year amortization, I will send you a nice gift from the west coast ;)

#120 Dodged-A-Bullit-In-Alberta on 03.22.12 at 1:25 am

Greetings: I have spent some time reading about the history of Canada as regarding how our governments, and financial instutions have treated the general public when economic trouble hits various parts of Canada. Without reservation, I know these instutions will screw the same people they profess to serve. A bunch of lying bastards, they have been for well over a hundred and fifty years. What I find most disconcerting is that Canadians will invest, and trust their money to the same institutions/corporations whose primary goal is to max profits, no matter what the cost!!! I saw a huge billboard today in Medicine Hat that proclamed “No down payment, No Problem, 5.5 % cash back. We will approve your mortage.! This is fraud, and Ottawa does nothing!! Pricks.

#121 TRT on 03.22.12 at 2:14 am

This is for all the skilled trades people out there.

The new immigration program will allowed skilled trades people to immigrate to Canada if they have a conditional job offer with a set duration contract.

So if you are a electrician, welder, etc. Be prepared to compete with people accepting 2 year work contracts who will work for about $13-$15 dollars an hour.

It is going to happen by the end of the year. A sawmill in the fraser valley will be the first example of this..you heard it here first.

#122 Blasé on 03.22.12 at 2:31 am

Do the math smoking man. 3,000 after tax for 12 hours a week work, 3 days a week, half the year off. What’s that an hour? I think you need to go back to school if you think that’s a bad deal. Course, I don’t drink it all away or blow it on hookers.

#123 Blasé on 03.22.12 at 2:35 am

Guess we all can’t make six figures straight outta high school after selling knives door to door for a month though, eh smokey?

#124 Not Wondering Anymore on 03.22.12 at 2:36 am

25 years of interference and influence by the private financial sector has eroded and eliminated public regulation and oversight, with the specific intent to access the public pool of funds known as CMHC, thereby offsetting their own risks, while guaranteeing profits at the expense of taxpayers. This has been accomplished.

These B20 guidelines are now being proposed by OSFI in the attempt to reinstate prudent regulation and oversight and require the financial sector to once again become accountable by redirecting risk back to lenders, where it belongs.

Public input about these guidelines is being requested by OSFI. Not surprisingly, the financial sector is voicing resistance to them.

A collective response is needed.

Contact the Office of the Superintendent of Financial Institutions at:

[email protected]

to express your support that ALL of the proposed B20 measures be implemented NOW to address both this housing bubble and the financial future of the majority of Canadians.

#125 Blue Monster Lover on 03.22.12 at 3:11 am

Garth, I’m amazed at how you continue to beat and torture this dead horse endlessly and it’s still entertaining. Bravo!

These new rules are draconian, it’s like the whole thing over the last 10 years was the setup for the axe. If they actually implement these rules as you say, I will have little doubt the whole thing was intentional orchestrated. I thought they were just idiots, boy was I wrong, they’re evil.

#126 scib on 03.22.12 at 3:32 am

F should do what China did. All foreigners are limited to one unit.
China did this within the country as persons without a Shanghai or Beijing ID card are considered foreign to the area.
Real estate should not be used to hype up an economy just before an election as ours and other governments did.
Bringing back normal interest rates so we don’t rape the pensions of our elderly along with high taxation for Flipping real estate would bring back normalcy to real estate.
RE should be used to house our population.
The callous disregard to who gets screwed has me personally turned into a non supporter of our present government.

#127 Timbo on 03.22.12 at 3:37 am

http://www.marketwatch.com/story/hsbc-flash-china-march-pmi-tumbles-to-481-2012-03-21?link=MW_story_latest_news

“China manufacturing activity fell sharply in March as the rate of booking new orders fell to a four-month low at factories, leading to weaker generation of jobs”

the R word is spreading…..

http://insider.thomsonreuters.com/link.html?cn=uid391006&cid=608828&shareToken=Mzo4ODcyMWUzYS1hMjJkLTQ5Y2UtOTA1NS1lY2Q5MjRiZTQ2Nzc%3D

Interesting video on the rebound in housing prices down south. Damn false bottoms!

#128 Timbo on 03.22.12 at 3:44 am

http://www.charlierose.com/view/interview/10960

Interesting video from Charlie Rose on China’s bubble.

#129 gmc on 03.22.12 at 5:18 am

Garth I am board with what you are saying, and have been since five years ago now, so yes you are correct, but really your timing has been off by five years, cost me big time, i was a hell of a battle, i won, but I lost her all and I owe it all to her and her new one….you know what I mean, so you are not almighty, your timing sucks, could have made 100 000 if would have stayed in until now, but the misses didn’t believe you and now I am paying for ever anyways WTF.

#130 James Deen on 03.22.12 at 5:56 am

Garth, “I’m a Lover Not a Fighter” Turner, I have a few things to say before my Smoking Man joke. I love this blog. I do. And my kids love this blog too. I read it to them at bedtime. It’s alot better than those Roger Hargreaves Books (though I do like Mr Tall). However, people who post on this blog have to remember what it’s all about. It’s about Economics, Real Estate, Money and the Road Ahead! It’s not about “Hey look at me! I’m soooo smart! Look how well I’m doing!” or “Hey Ladies, look at the size of my beliefs!” If you’re going to post, remember, it’s like owning a Vespa, it’s fun to ride but it’s not a right. Also, don’t take things too personal. Like I said, this blog is like a Vespa, fun to ride, but you still look like a goof. I won’t say anything if you don’t. Finally, lets encourage more people to buy houses and take risker loans. It’s like a Vespa. You’re happy to see your friend ride one but secretly you want him to get lose control changing lanes on Spadina Ave and crash into a fruit vendor.

Now for my Smoking Man joke.

Q. How many attempts does it take for Smoking Man to change a lightbulb?

A. None. The guy lives in a cardboard box.

http://www.youtube.com/watch?v=UTdP-aeY5HE&feature=g-vrec&context=G247340bRVAAAAAAAACQ

You’re welcome, Ladies.

#131 Deb on 03.22.12 at 6:09 am

The question is, what has the OSFI been doing for the last five years while this mania and foolishness has been going on, an analysis of their belly buttons? In order to be truly effective, these guidelines should have been contemplated and implemented then rather than now.

#132 I'm stupid on 03.22.12 at 6:23 am

People are ass*****

I went to a friends house yesterday, parked my summer car on the street when I left I found a nice screw hole in my bumper. The guy parked behind me bumped my car and left. I know exactly what car it was next time I see it on the street I’m going to key the shit out of it. I’ll teach him to have respect for other peoples things.

Then respect this blog. — Garth

#133 House on 03.22.12 at 6:44 am

Royal and TD will make up lost revenue with their charges on “white tops.”

#134 Kip on 03.22.12 at 7:19 am

How can any of those new rules be seen as bad? I agree with most of your blog today except interest rates which will not rise in 2012. The rest of those rule changes are good.

Of course rates will rise. This year, next year – the precise time is irrelevant. Those who do not prepare are fools. — Garth

#135 househornyhousewife on 03.22.12 at 7:31 am

Garth,

So what you are telling us is that the government is forcing banks to remove their double standard and treat greedy twenty and thirty somethings the same way as other folks who don’t have to use the CMHC as a surrogate parent ? (used to be that you had to get a parent to co-sign a loan you couldn’t afford).

Bring it on baby !

HHHW

#136 jess on 03.22.12 at 7:33 am

renewal time – i wonder how many loans have co signers

#137 sue on 03.22.12 at 7:34 am

#7 Just Say No.
Maybe if you stopped wishing bad things for people, better things would come your way…like a job.

#138 pbrasseur on 03.22.12 at 7:41 am

I really don’t believe requalifying for CMHC coverage is going to get implemented, if only for political reasons. Plus it would only exacerbate any ongoing crisis, which would cost CMHC even more. Mind you, in the long run you never know, if things get real bad, CMHC might have no choice to pull out, as did Freddie&Fannie…

But the issue is interesting, in fact is reminds us of how much liability CMHC really represents for us taxpayers. It’s bad enough thay make credit so easy while rates are at the bottom, but they also commit for decades ahead where rates are very likely to by higher.

#139 Jim on 03.22.12 at 8:15 am

HELOC and other provisions overreach
Forcing conversion to a mortgage from a low ratio HELOC say less than 0.6, would unduly and unfairly inflate carrying costs and increase bank profits.

Low ratio HELOCs are good instuments to allow flexibility for homeowners without extra costs and constraints of fixed mortgages and should be left alone

#140 unbalanced on 03.22.12 at 8:15 am

You state ” owning a home is not a right”. Does paying your taxes count? Ask the honorable Brian Mulroney or the Bronffman family. People should practice what they preach.

They both pay taxes. You have no point. — Garth

#141 jess on 03.22.12 at 8:23 am

123 TRT
and yet MP says:

There are 1,300 skilled jobs unfilled in the Kitchener-Waterloo area alone, Albrecht said(kw record)

=======
Maybe he should list them alphabetically.

=

#142 LS on 03.22.12 at 8:23 am

Garth;

Nice post — If you purchased last year with 25% down and no CMHC. A 15% correction before renewal may put you in high ratio. Would you then be required to pay CMHC premiums as part of the renewal ????

Just wondering….

That is unclear at this time. The story is evolving. — Garth

#143 CTO on 03.22.12 at 8:36 am

Why is it the OSFI that has to act firat in a responsible way and not our Government????

#144 Aussie Roy on 03.22.12 at 8:36 am

GeneticistX on 03.21.12 at 10:44 pm

I liked today’s blog, but this one made me think even more:
1. I still believe this is the high price of houses is the free market at work (however short sighted). The bank sent an “appraiser” over this past week. What can the appraiser say??? The house is worth what someone will pay for it. That’s the value

You are confusing VALUE and PRICE.

When US houses were 40% higher than they are now clearly their price wasn’t their true value.

I blame the media for this price versus value confusion.

These two words are NOT interchangable as most people nowadays tend to use them.

Your appraiser isn’t doing a valuation if he is just using the prices that other homes in the area have sold for (i would call this a price-uation), a valuation should be calculated on the potential return (its rental income potential) not what some other fool paid for a place down the street.

You only have to look back 15 years or so to see past valuations were based on these values not just prices.

Price and Value, two completely different things.

Price is what you pay, value is what you get.

#145 fancy_pants on 03.22.12 at 8:51 am

Great info here Garth. thank you. The masses here appreciate it.

If they rubber stamp all these proposed rules, RE sales volumes will fall to a crawl.

Nudge rates up a little and the real mess begins.

If rates go up significantly it’s RE Armageddon – although won’t happen; especially if the price of oil holds or rises, which it will IMO.

#146 neo on 03.22.12 at 8:56 am

Garth was right. LTRO1 and LTRO2 aka Euro Tarp did fix everything. Oh but wait, Euro zone PMI’s are now worsening even in France and Germany now. The Eurozone will “officially” be in recession after Q1 GDP is released and will be forced to continue to lower interest rates to spur growth which will be difficult with austerity headwinds. Bond yields are even starting to creep back up in the southern PIIGS. In other words, as I’ve said. Nothing has been solved even with that $1 trillion dollars other than bailing out banks who made bad bets and had bad exposure. The REAL economy and growth were never addressed. The unsustainable debt in the E.U. was never resolved and they will be back to square one in short order with a bigger bill this time around. The global economy has major structural issues that can’t be solved by the issuance of more debt. The same way that escalating home prices cannot be made sustainable by handing over cheaper money and more leverage.

Tempus Fugit…

Europe is contained, despite a recession. There will be no global financial reckoning. Try to keep up. — Garth

#147 Kevin on 03.22.12 at 9:03 am

These are all great ideas, but unfortunately, I agree with other commenters that none of them will see the light of day. It seems more likely that these recommendations have about as much chance of being implemented as the Drummond Report.

I do not agree. OFSI does not float trial balloons, nor does it need political approval to implement regulatory changes. — Garth

#148 NoName on 03.22.12 at 9:05 am

@TRT

There is lot of trade people who will have to take paycut due to the financial missfortune, but I believe that pay is directly related to the skill. I can see problem for older trades people that didn’t keep up with technology, and newly licensed. But Those who have been working on their skills will do just fine. I can see in smaller communities being compensated on low end of pay scale but in urban centers its skill and experience what dictates wage. When you run tight margin you make sure that person working for you is good and well compensated, because trades man tend to change jobs if they are not happy.

#149 Kevin on 03.22.12 at 9:16 am

@Westernman (#59):

“There aren’t many [Canadians with an I.Q. over 70] in this country ( maybe 1 or 2 % )”

You do realize that by the very definition of “I.Q.”, the average is 100, right? Thus, it is a tautology that roughly 50% of the population has an I.Q. over 100.

#150 Kevin on 03.22.12 at 9:25 am

@JB (#67)

“more than half of the new mortgages in the first half of 2008 were 40 year amortizations. If F kills the 30, you know what happens to those in 2013 when they renew with 10 years less to play with”

If they stay with the same lender, then they keep the original 40-year amortization. Under the current rules, they’d only have to requalify if they want to switch lenders. In addition, if their LTV is such that CMHC is not required, then they could still take a 35 or 40 year amortization with the new lender.

The 30-year amortization cap only applies to new loans that require CMHC insurance.

New guidelines would require recalculation of LTV based on values at renewal. — Garth

#151 refinow on 03.22.12 at 9:38 am

Garth, I have to say you deviated a little beyond the truth this time. The full disclosure policies are not going to effect the 5% down payment borrowers who will suddly have to fork out money at renewal.

CMHC’s insurance completely covers the Bank for any future changes in the the property value.

CMHC would not want the Bank’s to start jumping up and down on a near sinking ship like that.

As long as you paid your 5% down mortgage as agreed, and the file was adminsitered properly, meaning it would pass a CMHC audit, for income confirmation and downpayment verification, the insurance remains in tack regardless of value.

You will even be able to move a negative equity deal from lender to lender at maturity.

This is verified by the fact that lenders today will switch a mortgage who’s value is greater than 85% of current value from lender to lender as long as the CMHC insurance policy number is identified.

But….. the valuations will likely kick in for all you conventional mortgages without CMHC insurance coming up for renewal, if last time you borrowed exactly 80% of the current value, and the value has reduced then it is very likely your mortgage is now considered high ratio….Hence the need to re-qualify and re-value those maturing mortgages…

Secured credit lines dont actually have a maturity date, currently… but you can bet your bottom dollar that a new….annual credit line review proceedure will quickly be introduced especially for those already at above 50% LTV… And if the value has gone done…., they will likely see if you or your proeprty still qualify to keep your line of credit, if not they will mandate the conversion of that credit line to a mortgage, and guess who will now have to pay CMHC premiums on their entire mortgage and line of credit values…

So the already high ratio borrowers will not likely have anything to worry about with this change in legislation, but all you high level conventional borrowers out there, be prepared to also have to insure your current mortgage or line of credit balances…

Perhaps you do not understand. These are proposals for change, not the status quo. — Garth

#152 Form Man on 03.22.12 at 9:50 am

#151 Kevin

straightforward math and facts are a struggle for for westernman ( giving us a clue as to his IQ )

#153 SJ on 03.22.12 at 9:54 am

If OSFI really wants to fix it, here is what they should tell the banks how to underwrite a mortgage: show me your tax return for last 3 years and the most recent biweekly pay stub, use the after tax number from the pay stub and times 1/3 then times 2 to get the monthly max mortgage pmt amount, then adjust downwards for any other debt servicing needs. End of story.

#154 Daisy Mae on 03.22.12 at 9:56 am

Al on 03.21.12 at 8:16 pm
“Banks will fight tooth and nail against implementation of the new OFSI rules.”

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

Tough. The banks will do as they’re told. And suffer the consequences…along with everyone else.

What a legacy this government leaves for Canadians.

#155 APCM on 03.22.12 at 10:05 am

#82 – I took out a $150,000 mortgage two years ago and the bank wanted to see 3 years of banking records to “prove the money had been accumulating” as well.

#156 Daisy Mae on 03.22.12 at 10:06 am

#23 WILLY H: “The only consumers being protected today are the greater fools that never should have been allowed a mortgage in the first place.”

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

So tell me again….how were these ‘greater fools’ protected?

#157 Stanley on 03.22.12 at 10:08 am

Garth,
Having read your blog for long, I agree with you that the market is over-heating. While most Canadians may not afford the houses, the rich people from China, Russia, India and Middle East are willing to spend a good sum of money buying the houses to inflate the market. Recently looking into the market in North of Toronto, the selling prices of most recent deals are all higher than the listing prices. To your surprise, the selling prices are larger than the listing prices from 6-7% to 10-15%!!!

How would you explain the behavior?

I wouldn’t blame rich foreigners. — Garth

#158 Kevin on 03.22.12 at 10:10 am

@Mr Buyer (#100):

“[Housing] is in fact a prerequisite to life in this country along with food, clothing and medical care. A fast exit from these areas by profit taking entities would go a long way towards improving the quality of life for the greatest number of Canadians”

So you would advocate running all the grocery stores out of town? After all, they “take a profit” off our food. You’d prefer a world in which we all line up outside the Department of Food every Wednesday morning to receive our weekly allowance of government-approved (no junk food) groceries?

Then we all head home to our packed-like-sardines government housing ghetto and bask in how glorious our lives are while munching our stale, flavourless granola ration for the day?

Sign me up!

#159 NCYer on 03.22.12 at 10:11 am

“After five years HELOCs would have to be converted into regular loans or amortized, boosting payments.”

Garth, can you expand on this? Do you mean if you buy a house and have a HELOCs, when it comes up for renewal, you cannot keep your HELOC and it must be paid off?

No, I was clear. After five years it would have to turn into a term loan or amortized debt, with blended payments. — Garth

#160 Syndicate Mortgage on 03.22.12 at 10:12 am

Garth,

My friend just called…crazy excited about this amazing opportunity (that he now wants to share with me)…

Wants to each put $50,000 into a “syndicate mortgage” green-lit condo development in Toronto.

12% return/year.

My buddy says we can’t lose.

Go for it. We could use the entertainment. — Garth

#161 Daisy Mae on 03.22.12 at 10:13 am

#28 A FAN IN VAN: “What is it with politicians, especially those a particularly extreme ideology, that they only think to shut the barn door after they’ve set fire to it and chased the horses screaming into the night?”

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

That’s the problem. The government DOESN’T ‘think’….about anyone but themselves.

Now they’re scrambling…

Absolutely disgusting.

#162 Reality on 03.22.12 at 10:13 am

Housing market will correct, that’s a fact, however advise about investing in stocks, bonds, gold, etc is also a bigger crap shoot, since it really is all connected on a global scale, you the investor has no control what happens with equity or debt you own in the markets, already hearing some serious negatives on the new iPad, apparemtly it heats up and becomes uncomfortable to hold? How do you think that will effect stock price if this turns out to be a serious issue? Gold is a nearly useless metal, and at current values it’s too expensive to use in the limited applications it does have, silver another dog,
Companies lie, cook data, by the time you find out, oops too late, or your financial advisor blew your investment on themsleves, or gambled it on a hot tip, just read the news about this stuff, the guy at UBS that blew $2B or Bernie Madoff, or forget his name now the guy from Quebec that stole investor money, the stock markets are severely over valued, The USA is dead meat, their housing market is dead for the next 10+ years or more, there is 5 years of foreclosures on the books, not including shadow inventory, every bank in the USA and Europe is insolvent period. Forget the stupid comments about cash losing on inflation, horse shit, at least you know what you have, and where it is. My prediction is absolute chaos is on the way and sooner than you might think, Eurozone DOA, most of the countries have no economy anymore, lining up will be Portugal, Ireland, Spain, Italy, the biggest pig of them all the USA, that has done diddly squat about the 75-100 Trillion of debt the have racked up, no-one wants those phoney IOU’s anymore, watch China will not buy USA debt like the old days, those days are gone. The USA is a phoney consumer market where 70% of GDP comes from tapped out consumers, the big fat corp profits, not from America, not in America, that money is not sitting in USA banks people, because it would than become taxable.

As I said before, there is nowhere safe for your money except in your hand.

How’s the 18th Century going for ya? — Garth

#163 Joe_Blown_Away_By_High_Housing_Costs on 03.22.12 at 10:15 am

Real estate booster article in the Vancouver Sun today. Some choice quotes:

“The Canadian housing market is off to a strong start this year, with gains in sales and prices in most major markets”

“Given the current economic climate, the strength of the country’s housing market clearly reflects the value Canadians place on home ownership”

“One driving factor has been the overall performance of the market over the past decade. Existing homeowners have realized substantial equity gains, especially in recent years, and many are taking advantage of the combination of historically low interest rates and equity to upgrade.”

“Vancouver-area sales were down 16 per cent in the early part of the year, joining Winnipeg and Kitcherner-Wateloo, Ont., as the only spots where sales were down from one year earlier, Re/Max said. Still, Vancouver had the highest average sales price of any market, at $786,695, up 0.1 per cent from last year.”

http://www.vancouversun.com/Housing+market+strong+this+year/6341819/story.html

#164 refinow on 03.22.12 at 10:23 am

Garth I actually think it is the Bank’s that wrote that policy change…

Right now the Bank’s are vulnerable to falling equity in their conventional mortgage portfolios…

There are so many changes coming down the pipe it is hard to know who wrote what and who benefits from what change…

After 3 years of lobbying about rediculous mortgage penatlies, 2 weeks ago they created a full penalty disclosure policy to appease the lobbiests..

Doesn’t change the fact that the Bank’s are maintaining an artificially high spread between posted rates and discounted rates on the 5 year term. More then 200 bps.. This is soley for the benefit of JACKING UP” the mortgage penalties for anyone taking a 5 year fixed mortgage… Explain why the the posted rate is 200 bps higher only on the 5 year term and no other.. This is for the sole purpose to create massive mortgage penalties, of the 5 digit varity on most mortgages.

But now they have to tell you that really high penalty figure once each year, and give you a 1-800 to find out the really high figure any time… Boy i would feel so much better now.

But the fact remains even if rates stay the same as soon as you sign up for a 5 year fixed, you have just commited to a penaly figure greater then RE commissions if you need to sell before maturity.

This is “THE AREA” that it is different here then in the US.. in the US…No Mortgage penalties…

And yet a massive drop in value in the US… here in Canada when those who realize that RE is now in distress, they can’t get out becasue of those mortgage penalites..

This could also be a reason why our values have not dropped yet….Clients who konow there is trouble, but when they call the bank to find out what it costs to break their mortgage now, they realize they can’t sell, so they just put their heads back in their shells and hope the bubble doesn’t burst.

I wonder how many 90- 95% financed clients fall in that catagory.. Would sell if they could but they know they can’t get out… Delays the burst don’t you think??

#165 refinow on 03.22.12 at 10:27 am

Gerth i understand that these are proposal, but many people think you have some insite, and suggesting that 5% down people will have to cover any shortfalls on up coming renewals, is poking the bear, no wait, it is covering yourself with honey, stomping on the bears foot then squeezing his nose…

We can ignore it all and wait for the rules to change, if you wish. Or we can inform people and let them make choices. What would be the more responsible course of action? — Garth

#166 Guan-Di on 03.22.12 at 10:30 am

For those of you who think Harper will try to keep the bubble going because of an election 4-5 years away, do you really think he can keep it going that long? The man is not as stupid as many think, he could very well want the collapse to happen right now, wait five years for the recovery to begin THEN call an election… Look South, the crash and recovery timing are working very well for Obama… of course having zero credible opposition in the next election isn’t rerally hurting either… regardless, Harper kept the bubble alive to GET the majority, popping it sooner rather than later is the best strategy to keeping it. If you think he cares about how many average Canadians get slaughtered in the meanwhile… you’re kidding yourself!

#167 Kilby on 03.22.12 at 10:32 am

#97 D from the P-town on 03.21.12 at 11:47 pm
Not sure if this has been posted before?

http://www.youtube.com/watch?v=DreC3IeHPk4&list=HL1331151887&feature=mh_lolz
—————————————————————-
After 25 years and two Okanagan homes I found this 10 minute video quite profound and interesting. The creator was a licensed realtor.

#168 $$$BPOE$$$ on 03.22.12 at 10:35 am

And where would the Canadians come up with the cash difference upon renewal if prices “crashed” That’s right folks, from their balanced portfolios! Luckily none of the above scenarios posted have a snowballs chance in hell of happening. Pros in the wings folks ready to buy lock stock and barrel. I encourage everyone to come down to beautiful Aberdeen Centre area in Richmond, another WINNER condo is goind up and I can guarnatee you will sell out in hours. Close to the airport, World Class setting and everyone wants a piece

#169 The American on 03.22.12 at 10:35 am

At #62: Dean, you’re partially right. Canadians have pre-bailed the banks indeed. However, Canada has not replicated what happened in the U.S. Canada has, by all measures, exceeded what ever happened in the U.S. In Canada, your household debt levels, low savings rates, housing valuations, compressed interest rate environment, the rate of subprime lending, and mortgages with zero to little money down have all exceeded what ever happened in the U.S., on a per capita basis. This is not disputable. How did this happen in such a “conservative” banking environment? Well, like I said… It was never really conservative. They were great at snowing the masses into believe such nonsense.

#170 eaglebay - Parksville on 03.22.12 at 10:36 am

#50 eagle eyes on 03.21.12 at 9:43 pm
“Forgot to say please and thank you. I look forward to your blog and really miss it on saturdays (well deserved day off). You insightfulness and intelligence is very sexy.”
__________
Brown noser.

#171 eaglebay - Parksville on 03.22.12 at 10:38 am

#51 ANONYMOUS on 03.21.12 at 9:47 pm
“from both of these it looks like the American economy is NOT recovering. Along with falling volumes on the exchanges, I have a feeling that stocks will start declining really really soon, possibly tomorrow.”
__________
Charts are the past. Like looking in the rear view mirror.
Watch and learn. Doomer.

#172 Worried mortgage brokers and realtors on 03.22.12 at 10:39 am

They both know housing in Vancouver and Toronto are in a monster of a housing bubble never seen in history and all on cheap easy sub-prime loans. Take away CHMC and prices crash 50% over night. Everyone in the industry knows it. Many realtors laugh at how easy the masses are to manipulate. No realtor would drop a penny in this market and in fact many realtors/smart money are cashing out. My buddy rents from a couple who lives in miami of all places and now wants to sell but it’s going to take a few months to get ready. Might be to late by then. Smart money wants out of this ponzi scheme .

#173 Iconoclast on 03.22.12 at 10:47 am

Re: Mulroney and Bronfmans

They both pay taxes. You have no point. — Garth

Garth, perhaps Unbalanced was referring to the sack of cash (Not from Airbus!) that the Honourable Mr. Mulroney “forgot” to pay taxes on a little while back. Good thing he remembered before he got in trouble, eh?

And the Bronfmans benefited just a little from a Martin-era tax holiday, did they not?

I’m pretty sure he, you and I would be treated just as kindly by the authorities though. Pretty sure.

Worry about your own inadequacies first. It’s healthier. — Garth

#174 Syndicate Mortgage on 03.22.12 at 10:49 am

#162 Syndicate Mortgage

“Go for it. We could use the entertainment.” — Garth

It seems like you don’t think that this is a good idea. I don’t really know what a syndicate mortgage is…but my friend forwarded me this little video that looks pretty sweet…from “fortress real capital”.

http://www.youtube.com/watch?v=BWvs6SkJA3Q

After watching this video, I can’t understand how this can possibly be a bad idea.

You’re kidding, right? — Garth

#175 Ronaldo on 03.22.12 at 10:49 am

#105 Van Guy –

”Look back at 2008-2009. People that bought presales ended up walking. This will happen again and mortgage qualification will not be the issue. It will get ugly and there will be lawsuits.”

Speaking to the daughter of a friend who bought a pre-sale in the Okanagan back in 2005 and took possession in 07 with a fixed 5 yr at around 5%. Now up for renewal and hoped to get one of those juicy low 2.99 deals. She saw the unit go up in value and back down again. She went to a mortgage broker and was told that she may not qualify for the mortgage as her earnings are actually lower than when she took the mortgage out. Back then she had a different job and making lots of o.t. which they took into account when she first qualified. Not so now. And she is one of the lucky ones as she is justly barely at break even on the price she paid. Pity those who bought later. Damage is already done. F does not need to do much more.

#176 Realistic on 03.22.12 at 10:53 am

Garth,

For your next posting…:

http://opinion.financialpost.com/2012/03/21/risks-of-cmhc-mortgage-cover/

#177 JS on 03.22.12 at 10:54 am

Just to be a stickler on your example, the principal would not be so small if you were on a 5-year fixed term at say 3.5% (which I believe the majority are). Using your figures, the principal owing at the end of a 5-year term would be $340k, so protection against a 10% fall, or a $35k cash call in the event of a 20% fall. Your point is definitely valid, but $35k (so under half a year’s pre-tax income for someone who bought this place at 5x income) is not nearly as crippling as your $76k

I really doubt that F will make this retroactive, if he institutes it at all. Perhaps new mortgages written will require this, but you’ve got to think f will not want to trigger the implications of making this retroactive.

For someone who bought with 5% equity, the difference between 76K and 35K is probably zero. — Garth

#178 refinow on 03.22.12 at 11:06 am

I find it so funny everyone commenting on perception of lending policies…

it would be like me telling my mechanic how I thought he fixed my cal last year…

There are currently 2 types of CMHC approvals,
\
Verifiable income, using paystubs and letters or 2 year average using Notice of assesments (and allow for upto a 15% gross up of line 150) if you are self employed for creative accounting.

Or stated income, for self employed with 2 years history, as long as your credit rating is high enough and you are up to date with your income tax filings and have no tax arrears.

There are a fw other small fators, if longer then 3 years self employed you have to go to genworth..

This stated income program will be gone April 2, and it needs to go.. The Schedule A Banks should never entered the “Cowboy Lending” market allowing people to fabricate income to qualify for mortgages they can’t afford.

Lending is just going back to where it was, if you need more income to qualify you go to “B” lender and pay a higher rate.

#179 Syndicate Mortgage on 03.22.12 at 11:11 am

#167 Syndicate Mortgage

“You’re kidding, right?” — Garth

What should I tell my friend, who is all over this idea? He thinks we can’t lose. How can I convince him otherwise? If I tell him, for example, that condo investments will drop…he tells me it doesn’t matter because you will always get paid back…even if the units don’t move…according to the rules of real estate.

The bank gets paid first, and if a project fails the land value will not even cover that security. ‘Syndicate mortgage’ investors are taking a 100% risk. How can you be so naive? If the developer could get traditional financing, he would. — Garth

#180 Jimmy on 03.22.12 at 11:14 am

Well look who showed up Garth!

http://toronto.ctv.ca/servlet/an/local/CTVNews/20120322/remax-survey-real-estate-spring-120322/20120322/?hub=TorontoNewHome

Like that’s a surprise. — Garth

#181 neo on 03.22.12 at 11:17 am

Europe is contained, despite a recession. There will be no global financial reckoning. Try to keep up. — Garth

Garth,

The amount of debt in the global economy cannot be serviced by the level of REAL economic activity present(ie. goods and services) even AFTER the develaging that has taken place so far because it was stalled before it reached it’s equilibrium by artificial Central Bank policies, not free market purging. It is really that simple. It is the same way the amount of household/mortgage debt cannot continue to be serviced at household present income levels. It only APPEARS so because of more debt being taken on and more leverage provided. Telling everyone Europe is contained is as erroneous as a realtor saying as long as interest rates are low and more debt logs are thrown on the fire, that house prices will continue to be higher.

Sold your gold yet? — Garth

#182 eaglebay - Parksville on 03.22.12 at 11:22 am

#116 ANONYMOUS on 03.22.12 at 12:52 am

Where’s Eagle Pass?
Sounds like a fun place.

#183 neo on 03.22.12 at 11:23 am

By the way. The 10 year US bond couldn’t even get to 2.4% before the market started turning over. Like I said, you can’t have it both ways with almost $16 trillion of debt. They have to either sacrifice the stock market or bond yields and they are trying to do neither. It’s not going to work. Try to keep up with that.

Equities will rise, bond prices will fall, yields will increase. Gold is a swamp. — Garth

#184 Ronaldo on 03.22.12 at 11:33 am

#123 TRT –

”So if you are a electrician, welder, etc. Be prepared to compete with people accepting 2 year work contracts who will work for about $13-$15 dollars an hour.”

And they will think they died and gone to heaven receiving that compared to what they earn back home.

#185 disciple on 03.22.12 at 11:33 am

#146 Aussie Roy… excellent point. The media is very skilled at mis-using the terms value and valuation (price). A higher priced home means it has less value to a buyer, even though it may have a higher valuation upon resale (from the seller’s perspective).

#166 refinow… also another excellent point, we often overlook the mortgage penalties when considering selling… among other things…

#186 JS on 03.22.12 at 11:34 am

I think it’s debateable that $35k would cause mass forced sales in the event the borrower could tap RRSPs tax-free or some other “soothing” exemptions. Also, wouldn’t the threat of losing your house possibly trigger your average worker’s ability to tap their RPP?

Not doubting the broader harsh implications that this policy would bring, especially if people are tapping in to their retirement funds to keep their houses, but I’m willing to bet that if this policy is introduced, it will be in a way that will prevent like 100s of thousands from losing their house

Ps. Sorry for posting my original comment a number of times, I seemed to be getting an error when I submitted.

People who buy with 5% down don’t have investments. Get a grip on reality. — Garth

#187 Houman on 03.22.12 at 11:36 am

We listed our house at 688k for 6 days had around 40 showings and close to 100 people over the weekend when our agent had an open house.
We ended up with 4 offers, accepted the one that had no conditions and sold for 729.
About 10 days ago a house just like mine came on the market for 680 and this one is walk out basement! It does not have the upgrades that we did but I thought at 680 compared to 729 that we sold is a steal and it will sell in a day… Well it is still on market and not moving. Here is the link
http://www.realtor.ca/propertyDetails.aspx?propertyId=11670460&PidKey=914989014

this one is the exact same house and has been on market for 70 days or so
http://www.realtor.ca/propertyDetails.aspx?propertyId=11665767&PidKey=-2114725760

Did we time it perfectly? LOL I don’t know but I see a lot of listings coming on MLS every day and it seems like the market is not as hot as it was just a few weeks ago..

What do you guys think?

Fall to your knees. — Garth

#188 interesting on 03.22.12 at 11:37 am

24 listings in my favourite pocket… a new one gets added each week :) keep them coming…. why people are getting into these bidding wars is beyond me…. what can you do other then smile… and be thankful that it’s not you that will be caught in the craziness of their future. Heard from someone else who said the condo was the worst “investment” purchase ever… probably will be a loss.

#189 Sticky on 03.22.12 at 11:39 am

#123 TRT

>>I hate that. It has been going on in the IT industry for a long time. Shame.

#190 debtified on 03.22.12 at 11:40 am

Damn H, so genius! I don’t like the guy but you gotta admit it, he’s a very shrewd politician.

Step 1: Create the problem by making it easy for house horny citizens to binge on debt (i.e. 40yr amort, 0% down). Happy Homeowners = Happy Electorates = MAJORITY government! .
Step 2: Once the problem has been created, identify it and start warning the citizenry that there is a problem (aka: CYA – “I told you so!”)
Step 3: Once the problem can no longer be denied, start removing the cause of the problem (aka. “See, I am doing something to fix the problem?”). In the process, aggravating the problem.
Step 4: Once the problem has gotten worse and the once house horny homeowners are desperate, deploy the magic weapon: BAILOUT! (aka: “Am I great or what?”)
Step 5: Once the electorate feels that the government has their back, call an election. (aka: “Winning!”)

I won’t vote for him or his party, of course, but the guy is good at what he does. That much credit I give him.

This doesn’t mean that there won’t be a correction on the real estate market with prices going back to what fundamentals support. This just means it will take a while for the whole thing to unwind. Sorry, doomers. After the initial 15% or so decline, it will take a long while before it will reach the over 50% decline (if ever) that you so desire. To vulch make a longer wait than you are expecting.

If I have to guess, 15%-20% decline until the next election in 2015 (or earlier). Because of elections related promises (i.e. bailout) the decline will have a pause. After the elections and Harper keeps his hold to power, the decline will continue gradually until the next election when another bailout is deployed. We are talking of at least 8-10 years of continuous decline – hardly an environment for vultures (caught a falling knife lately?).

In the end, there are no winners in this whole mess other than Mr. H.

Damn, the guy is good!

#191 throwstone on 03.22.12 at 11:51 am

Of course it’s not final. That’s why the guidelines were published. But ask any banker about the odds of draft guidelines becoming real ones. This regulator does not play games. — Garth

THAT’S RIGHT. I don’t think the OSFI is in the popularity business. They don’t need votes. They don’t need to stay popular to stay employed. F does, C too to some degree.

So no idle threats there.

Interesting to see what happens. Too bad the rest of Canada has no idea what is going on.

If this was on the national on CBC..it would be headline news…but it will eventually be there.

These days, this is the news. — Garth

#192 Ronaldo on 03.22.12 at 11:54 am

#126 NOT WONDERING ANYMORE – ”to express your support that ALL of the proposed B20 measures be implemented NOW to address both this housing bubble and the financial future of the majority of Canadians.”

DONE hope others will do the same

#193 TnT on 03.22.12 at 11:56 am

Is there any data that would show there’s enough rich foreigners to prop the GTA housing market? With a population of over 2.5 Billion from China and India alone is it possible a small / tiny fraction of the 2.5 Billion people would be enough to prop up this industry?

#194 Miko on 03.22.12 at 12:00 pm

Flaherty just said all these new proposed rules are “a bit much”

and that he’d rather see the market correct by itself.

So much for all this inside info and predictions, he’s most likely not going to do a thing..

No, he was not commenting on the OSFI guidelines. Why is it people here stopped reading more than headlines? — Garth

#195 Debtfree on 03.22.12 at 12:06 pm

I just heard the gnome of Ottawa on tv . He is very happy with the osfi recommendations . And laughing out loud at Ontario .The very people that elected them. Is he the last guy in Canada that doesn’t know that we have a petro dollar ? Now he’s shifting the onus onto the banks . I guess it’s their fault that he created the no money down 40 ,35, 30 year ams. On the bright side h is in asia visiting our jobs. The older I get the stranger things seem . I heard a few days ago that 6million canadians are hooked on purdues oxiconten . Who the hell was in charge of letting that in ? The harper government? No wonder he wants more prisons . With 6million health care created junkies they will need ones the size of cities .

#196 throwstone on 03.22.12 at 12:12 pm

#192 Debitified…

I dont vote for H either…the guy is a disaster to canada.

I refuse to say anything that will inflate his already massive ego; especially how he is brillant at…obfuscation, deceit, lieing, cheating, stealing, and manipulation.

I DETEST any person who would go to such lengths to attain and maintain power.

Lucky for us that ‘ideological’ thinking has no practical application. So in reality the conservative government of Canada really has no end to its means.

What is their aim for canada? domestically and internationally?

Really think about it?…what are they really doing for Canada?…

No intergrated national energy strategy, no national infrastructure strategy, no international agenda….etc. etc.

Poor leaders.

And to think the masses will forget the housing bubble that exploded on there watch….not a chance.

Most people will still be in negative equity and very angry about it. And when the media begins to report on it and the people connect the dots. Its all over for the conservatives.

#197 Daisy Mae on 03.22.12 at 12:15 pm

#72 Live within your means: ” What is highly laughable is that the vast majority of the MSM have given credit to F,C & H for gradually reducing the lengths of mtgs. & increasing down payments when in fact it was they who brought in 0/40 mtgs to begin with.”

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

Will we remember this next election?

#198 bill on 03.22.12 at 12:16 pm

garth said:
If the developer could get traditional financing, he would. — Garth

so the developer doesnt like what the future may hold for their project ,so he lets some bagholders [ Syndicate Mortgage ] finance it for him/her?

#199 Daisy Mae on 03.22.12 at 12:20 pm

#73 I was subprime: “Another blogger has already mentioned the carnage this would create even if the owners can meet their monthly payments, so I can see this guideline not being implemented.”

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

But someone has mentioned ‘second mortgages’ as a way around that problem…. (??)

#200 Syndicate Mortgage on 03.22.12 at 12:23 pm

Garth,

Here’s our facebook convo. about syndicate mortgages from a few minutes ago. Just wanted you to know that I am not making this stuff up. I thought you might find this interesting. I tried to hold down the Turnerian point of view…to no avail it seems:

FRIEND: well why not get in on it when it does work…
yeah – but so what tho you know ? if there is an opportunity to make money and it still exisits you gotta act on it while it lasts. makes no sense to be scared and not act – you don’t gain anything that way. you analyze to much – it like @#$% or get off the pot morals dont apply here – the buildings will get built with or without you, only do you want to profit since they are anyways ? certainly – you need to be SMART with your investments. but you are almost preaching morals

ME: buddy…one, i don’t know how i am preaching morals…and two, if it was such a secured way to make money…why couldn’t the condo builder get a traditional loan to cover the entire cost?

FRIEND: I dunno – seems like any venture is a RISK but you need to choose the lowest risk with the highest return. this is as you observed, at the moment, one of those low / high ratios..

ME: this is 100% high risk stuff…this is why the banks shy away from funding the entire deal themselves. and the reason why developers can’t secure a traditional loan…what your syndicate mortgage outfit is doing…IS a symptom of a messed up economy

FRIEND: u are totally entrenched in your view. the banks never fund anything 100 %. Everything has a risk. How is it a risk to you, if it’s only a loan you are involved in? hmm i dunno man. u are convinced that real estate is going to drop out.. yet people STILL CONTINUE TO BUY like crazy.

ME: it IS a risk…because if you borrow money in order to invest…and then you lose the money…you have to pay back the debt…and banks DO fund stuff 100%…the average joe person who gets a mortgage doesn’t get 70% of their mortgage from the bank…and then get private investors to fuel the rest

FRIEND: i dont agree with your waiting to buy waiting to buy – i don’t think it makes sense if you have a dependable employment and the means to go ahead and get a place. Renting is stuffing money into nothingness. We don’t gain anything by doing it. if we put our money into land or owning land – how is that bad, the market will go up and down, but ultimately, you aren’t going to lose out unless you buy and default which wouldnt happen, or buy and move in a year or 2. most ppl buy and stay in a place for long enough that the values even if they dip, will return back to a state that they bought it at. your afraid of the ‘bubble bursting’ yet how do you know it will ? and how many more years will go by while you wait for this to happen, thats all money you lost paying someone else anyways ! ?

#201 Steven Rowlandson on 03.22.12 at 12:24 pm

http://www.housepricecrash.co.uk/newsblog/2012/03/blog-london-immunity-is-over-rated-36382.php

It seems the real estate market in London England has or is about to lose its Mojo. Something to do with a 15% stamp duty on property if I understand things correctly. Click on link for details and opinion.

#202 CTO on 03.22.12 at 12:27 pm

182 Jimmy

Check out G&M for their “infomercial” by Remax. Check out the comments, you’d be hard pressed to find anyone who is believing their crap!!!!
Maybe, its just the smart people that read the papers and comments and the dim-wits just listen to their neighbour or local real estate rep.

#203 grantmi on 03.22.12 at 12:28 pm

Canada stands ready to tighten mortgage rules: Flaherty

Reuters Mar 22, 2012 – 11:30 AM ET
Chris Wattie/Reuters

“With respect to tightening up the mortgage insurance market we’ve done it three times … and we watch, we monitor the market and if we have to tighten it some more we will,” Jim Flaherty told reporters in Stittsville, Ontario.

STITTSVILLE, Ontario – The Canadian government, dealing with signs of an overheated property market, is ready to tighten mortgage insurance rules again if necessary, Finance Minister Jim Flaherty said on Thursday.

Ottawa leaning on bank regulator over mortgage disclosure: analyst

“With respect to tightening up the mortgage insurance market we’ve done it three times … and we watch, we monitor the market and if we have to tighten it some more we will,” he told reporters in Stittsville, Ontario.

“The new housing market produces a lot of jobs in Canada so there’s a balance that needs to be addressed. I’d like the market to correct itself, quite frankly, if it can.”

© Thomson Reuters 2012

http://natpo.st/GGxabV

#204 Arshes on 03.22.12 at 12:28 pm

#181 Syndicate Mortgage on 03.22.12 at 11:11 am #167 Syndicate Mortgage

“You’re kidding, right?” — Garth

What should I tell my friend, who is all over this idea? He thinks we can’t lose. How can I convince him otherwise? If I tell him, for example, that condo investments will drop…he tells me it doesn’t matter because you will always get paid back…even if the units don’t move…according to the rules of real estate.

——————————————————

Don’t try to convince him of anything, just say you’ll Pass and there’s no such thing as “risk-free.” Trying to convince him of something that he can’t comprehend or doesnt want to comprehend is pointless.

#205 truth hammer on 03.22.12 at 12:32 pm

Proposed lending changes are really bringing the freaks out of the closet.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/03/tougher-mortgage-qualifications-on-the-horizon.html

This is NIMBY on acid folks………the industry pundits are running scared. I’ve already pointed out that the government itself has been complicit in overlooking the technical failure to adhere to Canada’s Bank Act by the entire lending industry.

Why go to the theater to watch a good farce?

#206 grantmi on 03.22.12 at 12:34 pm

Run for the hills…

GOLDMAN SUCKS says BUY BUY BUY!! Pure sign that we’re headed for the sh!tter again!

(Who would believe these lying SOS after what they did the last 5 years to the market?)

Come here! Go Away!

Goldman Sachs Group Inc. said stocks will likely see a “steady upward trajectory” over the next few years as any declines in economic growth are already seen in share prices.

“Given current valuations, we think it’s time to say a ‘long good-bye’ to bonds, and embrace the ‘long good buy’ for equities as we expect them to embark on an upward trend over the next few years,” Peter Oppenheimer, chief global equity strategist at Goldman Sachs in London, wrote in a report Wednesday.

http://natpo.st/GHqybV

#207 unbalanced on 03.22.12 at 12:36 pm

To # 175 Iconclast. Thanks for jumping in ! I guess its not a right to pay your share of taxes. Evaded or eluded—whatever.

#208 Nemesis on 03.22.12 at 12:38 pm

“Europe is contained…” – Hon. GT

What he said…

http://tinyurl.com/2bj8zxd

Oh, right….

#209 Coraline on 03.22.12 at 12:40 pm

So, Flaherty says no housing market moves in the budget. All bluff, no action.

#210 Van guy on 03.22.12 at 12:52 pm

#170 $$$BPOE$$$ on 03.22.12 at 10:35 am

You go buy units at Mandarin Richmond. You obviously didn’t here about the fine print in the contracts for the Marine Gateway. You’re an idiot

#211 City Slicker on 03.22.12 at 12:54 pm

When do we find out if OSFI will implement this?

#212 TRT on 03.22.12 at 12:55 pm

BREAKING — Flaherty just confirmed that there will be NO mortgage changes this spring.

I can just see the bewildered look on most of the posters here. If so, you just don’t get it.

Learn to read. This is the report: Mr. Flaherty said he would like to see if the market will “correct itself,” and noted that there are some signs that this is currently taking place. Some Canadian banks are calling on Ottawa to intervene – either by lowering the maximum amortization period for insured mortgages or by raising the minimum required down payment. Mr. Flaherty said he finds those suggestions “a bit much” given that the banks ultimately decide whether to approve a mortgage.” — Garth

#213 Kris on 03.22.12 at 12:56 pm

Markets turn, one way or another, when public sentiment & econ fundamentals feed each other in a spiral.

This blog is pretty convincing that econ fundamentals are in place for a RE correction. Public sentiment is another story.

MSM plays a part in public outlook, and that has begun to come around.

But most of all, people need to FEEL it to believe it – Then debate stops and panic begins. For that to happen, we need higher rates, more (boomer) sellers, less buyers, or unemployment, or higher cost of energy & food, or higher taxes.. These are like the tsunami of econ fundamentals spilling over on to Main St.

Thus far, the tsunami appears to be at sea, or so think most Cdns due to these10yr/3% rates.

#214 Tiny Bottoms on 03.22.12 at 12:57 pm

Flaherty blames banks for lax lending rules

http://www.cbc.ca/news/business/story/2012/03/22/flaherty-banks-lending.html

#215 Mr Buyer on 03.22.12 at 12:59 pm

#160 Kevin on 03.22.12 at 10:10 am…
……………………………………………………………
You have made some valid points. Clearly socialists do not know how to cook but do not tell the french that. They seem to think they are pretty good cooks. It is best just to ignore me when I get all socialistic like this. After a few days I dummy up again and rediscover the stress free apathy I love to warmly embrace. At the same time there is something very severe lurking a slight way down the timeline and I just can not sleep as soundly as I would like to since my children will be contending with it. No, it is much better if we decide to get ready now even though it is rather late on a global scale. I wish star trek fleshed out the process from money to no-money a little better than it did. I am thinking education being the bench mark by which retirement allowances are apportioned. That does not mean academics are guaranteed maximal allowances but rather people that complete courses over their working lives reach the maximal levels of retirement allowance. I figure a 6 month work year, a three month educational term and a three month vacation period would be a good working year. A heavy reliance on robotics and automation would go a long way towards facilitating such a liberal work regime and it would take a huge amount of work to bring it all about so we would be busy as a nation from the get go. I am just throwing this stuff out as is flies through my empty head. I am sure there are many that have envisioned a pragmatic utopia far more realistic than mine.

#216 zeeman1 on 03.22.12 at 1:02 pm

#10 Turner Nation.

So our governments should just cave in to our employees and continue to increase spending for the same results?

Taxes in TO increased at double the rate of inflation every year under Miller, despite cutting garbage collection in half and big increases in parking fees, tickets etc.

I love selective Liberals.

#217 Mr Buyer on 03.22.12 at 1:04 pm

Did you know that an outlandish proportion of our food supply is lost to spoilage and parasites every year. I can not remember the exact proportion on a global scale but it is some crazy number like 30%. There are likely sound economic reasons for this to be going on.

#218 neo on 03.22.12 at 1:05 pm

Equities will rise, bond prices will fall, yields will increase. Gold is a swamp. — Garth

Equity AND yields will rise? Sigh.

As they have been. — Garth

#219 interesting on 03.22.12 at 1:08 pm

One of these days… we will all be here sharing stories… stories about how this friend/relative/co-worker lost their home/condo/property… it’s inevitable… and the higher prices go the more stories there will be. More people are losing their jobs, people are far more conservative with their spending. HELOC’s are used and abused for lifestyle decisions, vacations etc. No one wants to agree with “Debbie Downer” and talking about the housing market or apple in a negative way is a complete no no! You almost have to use reverse psychology… yes… spend… yes take out more debt… yes buy that car… yes go on that vacation. At some point the limit will be reached. I’ve been thinking to list my home for fun for the highest price ever in the neighbourhood and see what happens. If the market continues like this… I think I will. I know it will raise a lot of eyebrows.. but I am thinking more and more that it is the right thing to do.

#220 Rhino on 03.22.12 at 1:09 pm

http://www.theglobeandmail.com/news/politics/ottawa-notebook/federal-budget-will-include-only-modest-spending-cuts-flaherty-says/article2377866/

Looks like your dead wrong. Sorry Buddy!

How’s that? “Mr. Flaherty said he would like to see if the market will “correct itself,” and noted that there are some signs that this is currently taking place. Some Canadian banks are calling on Ottawa to intervene – either by lowering the maximum amortization period for insured mortgages or by raising the minimum required down payment. Mr. Flaherty said he finds those suggestions “a bit much” given that the banks ultimately decide whether to approve a mortgage.” Nowhere in those comments are the OSFI guidelines discussed. — Garth

#221 zeeman1 on 03.22.12 at 1:10 pm

#124 Blase.

What the hell does that matter? 3K/month is still crap, no matter how many hours you work. So the teacher has to take on all sorts of side jobs just to get to a half decent salary and ends up working 50 hours a week?

#222 blatherer on 03.22.12 at 1:26 pm

You state ” owning a home is not a right”. Does paying your taxes count? Ask the honorable Brian Mulroney or the Bronffman family. People should practice what they preach.

They both pay taxes. You have no point. — Garth

Garth, I think his point is that its a little smarmy to sit on a high horse and say that these middle-income families facing financial ruin in the event of a housing collapse had it coming to them, as “housing is not a right” when high-income earners, like the Bronfmans can use their political connections to “legitimately” commit wholesale tax evasion (or however you want to spin being granted a multi-billion dollar tax waiver by your buddies in gov’t)

I would argue owning a primary residence is a right in this society if you play by the social contract i.e. pay taxes. Certainly, we don’t want to be like Switzerland, for example, where property is owned by a minority and rented out to the majority?

#223 refinow on 03.22.12 at 1:29 pm

#182..

Did you notice they compared Jan Feb 2012 to Jan feb 2010… in that article…

Funny what happened to 2011…

Realtors and Government having a tougher time showing normal stats that support the everything is fine….

Omitting last years data seems a little too obvious don’t you think??

#224 From Mississauga With Love on 03.22.12 at 1:34 pm

wow, F not going to make any changes to Housing regulations in the budget..
how is that possible?
we are starting to look like we are the greater fools indeed….

#225 Alan on 03.22.12 at 1:40 pm

F says it’s not his business to tell the bank CEO’s what to do. March 22, 2012.

Clearly, the banks can’t/won’t do it themselves simply due to the fact that it will give the competition (other banks) an upper hand to get creative with their mortgages. The banks want F to legislate them so they can continue to have a monopoly they have enjoyed forever. I say let them take on whatever risk they want and let their sharholders govern their activity.

#226 jess on 03.22.12 at 1:50 pm

Canadians looking for a top and looking back to April 2007, the Treasurer, Paulson was quoted as saying that the U.S. housing sector was ‘at or near a bottom

=========
the synthetic CDOs
Dodona I LLC v. Goldman Sachs & Co et al, U.S. District Court, Southern District of New York, No. 10-07497.

the market is up for muppets and etch a sketches

#227 grantmi on 03.22.12 at 1:59 pm

What would John Carter do??

http://bit.ly/GGIaGq

#228 not 1st on 03.22.12 at 2:05 pm

So much for the toothless OFSI regulator – nothing is changing. Just like I thought because it would be political suicide. The gov’t would rather have a natural crash than bring one on themselves.

F does not dictate OSFI regulation. Learn how this works, then comment. — Garth

#229 jess on 03.22.12 at 2:07 pm

F said: I’d like the market to correct itself.

oh yeah, cuz it’s self regulating. Meanwhile in the
Eurozone Mr. Geithner urges Europe’s weathiest countries to do more

From: Breaking the Mould
How Latin America is coping with volatile capital flows
December 2011
“However, it was also observed that there was space for evasion: investors were disguising short-term portfolio investment as foreign direct investment through swaps and derivatives, and
by buying American depositary receipts (ADRs) abroad and selling the stock domestically
11 (14 of 24)
http://www.brettonwoodsproject.org/doc/financedebt/breakingthemould.pdf
http://www.tjnamericalatina.org/2012/02/02/rompiendo-el-molde-la-regulacion-de-los-flujos-de-capital-en-america-latina/

American Depositary Receipts (ADRs) are negotiable securities representing the
underlying securities of a non-U.S. company that trades in the U.S. financial markets.

#230 grantmi on 03.22.12 at 2:14 pm

#222 From Mississauga With Love on 03.22.12 at 1:34 pm

wow, F not going to make any changes to Housing regulations in the budget..
how is that possible?
we are starting to look like we are the greater fools indeed….

Where did he say HE WASN’T going to make changes to the housing regulations??????

#231 City Slicker on 03.22.12 at 2:22 pm

Garth, if someone filed for bankrupcy, do they keep their home?

It depends on the creditor arrangement. — Garth

#232 Just Say No on 03.22.12 at 2:23 pm

#139 sue, I should say I would love homes to drop 60% for the people that really really want,need and must have homes. I do not need a home and I do not want a home…I do not need a job…I am more concerned for the well being of others….I even gave up my job to help the Company out as they were cost cutting so I am questioning job futures for young……I give and I ask for nothing… free advice is get out of debt. 90 rule

#233 Just Say No on 03.22.12 at 2:25 pm

a world with high priced homes and no jobs

#234 John G. Young on 03.22.12 at 2:26 pm

eaglebay – Parksville

“brown noser”, “doomer”, etc. etc. etc.

Girlfriend! Missed you at the baths yesterday.

Go put on your dress and stop being such a Grumpy Glenda.

#235 Devore on 03.22.12 at 2:37 pm

#77 GeneticistX

The bank sent an “appraiser” over this past week. What can the appraiser say??? The house is worth what someone will pay for it. That’s the value.

As they say, price is what you pay, value is what you get. The two are not always the same. The appraiser determines the value. He cannot tell you what a given buyer will want to pay.

Real estate is not like corporation shares. Properties are unique. They are not fungible. Assessed value and market price will rarely be the same.

Just because the appraiser cannot tell you what someone will pay, he can tell you how much it’s worth. In tighter credit conditions, lenders will only lend up to appraised value, which creates problems for buyers and sellers in the US constantly, as sometimes what the buyer bid is deemed to be too much, and the financing falls through.

#236 Kris on 03.22.12 at 2:42 pm

So F won’t be our knight in shining armour.

We’re left to the cold calculations of the profit-maximizing mechanism known as ‘the market’.

May the Market Forces be with you.

#237 Blacksheep on 03.22.12 at 2:43 pm

Grantmi #229,

What would John Carter do??
———————————
What would John Galt do?

take care,
Blacksheep

#238 not 1st on 03.22.12 at 2:50 pm

Garth, it may be time for you to go back to the drawing board. House may fall in price but its not going to be by anything the feds, carney or this sleepy regulator are going to do. Anything drastic is economic and political suicide and they know it. They know the market will take care of it. The cure for high prices is high prices.

Also, interest rates may rise but that will not be more than 1 or 2%. There is no repeat of the 1980s coming.

The banks might now start naturally looking at mortgage more critically, but for the most part its going to be business as usual there.

#239 Devore on 03.22.12 at 2:54 pm

#98 The Thing in the Basement

At the very least, buyers will be walking away from their deposits, like in the case of the Trump Towers recently. I have heard of developers suing for the difference (contract price vs market price), but I don’t know how wide spread that was, or how successful they were. I imagine the would-be buyers lose their deposit and lick their wounds, and the developer settles for some free cash and sells the unit to another buyer at prevailing market price.

#240 DJB on 03.22.12 at 3:01 pm

Garth I think the naysayers are trying to throw Flaherty’s non movement on amortizations and down payments back in your face. You did elude to this on previous postings as hearsay in the upcoming budget. If implemented it would have been equivalent to about a 1% jump in interest rates without touching the overnight rate.

Politically, the conservatives want to keep the house party going and Flaherty sure does want to be the fall guy if and when housing turns south. Maybe there is moral suasion on behalf of the BOC on the OSFI to tighten regulations. Bureaucrats don’t have to run for election every four years.

The problem politically is if you give the masses something it is hard to reverse the position even if you know it will have a bad outcome.

Actually it is the major banks (TD, BMO) who have been asking for a 25-year am. If F refuses, that speaks volumes about what happens next. It’s called a hard landing. — Garth

#241 smartalox on 03.22.12 at 3:15 pm

I think F is just passing the buck with his statement today. It’s not up to government to regulate the banks. It’s up to the banks (through implementing recommendations of the OSFI, in support of the FSB) to regulate themselves.

Nice. He keeps the blood off his hands, and his government’s free-market capitalist credentials intact.

Meanwhile, 99% of the property-speculating, free-market capitalists that elected that government are about to get hosed when their mortgages come up for renewal.

#242 Smoking Man on 03.22.12 at 3:24 pm

#124 Blasé on 03.22.12 at 2:31 am

Even if it was just 1 hour it’s still 3k a month, that’s poverty buddy

vald had a great link, I suggest you read it and see the VID.

I should not bash teachers, as it the curriculum that’s the problem. But look how many first time posters I draw out of the shadows when I attack teachers.

http://www.theundergroundinvestor.com/2012/01/the-hidden-dark-agenda-of-public-education/

I’m a star in my field, why critical thinking, problem solving. My competitors, the schooled. It’s so easy to be a star.

If you want to rebuttal no problem, just read the link, it will awaken you to the evil you do every day.

If kids today had critical thinking skills, the Toronto sky line would not be filled with empty condos.

#243 Burnt Norton on 03.22.12 at 3:27 pm

In order to curb flippers, why don’t the feds just do away with the capital gains tax exemption on principal residences?

Oh right, because then everyone will be able to claim huge write-offs on the coming depreciation.

As you say: Horse. Barn door.

Stampede perhaps?

So we wait, rent and watch with interest accumulating (both kinds).

#244 refinow on 03.22.12 at 3:31 pm

233, do you lose your house in Bankruptcy?

Depends on the current equity position in that house. If there is minimal equity, that would dissappear if the house was sold, you can keep the house. The trustee requests an opinion of value, most are very conservative…. and if you owe basically what it is worth you keep your house.

If there is equity, you may have to refiance a portion of that equity making the funds payble to the trustee. if you can’t get a mortgage then your payment to the trustee will be increased by the amount to keep your house out.

Many people go Bankrupt and keep the home.

#245 Ronaldo on 03.22.12 at 3:32 pm

#192 Syndicate Mortgage –

http://www.cbc.ca/news/business/story/2005/04/05/eron-050405.html

Don’t know if what your talking about is anything like the above link but I recall a friend back in 1997 talking to my wife and I about a deal that he thought was too good to be true and suggested that we consider investing in it. Proposed returns of 16 to 24%. He had just transferred $20,000 of his RRSP into one of the many projects they were supposedly funding. A couple months later, the BC Securities Commission shut them down. Took several years (2011) for the unwinding and distribution of the final assets which which investors received pennies on the dollar.

MORAL OF THE STORY:

IF IT SOUNDS TO GOOD TO BE TRUE. iT USUALLY IS.

#246 JB on 03.22.12 at 3:34 pm

“We have bank executives in Canada saying ’You know, really the rules on insured mortgages should be tightened up’. They must forget that they are actually the ones that issue the mortgages — it’s their market, it’s not my market,” – F

Oh ya, so it was your market when you introduced the 40 year? But when it’s on the brink of blowing up in your face “Not my market! Don’t look at me, I tried to tell you” What a s*** show…

#247 Devore on 03.22.12 at 3:34 pm

#156 Daisy Mae

Tough. The banks will do as they’re told. And suffer the consequences…along with everyone else.

What a legacy this government leaves for Canadians.

More to the point, and as bankers already stated in interviews and article stories, they WANT the government to change the rules, because they need to lower the risk of their portfolios. Until then, they must compete with other banks for business, even if it means giving away 2.99% money to people with no savings and scant employment and credit history. They’ve limited or jettisoned their high risk peripheral business, stated income lending, but their core business must grow, within the established rules, always pushing them to gain a competitive advantage.

This is as clear a way as any to convey that when a regulator rears up and is eager to regulate, they MUST do so responsibly. The buck really does stop with them. When regulators fail, all of us pay the price. They provide the framework, within which the industry operates. When regulators do not do their jobs, there is no plan B. They have a monopoly, they’re it.

#248 Victor on 03.22.12 at 3:35 pm

Mr. Flaherty said “it was a bit odd” that some banks were pressing him for tighter rules.

“We have bank executives in Canada saying ’You know, really the rules on insured mortgages should be tightened up’. They must forget that they are actually the ones that issue the mortgages — it’s their market, it’s not my market,” he said.

http://business.financialpost.com/2012/03/22/canada-stands-ready-to-tighten-mortgage-rules-flaherty/

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

As the real estate house of cards continues to collapse, the Government can place partial blame on the banks (which Canadians love to hate). F is a master politician. Gotta love the spin they are putting on this.

#249 Bottoms_Up on 03.22.12 at 3:36 pm

#244 Smoking Man on 03.22.12 at 3:24 pm
——————————————–
I think the best thing a teacher (or parent) can do is to provide their children with critical thinking skills.

Always ask the question ‘why’.

#250 disciple on 03.22.12 at 3:52 pm

#251 Bottoms_Up…Always ask the question ‘why’.

That’s rich, coming from you. Or maybe there is a God and you have begun to escape your cultural programming out there in East O?

#251 EdmontonJim on 03.22.12 at 3:53 pm

Sydicate Mortgages….WTF?

I watched the video. Didn’t those used to be called Asset-Backed Securities? And weren’t those one of the leading causes of the financial crash, when it was discovered that many of them were worthless?

So… aren’t they illegal? Or is it still possible to be an idiot as long as you are not a bank?

#252 neo on 03.22.12 at 3:58 pm

Equities will rise, bond prices will fall, yields will increase. Gold is a swamp. — Garth

Equity AND yields will rise? Sigh.

As they have been. — Garth

Alright then. So you are saying yields will begin to normalize on a historically basis, say 5-7% on a 10 year? And equities will rise along with that? You’re kidding right? Increasing from 2.00 to 2.38% isn’t exactly a big move and equity is turning over just on that.

Sigh. — Garth

#253 Canadian Watchdog on 03.22.12 at 3:59 pm

Today’s Transcript:

Banks: What’s with the MSM regulation campaign? I thought we had a deal.

F: I have to pretend like I’m doing something about the sub-primes.

Banks: Ok. So the bailout is still on?

F: Yes. I’ve already made a $3 billion deposit in our EFA account, that should get us another $40-50 billion loan with the BoC.

Banks: Good, cause we have no TCE left.

F: Ya, you guys caused quite a stir in the market selling all those shitty covered bond deals. Thank god Carney pushed the Volcker rule back for you guys.

Banks: Indeed. We need those OTC CDSs, otherwise we’re toast.

F: You guys are short?

Banks: Kind of. We haven’t told our clients cause it’s irrelevant. CMHC will cover everything if all goes wrong.

F: ……

Banks: What?

F: How the hell is CMHC going to cover the net interest spread on those bonds when they’re leveraged 25:1? Do you have any idea how much those BC foreclosures are costing CMHC?

Banks: Relax. Just print like we agreed.

F: We can’t keep printing. The bond market will eventually withdraw.

Banks: Screw them. We have a printing press. Just do as your told and all will be fine…Cigar?

F: No thanks….. I don’t know what else to tell the public. The entire ponzi scheme is becoming obvious.

Banks: Just confuse them. It works every time.

F: I know, but everyone is blogging and tweeting these days and starting to figure out that our banking scheme is just built on confidence and false journal entries, that money doesn’t even exist.

Banks: What’s your point?… Look, just consult with Carney, he’s the chairman of everything and can pull strings for you. k?

F: I’m not sure he can do much. Rate are already…

Banks: I know.. just deal with it…..we have a meeting at Morton’s, gotta go.

F: (A**holes)

#254 jess on 03.22.12 at 4:03 pm

Break Up The Banks! Dallas Fed President Calls for The End of “Too Big To Fail”
By Christopher Matthews | @crobmatthews | March 22, 201

Read more: http://business.time.com/2012/03/22/break-up-the-banks-dallas-fed-president-calls-for-the-end-of-too-big-to-fail/#ixzz1psUIv8Gb

#255 VICTORIA TEA PARTY on 03.22.12 at 4:09 pm

“Housing Recovery? Economic Recovery? Forget It
Forget it folks.” (Karl Denninger — Market Ticker blog)

While your read some of the rest of Denninger, ALSO think about what’s happening, AND ABOUT TO HAPPEN, to Canadian real estate, and hope to Hell you haven’t “bought” recently:

Denninger: “…When you add all this together with the demographic problems we have, you’ve got the ingredients for a disaster…sooner rather than later.

The amount Americans owe on student loans is far higher than earlier estimates and could lead some consumers to postpone buying homes, potentially slowing the housing recovery…(because loan amounts now surpass)… $1 trillion…16% higher than an estimate earlier this year by the Federal Reserve Bank of New York.

This is going to destroy retirements and those who currently own homes. You’re finished folks.

Here’s the problem — we have a demographics issue…fewer young people compared to old, which leads to pressures on things like Medicare and Social Security.

But the traditional path is for older people to downsize…sell their big house…buy a smaller one…
(and) sell it someone has to have money to buy it. Who is that going to be?

…not…young adults now in college because we have screwed them by saddling them with this debt. They thus cannot qualify for a loan to buy your house!

…As for the so-called “economists” this is what they say: …college is an increasingly good investment because of the widening pay gap between jobs that require a degree and those that don’t.

I respond that any economist that argues that a thing rising in price faster than the income that thing generates…needs to be turned into pink slime and used for dogfood…(and) graduate’s resumes stuffed directly into the paper shredder when received by potential employers.”

YIKES!

Another item on his blog, courtesy of Bloomberg News, is that a lot of airlines will be tubing later this year because of high fuel prices.

Also, the stock markets closed lower today, amongst increasing investor jitters, marked by various VIX index outcomes (not good ones), all pointing to continuing interesting economic and market times ahead.

If EVER there was a time for personal fiscal rectitude, it must be now!

What other conclusion must one draw?

As for investing in the markets, there are LOTS of opportunities in energy, banks and various derivatives if you’re fleet of foot and smart as a tack.

#256 Steven Rowlandson on 03.22.12 at 4:18 pm

Re:#123
I have very bad news for all those immigrant tradesmen.
You all better bring a quarter to a half million dollars with you when you come to canada so that you can buy the average priced house in canada because you will never earn enough on $13 to $15 dollars an hour doing work. You would need $50 to $60 an hour to play that game and you won’t get it as a tradesman.
Canada only needs tradesmen who work for slave wages .

#257 DJB on 03.22.12 at 4:19 pm

Garth you are right about the banks need everyone to play by the same rules across the board as far as amortizations go so they lean on the F.

But if the F won’t do it nobody will due to competition. I guess that is why the heads are of the big 5 are sending out warnings but keeping the easy credit flowing.

I do not not if the OSFI has foresight, do you think the F is whispering the rule changes in its ear?

#258 s on 03.22.12 at 4:21 pm

Actually it is the major banks (TD, BMO) who have been asking for a 25-year am. If F refuses, that speaks volumes about what happens next. [b]It’s called a hard landing. — Garth[/b]

If no changes to anything, how much longer do you expect the housing bubble to continue Garth?

July 8th. — Garth

#259 T.O. Bubble Boy on 03.22.12 at 4:21 pm

Flaherty = Weasel

Like the bartender who sends a drunk driver home and then blames car manufacturer for the accident.

#260 Blacksheep on 03.22.12 at 4:29 pm

Today we got national confirmation that the RE
goose is cooked. They know what comes next.
It’s past the denial stage, with the simple admission
that any “correction” is required, and are now in the
“it wasn’t my fault” stage. Everyone’s playing
hot potato in an attempt to avoid blame.

take care,
Blacksheep

#261 John G. Young on 03.22.12 at 4:33 pm

#244 Smoking Man on 03.22.12 at 3:24 pm

“Even if it was just 1 hour it’s still 3k a month, that’s poverty buddy”

Depends on your definition. More than enough for the simple pleasures of life, but not much left for substances, hookers and casinos.

Of course, needing those escapes can be seen as a different kind of poverty.

#262 Devore on 03.22.12 at 4:39 pm

#253 EdmontonJim

So… aren’t they illegal? Or is it still possible to be an idiot as long as you are not a bank?

They’re private investors, who are always encouraged to be idiots with their money. As banks are backing away from the risky side of their business, fools rush in to pick up the slack. In the finance world parlance, they are called “bag holders”. When smart money leaves, it is often replaced by dumb money.

High yields are there for a reason. They often work fine under certain specific circumstances, but underperform or crash when conditions change, sometimes even slightly. If the investments make sense on a risk-adjusted basis (which can be difficult to calculate with these private deals that lack transparency), then it may not be a bad idea to put some money in them, but you have to remember rules of diversification and risk management, which most individual investors do not. They tend to go all in into whatever catches their fancy, without due diligence.

I’m sure these syndicate mortgage guys will feel like geniuses for a few months, until the money stops coming in, and oh by the way, it will take 4 months to liquidate your position.

#263 DonDWest on 03.22.12 at 4:40 pm

#244 Smoking Man

“If kids today had critical thinking skills, the Toronto sky line would not be filled with empty condos.”

So instead the kids should buy those overly expensive empty glass boxes to make boomers like you filthy rich?

No thanks, I think I’ll pass.

#264 T.O. Bubble Boy on 03.22.12 at 4:49 pm

Purchasing a home is cheaper than renting in 98 out of the 100 largest U.S. metropolitan areas, a survey by real estate site Trulia showed.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/03/22/BUJH1NO5RB.DTL

(San Francisco and Honolulu were the 2/100 where owning is more expensive)

Wake up, Canada!

#265 Vita on 03.22.12 at 4:51 pm

Hi Garth,

I am the long time reader of your blog, the renter who’s sitting on diversified portfolio as you suggested. But according to you book, I bought gold and silver bullion, about 7-8% of my net worth, in the mid of 2009.
Should I sell it now and invest in ETFs? I am so confused.

I told you to sell and rebalance last autumn. — Garth

#266 NoName on 03.22.12 at 5:01 pm

@Ronaldo
@Sticky
@TRT

http://i42.tinypic.com/t4ttzq.jpg

i think you guys are just jealous…

Knock it off. This is a family blog. — Garth

#267 Bailing in BC on 03.22.12 at 5:03 pm

July 8th. — Garth

Well that sucks. I’ve been reading this blog everyday since 2008 and the one time I’m not going to be available the bubble goes and bursts. I will be in Rarotonga July 8th. Do you think we could reschedule the bursting?

#268 eagle eyes on 03.22.12 at 5:10 pm

Take a page from Hong Kong – if you buy and sell a property within 2 years, you pay a stamp duty to the government. That is how they regulate flippers and keep their RE market sane. The fact that F is assigning blame on the banks instead of government regulations is irresponsible. Finally implementing the proposed “guidelines” or rules from the OSFI is a good start to putting the brakes on this runaway train we call RE.

#269 Mikey the Realtor on 03.22.12 at 5:11 pm

oops, wrong link, as a second thought why bother it wont get posted anyway…lol

http://www.moneyville.ca/article/1150145–toronto-housing-market-heats-up-again-with-bidding-wars-commonplace

#270 Kevin on 03.22.12 at 5:14 pm

Garth,
I feel I should share this as housing related employment is up over the long term average, not just in Canada, but in most major Canadian cities. If housing bulls believe that we need double digit unemployment for a housing bust, then look no further than our debt fueled inflated housing related industries in regards to GDP and employment.

Canada is more reliant on housing related industries for GDP growth than ever before. The long term average is 24.4%, currently Canada is at 27%.
http://tinyurl.com/7fgd22j

To think that it is just a few cities across the country that rely on housing now more than ever, take a look at these next graphs on how housing related employment contributes to overall employment in each Canadian city. All cities except Montreal and Ottawa are above the long term average dating back to 1987. * Data for Vancouver only goes back to 1995.

Canada
http://tinyurl.com/7osw2b2
Vancouver
http://tinyurl.com/829voma
Calgary
http://tinyurl.com/7edobv6
Edmonton
http://tinyurl.com/7jrzlc2
Saskatoon
http://tinyurl.com/7z56cxq
Toronto
http://tinyurl.com/7nc5h46
Montreal
http://tinyurl.com/867cn6c
Hamilton
http://tinyurl.com/7gowqzf

Some may say that population growth is driving the FIRE and construction sector employment to be above the long term trend. But that same reasoning should then apply to all other employment sectors but it hasn’t. Here we see that housing investment is near all time highs as a percentage of GDP.
http://tinyurl.com/75ugn8h

Now the problem the Government is faced with is that in 2008 they kicked the housing debt bubble problem can down the road in hopes that the households could do the heaving lifting until the economy recovered and something like business investment and hiring could take over, but that has not happened to the extent the Government would like to see. And because the Feds have kicked the household debt problem can down the road since 2008, we see that:

Credit market debt to income ratio has climbed from 134% in 2008 Q2 to 151% in 2011 Q4.
Household debt to GDP ratio has climbed from 84% in 2008 Q2 to 94% in 2011 Q4.
Household debt to income ratio has climbed from 136% in 2008 Q2 to 153% in 2011 Q4.
http://tinyurl.com/8yqt29v

And here we see that outstanding mortgage debt is still growing over 7% year over year. And previous “mortgage tightening” has had little to no effect. We see that mortgage debt growth was higher in Jan 2012 than any one month in 2010!
http://tinyurl.com/8xvfnq3

The housing market will either “soften” by the tightening of mortgage rules now, or down the road by the crushing weight of household debt. Both of these will crimp GDP growth and employment in housing related industries. This will lead to more than a “soft landing” in our housing market.

#271 Canadian Watchdog on 03.22.12 at 5:16 pm

Some of F’s campaign contributors.

39th General Election Details of Contributions from Trade Unions

Universal Workers Union Local 183: Dec. 29, 2005
TACC Construction Ltd.: Jan. 21, 2006
Miller Paving Limited: Dec. 15, 2005
TD Bank Financial Group: Jan. 21, 2006
Robert Attersley Family Properties Limited Jan. 11, 2006

More tonight…

#272 triplenet on 03.22.12 at 5:23 pm

#89 ozy – Lawyers are salivating
You’re a nut case.
– no pun intended

#94 D-Dawg
where were you in’82

#78 Tim
You are only partially correct. Try your hand at this:
(I’ll keep it simple)
Face value of loan: $25,000
Contract rate of interest: j2 = 10%
Amortization period: 25 years
Term: 5 years
Market rate of interest: j2 = 11%
Payments: Monthly

i) Calculate the Equivalent Nominal Contract rate – compounded monthly, the Monthly Payment and the Oustanding Balance due at the end of the Term.

ii) Calculate the Equivalent Nominal Market Rate with monthly compounding and the Market Value of the mortgage (Present Value of Payments and and Outstanding Balance at Market Interest Rate)

Show your work !

If you would like to challenge the exam (properly adjudicated) you will have 50 questions similar to this and 2 hours to complete.

Then 50 law questions – also 2 hours.

If you don’t have grade 12 university entrance mathematics – you’ll fail.
Unless of course you can memorize all the mathematical formulae and some magical principals of law.
Alot do. I know.

This test question should take you 5 minutes.
Post your answers for all to see.

#273 Keith on 03.22.12 at 5:24 pm

I will question orthodoxy here and ask if Flaherty is right. Why is it his job to impose the stricter lending conditions the banks keep asking for? Shouldn’t the banks be evaluating the risk profiles of their own customers and passing on customers who are marginal?

But they want Flaherty to do their jobs, because they likely fear market share loss. Unfortunately, shareholders don’t reward banks with lower risk lending portfolios and lower market share. But they should. Perhaps, Flaherty should let this thing run its course and give, not just homebuyers, but banks and their shareholders a lesson in moral hazard.

#274 Devore on 03.22.12 at 5:29 pm

#242 DJB

Garth I think the naysayers are trying to throw Flaherty’s non movement on amortizations and down payments back in your face. You did elude to this on previous postings as hearsay in the upcoming budget. If implemented it would have been equivalent to about a 1% jump in interest rates without touching the overnight rate.

What delusion? The delusion on your part that Flaherty is just sitting back with fingers crossed, hoping for the best?

Quietly, behind the scenes, through OSFI and CMHC, things are being done. F is a politician, he needs to make sure nothing will come back to him or his party. And you’re buying it. His options are open. He can tighten up mortgage lending if needed, as he’s been saying (and doing) for years, or he can “do nothing” as you say.

#275 Keith on 03.22.12 at 5:31 pm

Until then, they must compete with other banks for business, even if it means giving away 2.99% money to people with no savings and scant employment and credit history.

-Devore
=======

So in other words, the banks are too scared to make the morally correct decision to pass up market share and lower the risk on their lending portfolios?

Why should sound management of their lending portfolios be Flaherty jobs? He’s right about that.

He is wrong about the market not being his, as far as CMHC is concerned. But all that HELOC stuff? All those cashback mortgages? All on the banks and their shareholders who will punish banks who lose market share.

#276 ANONYMOUS on 03.22.12 at 5:37 pm

#173 : (“Charts are the past. Like looking in the rear view mirror.”)

Yes, you are correct there, I do have to agree with you on that point there !

But its just the fact that the markets are extremely over-bought, have not had a meaningful pullback in a long time, and volumes are falling quite a lot, this tells me to be careful, so 2 days ago I sold out and plan to buy back in one week when the averages fall a bit lower.

The overall trend of the market is generally higher, due to Central Banker’s printing presses gone mad, but for the next 1 or 2 weeks there will be a bit of a pull-back, that is all I meant.

Have a nice day !

#277 blase on 03.22.12 at 5:38 pm

Smoking Man,

I assure you, it’s not poverty wage in Asia, especially living rent free with housing provided by my employer. There’s no need to own a car here, although we own one. I bus for free to work on a uni bus, and take a train home that costs me $2. I am taxed at 8% for my income (used to be 4%); By working at my uni plus doing private lessons, camps on my summer and winter breaks for 2 weeks respectively, I was able to save $35,000/year for the last 4 years. In my 8 years here, I have managed to pay off $40,000 in Student Loans, visa cards, and Alberta Health Care debts; saved $150,000. Paid cash for a $13,000 vehicle. Got married, had a kid, traveled to Canada 3 times, to Thailand twice. Gone out on a weekly basis far more than any of my friends back home.

It’s easy to live well here because you don’t have to spend all your money on rent or a mortgage payment, and taxes are much lower. I can see a specialist any time, no appointment necessary. I can have an MRI done anytime and it costs me $50. I can eat out a restaurant for $5-$10 that I really enjoy and no tipping. We went to out to lunch in Calgary and it cost the 5 of us $120 with tip, ridiculous. I can see why everyone is tapped out there. But the house will pay off in the end? I don’t see it. Maybe I see the world differently than you Smoking Man. I go by “the Millionaire Next Door” way of accumulating wealth. You sound like that would be an anathema to you. That’s fine. To each his own, but I assure you, what ails the world is not teachers, although of course not all are good. They aren’t robots after all, but that’s what makes some of them so amazing, their humanity.

#278 Uh Oh Canada on 03.22.12 at 5:45 pm

Not only is Greaterfool.ca for concise financial advice, but now has a reputation as an Internet dating forum.

#279 triplenet on 03.22.12 at 5:45 pm

#241 Devore

Most recent cases:
Developers 3
Buyers 0

Stupidity is not a defence.

#280 T.O. Bubble Boy on 03.22.12 at 5:52 pm

HAM is alive and well in Garth’s old hood (Leaside):

http://www.torontolife.com/daily/informer/from-print-edition-informer/2012/03/22/the-chase-march-2012/

#281 Dan in Victoria on 03.22.12 at 5:52 pm

Syndicate Mortgage @ 181
Hey man listen to Garth and the others.
I’ve seen this gig time and time again.
I’ve seen the results when things go sideways.
I got my ass busted waaay back, I was lucky it didn’t break me.
Tell your buddy you’re going to pass
Send Turner a bottle.

#282 Riding the Pine on 03.22.12 at 5:57 pm

Just to be fair to the foreign investors that have “descended upon Vancouver buying multiple properties in full with cash”…I know more than a few local realtors who were buying multiple units in the same building and flipping them. They were/are the worst offenders of having both hands in the cookie jar, because many times they were the ones selling the cookies!

Anyone looking to avoid paying realtors obscene amounts of money to list your property…Assist 2 Sell. We just used them and paid $5000 instead of $31,000 (based on Remax rates). Hardest working realtors I’ve seen as well, because they’re hungry to take some market share from the fat cats.

#283 Devore on 03.22.12 at 6:01 pm

#261 T.O. Bubble Boy

Flaherty = Weasel

He is a politician!

On this, he is playing public opinion masterfully by shifting the responsibility onto the banks.

“They decide what they want to charge in interest rates. They’re the ones who make the profits out of this business, so I do find it a bit much when some of the bank executives turn to the government, the Minister of Finance and say, ‘”You ought to change the rules and make it tighter.”

He is putting the banks in the middle of a political football game. He is telling them to tighten lending. Why would they do it? If a bank were to do this, they would lose untold business to other banks, and not just mortgages, because that’s what people do when a bank doesn’t give them what they want. They take all their business next door. Why would they do this, when they can keep lending as much money as they can at the lowest rate they can, knowing all these loans are guaranteed by the government?

In other words, we’re asking banks to collude, and tighten lending together. Out of the goodness of their hearts. And to give their shareholders the finger. Even though the regulator does not require this. Interestingly, if banks were to similarly collude and all begin charging outrageous banking fees, with no impetus from the regulator compelling them to do so, almost everyone here would be screaming their heads off at the injustice. Cannot have both. Cannot expect someone else to do both.

In fact, what is happening while F is hanging the banks out to dry, is that behind the scenes, through OSFI and CMHC, rules are tightening. The banks know this. They’ve known this for months. This is why they are eliminating their high risk lending business. They’re not taking on any more risk. Some even unloaded it to unwitting “bag holders”.

Watch what is being done, not what is being said.

#284 ANONYMOUS on 03.22.12 at 6:04 pm

BUY AND HOLD GOLD / SILVER ? WHAT? No, not now, don’t do it !

Here, look at this 3 year chart of silver:
http://stockcharts.com/h-sc/ui?s=$SILVER&p=D&yr=3&mn=0&dy=0&id=p52599079983

notice how the price skyrocketed until about May 2011 and now is on a general ‘trending-lower’ trajectory? That is NOT a type of investment that will make you money, not when its trending down.

Gold and silver tend to follow commodities and look at the 3 year chart of Uranium, it is generally falling down:
http://stockcharts.com/h-sc/ui?s=URA&p=D&yr=3&mn=0&dy=0&id=p75741300188

Copper is slowly oozing down too: http://stockcharts.com/h-sc/ui?s=$COPPER&p=D&yr=3&mn=0&dy=0&id=p62702103508

The MOST TELLING sign is the 3-year chart of the Venture exchange, that one clearly shows a down-trend in commodities: http://stockcharts.com/h-sc/ui?s=$CDNX&p=D&yr=3&mn=0&dy=0&id=p27241856712

Overall; not a good time to be in either Gold or Silver or copper or any other commodities because China seems to be slowing, Europe is definitely slowing, and Garth Turner says that Gold is for Fools (I just threw that last one in there as a joke, but he is sort of correct now that the trend is down instead of up.)

#285 HDJ on 03.22.12 at 6:05 pm

This sounds rather unlikely. Any solution to the housing problem has got to be implemented more gradually. Politicians won’t bring down our house of cards and then expect to be re-elected – talk about shooting yourself in the foot! And, could be wrong, but do I detect a hint of glee in Garth’s tone?

The OSFI is not a political body. — Garth

#286 Timbo on 03.22.12 at 6:19 pm

http://krugman.blogs.nytimes.com/2012/03/22/the-irish-model-continues-to-shine/

http://www.markiteconomics.com/MarkitFiles/Pages/ViewPressRelease.aspx?ID=9310

damn graphs….

#287 EdmontonJim on 03.22.12 at 6:20 pm

Thanks Devore, that makes sense.

I suppose a balanced portfollio may as well include a high-risk/yield portion, but it seems to me that you could just as well allocate a portion of your ‘portfolio’ as gambling money.

For example, today I put 0.001% of my portfolio towards that ‘LottoMax’ product. It has a return of one billion percent. I can’t lose!

#288 gentleInvestor on 03.22.12 at 6:26 pm

Government involvement is a sure sign that the end of the trend is near.

The classic path of governments….

First government denies there is a problem

Second, government tries to fix the problem (making it much worse).

Third, government blames the problem on somebody else.

We are at two, three will come.

#289 Duckworth on 03.22.12 at 6:27 pm

Lots in my area (South Surrey) are still quickly selling out in pre-development stage . THese lots cost about 460-480 range and are only about 4- 5000sf with no view!!!

#290 Mario on 03.22.12 at 6:36 pm

Garth, do you ever tire of being wrong? Right after you posted this blog entry, Jim Flaherty announced that there will be NO housing market moves in this budget! He’s not gonna reduce max ammortizations, he’s not gonna increase min down payments, in fact he’s gonna do NOTHING cause he doesn’t believe in this so-called “bubble” you keep prattling on about. I’m about to close on a semi in Stouffville and I make only 55k a year. I’ve only got 5% of a downpayment, but that doesnt’ mean I don’t deserve to participate in the Canadian Dream. The idea that only people earning six figures deserve to have a house is ludicrous, and quite frankly, insulting to those of us who are average earners. And anyone who disagrees can smell my socks.

I’m glad you posted. I could not have made you up. — Garth

#291 Nostradamus Le Mad Vlad on 03.22.12 at 6:40 pm


Butch Cassidy and the Moonshine Dance

There was an Englishman, an Irishman and a Scotsman . . .

An Englishman, an Irishman and a Scotsman were sitting in a bar, drinking, and discussing how stupid their wives were.

The Englishman says, “I tell you, my wife is so stupid. Last week she went to the supermarket and bought £250 worth of meat because it was on sale, and we don’t even have a fridge to keep it in.”

The Scotsman agrees that she sounds pretty thick, but says his wife is thicker.

“Just last week, she went out and spent £17,000 on a new car,” he laments, “and she doesn’t even know how to drive!”

The Irishman nods sagely, and agrees that these two women sound like they both walked through the stupid forest and got hit by every branch. However, he still thinks his wife is dumber.

“Ah, it kills me every toime oi tink of it,” he chuckles.

“Moy woife just left to go on a holiday in Greece. Oy watched her packing her bag, and she must have put about 100 condoms in there.

“And she doesn’t even have a penis!”
*
Oooaarrrrrr, ’tis a foine day here in the Frozenagan. Lotsa good comments (a mass of them). Is Garthmania building up to a crescendo again?

#292 Tanya on 03.22.12 at 6:40 pm

Sounds like a win for the banks. Prices driven sky-high, backed by taxpayers, whole thing goes boom, taxpayers pay the sky-high price to the bank. No risk to the banks at all. And if these regs pass and the market tanks, the banks collect faster through co-opted CMHC than they would over the life of a mortgage, if no crash were to happen.

It’s hard to believe this isn’t all by design.

#293 debtified on 03.22.12 at 6:41 pm

#269 Bailing in BC on 03.22.12 at 5:03 pm

I will be in Rarotonga July 8th.

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

Get a Cook’s driver’s license (required to drive in the island). Best souvenir ever!

#294 DJB on 03.22.12 at 6:42 pm

Here is an interesting article that everyone should read so they know how the back side of CMHC works and how they get their money. It might be a little over some of the blog dogs heads but you have to start your financial education somewhere.

http://opinion.financialpost.com/2012/03/21/risks-of-cmhc-mortgage-cover/

I wonder what the connection of this and the OSFI rule changes are?

#295 Devore on 03.22.12 at 7:05 pm

#277 Keith

So in other words, the banks are too scared to make the morally correct decision to pass up market share and lower the risk on their lending portfolios?

Why should sound management of their lending portfolios be Flaherty jobs? He’s right about that.

Their portfolios are fine. You and me, we are making sure they stay that way. Banks aren’t panicking. But they do see what is inevitable, and would rather get there softly, rather than abruptly. Sooner or later, either the regulator, or the credit market will impose mortgage lending changes. Until then, nothing will happen.

#296 $$$BPOE#1 on 03.22.12 at 7:10 pm

Thanks F for confirming what I have been saying all along. Folks come to Aberdeen Centre ready to rock. Onwards and upwards folks. Remember when a certain poster talked about 40% price reductions. that poor uneducated little man
http://www.theglobeandmail.com/news/politics/ottawa-notebook/expect-modest-cuts-no-housing-market-moves-in-budget-flaherty/article2377866/?utm_medium=Feeds%3A%20RSS%2FAtom&utm_source=Politics&utm_content=2377866

#297 Can it be? on 03.22.12 at 7:12 pm

I’m sure the sellers that have been sitting on their properties for 1-2 years are feeling really good about now. Thanks Remax for continuing to assure is that the market is on fire! South east oakville… All the same properties listed for months to years… Lorne park same thing, put it on the market… Take it off. Mineola west… Increasing the number of listings weekly. The only plae selling is Port Credit South of Lakeshore. Everything else is painful to watch. The agents getting the listings are willing to cut their commission. Homes have gone through multiple agent listings. Prices change weekly. Up then down… Sometimes up then down again. Thank you Remax for pumping it up! Keeps those of us on the sidelines semi amused watching the show. On the positive side it’s a conversation topic :)

#298 Can it be? on 03.22.12 at 7:16 pm

Garth is on fire and so is this blog! Lots of posters onthe last 24 hours… Something must be happening ;)

#299 Devore on 03.22.12 at 7:16 pm

#289 EdmontonJim

There is a middle ground to be found. Personally I am willing to forgo the extra 1 or 2% yield and instead invest into a more transparent, regulated, liquid and easier to understand product or security.

#300 Sebee on 03.22.12 at 7:23 pm

That’s the end on “big moves” by F. As I expected, they will do nothing.

Today’s G&M

On the issue of Canada’s housing market, Mr. Flaherty made comments Thursday that suggest he is not preparing new measures in the budget to cool prices.
Mr. Flaherty said he would like to see if the market will “correct itself,” and noted that there are some signs that this is currently taking place.
Some Canadian banks are calling on Ottawa to intervene – either by lowering the maximum amortization period for insured mortgages or by raising the minimum required down payment.
Mr. Flaherty said he finds those suggestions “a bit much” given that the banks ultimately decide whether to approve a mortgage.

This is not what the above post is about. OFSI was not mentioned by F. — Garth

#301 zeeman on 03.22.12 at 7:33 pm

hi

Houman: where do you plan to live, now that you have sold your house for a nice profit….
i am also in the York region and I see no slowing down…houses are selling at asking price or more…

garth: i guess all the drama of mortgage changes has ended with F comments….but he does use the work correction to describe the market……but the masses will not pay attention to that

How can so many people read so badly? F did not even mention the looming OSFI changes, which are far more impactful than a change in amortization maximums. I give up. — Garth

#302 Olive on 03.22.12 at 7:35 pm

I was gonna buy a house. Scrimped and saved 25k. Went out with a real estate agent in TO. Tried to justify the purchase of an apartment that I could barrly afford, and watched prices drive up like a tsunami.

Then… I found this blog.

I’ve since paid off my student loan, invested 5k split between RRSP and TFSA (equities/bonds/ETFs), put 5k into an emergency fund, put first and last on a new apartment, bought my first set of grown-up furniture… and got a boob job.

For my friends, colleagues and family, a mortgage has bought (soon to be tainted) status and envy.

It took Garth to teach me a high ratio mortgage can buy a lot of intangible things, but what it can’t buy is a cash-paid pair of head-turning t*ts… which are, for the record extremely tangible.

I love you Garth (marry me?)!

Please send a revealing picture. Of the furniture, I mean. — Garth

#303 Daisy Mae on 03.22.12 at 7:48 pm

Hard landing (economics)
From Wikipedia, the free encyclopedia

A hard landing in the business cycle is an economy rapidly shifting from growth to slow-growth to flat as it approaches a recession, usually caused by government attempts to slow down inflation.[1] It is distinguished from a soft landing, in which an economy’s growth rate slows enough to control inflation, but remains high enough to avoid recession. [2] The criteria for distinguishing between a hard and soft landing are numerous and subjective.

#304 Daisy Mae on 03.22.12 at 7:54 pm

#249 JB: “Oh ya, so it was your market when you introduced the 40 year? But when it’s on the brink of blowing up in your face “Not my market! Don’t look at me, I tried to tell you” What a s*** show…”

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

So….the ‘blame game’ begins.

#305 Ret on 03.22.12 at 8:01 pm

That Kyle Bass guy called again today. He is a royal P.I.T.A.

He wanted to know how to buy some of that CMHC portfolio or bulk insurance for bundles of mortgages in bond cover pools as in the FP link in #297 today. He is looking for a little action on the side before he scores large again with one of those nothing-burger countries in Europe.

#306 jess on 03.22.12 at 8:01 pm

waiver from ten years ago now rule change under Dodd frank

Deutsche Bank trust company + an investment-banking arm —-> Taunus
which was holding bank now a domestic entity – other and will not be required to comply with increased capital requirements. Will other branches follow suit?

“When an institution becomes stressed, long experience has shown that foreign banks and their regulators are reluctant to send capital abroad to support U.S. operations,” Sheila Bair, a former chairwoman of the FDIC, said, The Wall Street Journal reports. “The only capital that matters is that which is here in the U.S. and can be accessed.”
==========================
How Latin America is coping with volatile capital flows
“However, it was also observed that there was space for evasion: investors were disguising short-term portfolio investment as foreign direct investment through swaps and derivatives, and by buying American depositary receipts (ADRs) abroad and selling the stock domestically.”

frameworks without funding?
$300 trillion swaps market.

“The U.S. swaps market…remains the largest dark pool in our financial markets,” Gensler said. “The Dodd-Frank Act squarely addresses this by shifting some of the information advantage from Wall Street to the commercial end-user community – to the companies across the country that use these markets…by providing all market participants the opportunity to come together to transact on transparent and competitive trading platforms.”

Gensler said that swaps dealers are being regulated for the first time, and clearinghouses are now required to move transactions to the central, public clearing as part of an effort to minimize risk to the economy.The Dodd-Frank Act also extends the CFTC’s enforcement authority to the swaps market and prohibits the use of fraudulent schemes.

http://bankcreditnews.com/news/gensler-warns-that-cftc-might-not-have-the-funding-to-meet-its-goals/3479/

#307 Daisy Mae on 03.22.12 at 8:14 pm

244 Smoking Man

“If kids today had critical thinking skills, the Toronto sky line would not be filled with empty condos.”

So instead the kids should buy those overly expensive empty glass boxes to make boomers like you filthy rich?

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

The ‘kids’ didn’t build the condos….

#308 Mr Buyer on 03.22.12 at 8:39 pm

#280 blase on 03.22.12 at 5:38 pm
……………………………………………………………………
Dearest Blaze…The rate of consumption by our in-country fellow countrymen is at a level simply unsustainable by wages at levels cited by yourself. Savers are losers here on this blog. Do not waste your breath or you will become a heat score for the RE, Bond and Stock and balanced portfolio pumpers that abound here. Do not judge to harshly as it has been a long time since our countrymen experienced 5% unemployment and $600 a month rent or $1000 a month in Tokyo. The $600 a month rent is for a house in a small town of 350k people (some go for $400 but they are even smaller than my paid off house if that is possible). You failed to mention the abundance of pristine dirt cheap used cars. Keep your head down and keep making much more than you spend and let the big lads have at it.

#309 eaglebay - Parksville on 03.22.12 at 8:41 pm

#237 John G. Young on 03.22.12 at 2:26 pm

You’re a sick puppy.
Try all you want, you won’t get me on your side.
I prefer hamburgers to hot dogs.
How are you making out in the “village”?
I got tired of being hit on about 22 years ago so moved out of TO. My good looks and virility attracted too much attention. Even the “working girls” were giving me discounts.
Such is life. Hope you don’t get ‘the disease”.
Now, go take your bath.

#310 Mr Buyer on 03.22.12 at 8:42 pm

I forgot to mention fiber optic internet to the door with television and phone for $70 bucks a month all in (with absolutely no bandwidth shaping).

#311 Mr Buyer on 03.22.12 at 8:44 pm

and no bandwidth caps. its fiber optic. i would have to have thousands of downloads motoring along to even cause a hiccup.

#312 Mr Buyer on 03.22.12 at 8:47 pm

I also forgot to mention $400 a year family car insurance but I have to shell out over 3k a year for health insurance so I do not yell that from the rooftops too often.

#313 Mr Buyer on 03.22.12 at 8:49 pm

2 full chicken breasts on sale yesterday $3 (no bull, 2 massive chicken breasts, what is this 1980?)

This is not a chicken breast blog. — Garth

#314 Blue Monster Lover on 03.22.12 at 8:52 pm

#109 ACP on 03.22.12 at 12:14 am
RBC tried to raise my LOC a few months ago and I just called them to complain and they reversed their decision. I told them the same thing, it’s not worth it at too high of a rate and I won’t use it, I have investments too that I would sell to pay it off. They said ok, and left my rate a just above 5%.

Yesterday I applied for margin on one of my investment accounts and am waiting to see what sort of rate I get, I expect it should be pretty good since it’s a secured line of credit that you can use for anything. You don’t have to buy stocks with it if you want to use it for other things, like paying down high interest bearing debt instead.

Also, I’m doing Norberts Gambit for exchanging piles of USD to CAD, I bought IAMGOLD today on the NYSE, well sell it later on the TSE and get CAD. Cool Stuff! Money’s fun.

#315 Blue Monster Lover on 03.22.12 at 9:12 pm

#152 Kevin on 03.22.12 at 9:16 am

@Westernman (#59):

“There aren’t many [Canadians with an I.Q. over 70] in this country ( maybe 1 or 2 % )”

You do realize that by the very definition of “I.Q.”, the average is 100, right? Thus, it is a tautology that roughly 50% of the population has an I.Q. over 100.
——
I thought it was 120 over 80?

#316 Mr Buyer on 03.22.12 at 10:22 pm

This is not a chicken breast blog. — Garth
……………………………………………………………………
Sorry about that. I knew the balanced portfolio pumper thing was going to get me in trouble. I’ll stick to my occasional socialism rants , lamenting about housing, and pointing out falling RE sales (I am by and large spineless and thus easy to lead around, I should own a newspaper or TV station or something like that (did I say that out loud?)).

#317 TimV on 03.23.12 at 12:11 am

So how much of CMHC’s insurance is being sold as portfolio insurance? Assuming CMHC hits the $600b limit, some of their existing portfolio insurance will presumably be up for renewal and they will use the free space to insure new 5% downpayment buyers. Will demand for insurance from <20% downpayment mortgages exceed the amount of portfolio insurance that comes up for renewal?

If CMHC runs out of insurance space, then Flaherty is right, in a futuristic sense, that it is the banks that issue the mortgages…

I know OFSI is not technically a political body, but it's hard to imagine that there is not some level of co-ordination.

#318 betamax on 03.23.12 at 12:28 am

Please send a revealing picture. Of the furniture, I mean. — Garth
This is not a chicken breast blog. — Garth

Dude, you’re on fire today. Too funny! You should be doing stand-up.

#319 TurnerNation on 03.23.12 at 6:56 pm

219zeeman1 on 03.22.12 at 1:02 pm

I voted against both Mayors – Miller and Ford. I could tell they were duds.