The Big Guys start reporting tomorrow. Quarterly earnings for the six banks that run our lives (and the economy, and the real estate market) are expected to be lower. Nothing serious, and no surprise. After eight interest rates hikes, a European war, US regional banking scare, sketchy capital markets and a consumer retrenchment, the bankers are feelin’ less love.
And let’s not forget about the mortgage thing.
Six months ago bank mortgage portfolios were behaving normally. Now a third of all borrowings have extended amortizations, and a growing hunk are being pushed out to 40 years and beyond. This comes after the Code of Mortgage Conduct was published in Chrystia’s March budget basically telling the banks (which are federally regulated) to play nice with homeowners who pickled themselves in low-interest mortgage debt.
The banks complied. Rather than enforcing contracts often calling for borrowers to cough up more in payments once their trigger had been pulled (not enough each month to cover the interest on variable-rate loans), mortgage ams have been elongated. Sometimes to extremes – seventy or even 90 years.
So the bankers may be giving out 4% or 5% interest on new billions in GICs, but are effectively collecting 2% on other billions in home loans. Not ideal. Of course, they’ll eventually collect their many pounds of flesh, since Canadians would rather eat drywall than default on a mortgage, but cash flow is impacted. And, yes, those borrowings are supposed to reset to 25-year amortizations when they renew in 2025 and 2026. Unless She says differently.
So don’t weep for CIBC, BeeMo, RBC, TDCT, the Bluenose or Quebec guys. They’ll be fine. No wobbling in Canada, and a dividend stream which is ever-growing and has never been disrupted. But there may be some share price slippage ahead.
Now speaking of mortgages, last week we told you about those who worry that 2025/6 will bring a massive real estate retrenchment as all those people who bought in 2020/1 at crazy prices with low downpayments face renewal. At least one bank is saying those bears are making it all up, and homeowners in general are doing fine. Sort of.
Derek Holt is an economist I have followed, debated and interviewed many times over the years. These days he is one of the most prescient and knowledgeable guys on The Street. (By the way, he’s calling for the Bank of Canada to hike its rate in two weeks.) He just made these 5 points about our debt reality:
- 60% of households don’t even have a mortgage. 27% own their homes outright without a mortgage. 33% rent and while they have seen increases in rents, on average across the country CPI shows more modest increases than the payments shock coming to some mortgages.
- Of the 40% of households who own their homes with a mortgage, the most pressured are those who took out new mortgages or refinanced at the peak for house prices and the trough in borrowing costs over 2020–21. Affected households will have a few years of income growth and the opportunity to make adjustments.
- First-time homebuyers have had the opportunity to amass larger down payments as they have been sidelined and waiting to pounce upon cheaper prices.
- Higher immigration is flooding into a market at a pace that is driving the fastest population growth among major economies as immigration targets rise.
- This infusion of demand into a market with basically no supply and where the supply side adjusts with long lags will persistently pressure house prices. Housing strengths in an economy that remains in excess demand with very tight labour markets could be among the factors that I think will foment another round of pressures on core inflation.
Hmm. Is Holt blowing smoke up our butts? Or is the Houseageddon scenario done? Would a shock like an American debt default (next Thursday, maybe…) spike rates and crash everything? Or in a country with low supply, a growing population and eternal real estate lust is a home in a major urban regional market a no-risk asset?
All we know is that a correction happened. In many places prices fell by a third. Nationally CREA’s average plunked 23%. Then a recovery. Now we have price escalation, and yet economic uncertainty. The buyers may be greater fools. They may be opportunists. After all, the country has never known a housing price decline of greater than 30%.
By the way, for context, the typical real estate sale price in Canada is currently $716,000. The average in Ontario is $911,000. In BC it is $995,500. And down in America, where ten times the number of people live, the median is $450,000 ($607,000 beaver dollars).
Now why do you think that is?
Current US house prices – nearing 2022 high
About the picture: “Hi, Garth! Here’s our boy, Chumlee,” writes Leslie, “after he put up with a home-made haircut from his mom. He’s Havanese, Maltese & Poodle, one hairy fella. He loves his car rides and your blog. :>) Thanks for sharing everyone’s pet pictures, so nice to see!”
To be in touch or send a pictureof you beast – [email protected].
142 comments ↓
Garth, any guestimate as to how far the bank stocks will fall? Some of them are paying dividends of 6% and look tasty.
Canada is a big country geographically but in terms of where people can actually live it is small. USA has much more choice and livable land. $109,000 more isn’t that much given that reality.
Early post? What time zone is this blog in…
…
#56 Leftover on 05.22.23 at 6:23 pm
Nobody’s gonna move to a Chateau in France. The whole POINT of living in Kanada is being able to brag about your overpriced home.
“Oh we live on the West Side”. Tongues then clack “Homes start at 3 million there don’t they?”.
They know. What a flex.
Obedience and one-up-manship is prized in Kanada. Obedience certificates, working for The Party or being a Friend of the Party. Compliance is key.
Learn from History . The Corvid “Rules” were designed to pit one against another.
I mean this literally reads like the past 3 years. The screaming, tacking, shunning, arrests of anyone daring to show their smile. Families, friends, co-workers; pitted.
https://en.wikipedia.org/wiki/Struggle_session
“Struggle sessions or denunciation rallies were violent public spectacles in Maoist China where people accused of being “class enemies” were publicly humiliated, accused, beaten and tortured by people with whom they were close.[1][2] Usually conducted at the workplace, classrooms and auditoriums, “students were pitted against their teachers, friends and spouses were pressured to betray one another, [and] children were manipulated into exposing their parents”
The denunciation of prominent class enemies was often conducted in public squares and marked by large crowds of people who surrounded the kneeling victim, raised their fists, and shouted accusations of misdeeds.[1][5]”
Letting people stretch out mortgage payments for up to 90 years means that interest rates will have to stay higher for longer to fight inflation.
It could also mean many people will have to work until they drop dead to keep paying those mortgage payments far into the future. I probably won’t be around anymore to see 90 years old getting evicted for not paying their mortgages but that could also happen.
Why are houses 30% cheaper int he USA? Because they had their housing crisis already and we have terrible policy coupled with growth of credit to inflate housing as a replacement for a real economy.
Top 5 reasons not to move to Canada | Why Canada is broken
https://www.youtube.com/watch?v=OlKbssRy5aM
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COMMENT:
Re immigration?
…listen to an immigrant !
Makes excellent points…
If all this is true….why did the government have banks extend amortization to 90 years?
If VRM holders didnt get bailouts…..There would be too much housing inventory. If OSFI let the free market do the right thing….pricing correction and tons of supply would be in the works
“60% of households don’t even have a mortgage.”
Dang it! So now you’re telling me I’m a 60%er when I’ve been scrambling to be a 40%er (that pay no met tax). This is really getting complex. LOL
#125 AnonyMusk on 05.23.23 at 1:27 pm
Sail Away should keep mentioning stocks, as many as possible, so that the ‘stock tracker’ (“stocker” for short) can report daily on them.
I wonder how he has time for anything else?
$$$$$$$$$$
When one owns and manages a successful private company that creates quality employment for others, it tends to allow them more flexible personal time.
——–
As apposed to stalkers who spend hours
spewing anger and hate on the public dime.
That dog looks like it’s wearing a toupee. LOL. What a cutie.
What is the rationale for not letting Canadians lock in 25 year fixed rates like the Americans can? Wouldn’t that provide a measure of stability?
#85 crowdedelevatorfartz on 05.22.23 at 10:07 pm
Hmmm
Is India cracking down on the paper currency again?
https://www.reuters.com/markets/currencies/indian-rupee-poised-weaken-after-central-bank-pulls-2000-rupee-notes-2023-05-22/
2000 Rupee are worth about $32.50 canuck bucks.
Or its an attempt to crack down on tax evaders and drug dealers like they did a few years back with another large denomination bill pulled from the circulated currencies……
A crypto Rupee can’t be far behind.
———————————————-
This is why the Digital Currencies are interesting tools, provide transparency into what is going on. You could go after Drug Dealer as well as Money Launderers etc . However like any tool it can be used for different ends, I suspect TPTB’s actual intention is greater control, benefits when you spend the “right way”, and penalties if you buy things nasty things like personal ICE vehicles.
A crack down for under the table tradesmen coupled with loopholes for the connected to exploit.
One question:
For the variable rate mortgages that have gone “underwater”, so to speak, due to the rise in interest rates, so that they’re no longer even covering the interest, how does extending the amortization period help? It doesn’t reduce the interest that has to be paid, does it?
Tools
RE conversation regarding near cash equivalents and how some Canadian banks brokerage accounts were restricting access.
I discovered ZMMK, currently pays $0.21 a month on $50, and while it is a BMO ETF it is available via the green bank.
Seems good place for the short\medium term dry power storage, a bit above inflation.
A flag man job pays $25/hr? Err “Traffic Technician”.
BRB, off to visit my local “Coffee Technician” for a cup of joe.
https://ca.indeed.com/Liuna-183-jobs-in-Ontario?aceid=&gclid=EAIaIQobChMIxsb9m4aM_wIVOMrjBx2KqQWOEAAYASAAEgKBOvD_BwE&gclsrc=aw.ds&vjk=053537b6eca4375a
Traffic Technician
Greater Toronto Area, ON
$23.28–$28.54 an hour – Full-time, Part-time, Seasonal
—————- —
What is the point of Kanada? No national identity; Cancel culture writ large. Years of the citizenry spent battling each other over “The Rules”. The Party basically running our daily lives, 101 new rules and laws passed against us each year. A giant kindergarten state.
Funneling everyone into the banking/telecom/airline/media/oil/developer/food oligopolies. A giant Tax Farm site for our Masters.
POV: there are no doctor or nurse shortages at the Maid or Abortion Clinics. No clinics closing early due to lack of staffing. You will get an appointment ASAP. With a family doctor? Never/maybe
So the bankers may be giving out 4% or 5% interest on new billions in GICs, but are effectively collecting 2% on other billions in home loans.
_______
No idea what you mean by effectively. The banks are getting interest at the increased rate, not at 2%. The only difference is the loan amount isn’t going down.
There is no impact on bank earnings unless they need to increase the loan provision (which they might).
#1 tkid on 05.23.23 at 1:37 pm
Garth, any guestimate as to how far the bank stocks will fall? Some of them are paying dividends of 6% and look tasty.
_________
Two things:
1) The markets have already factored in the earnings so no reason to believe the stocks will fall
2) You must be new here. Garth posts at least 10 times/week to be a long term investor, not a market guesser.
Why do I think that is? Canadians are fools.
In the UK the average house price 2023 is $483,174.06 CAD (288,000 GBP) A small island (s) with 67.22 million people on it. Manitoba is bigger than the UK. Ontario is 8.25 times the size of England 15 times the size of Ireland and the same size of US states Texas and Montana combined.
The average house price in Canada 2023 is $716,000 CAD. Canadians should maybe let that sink in.
Now why do you think that is?
—————————————-
The real supply shortage in Canada is desirable cities, where you can both find a high paying career and have the amenities many people are looking for. In the US there are many, many of these types of cities, so more “supply” available for folks willing to move, at all sorts of different price points. Here it’s Toronto and Vancouver. And that’s about it. No surprise those two areas significantly increase the Canadian average home price.
All I know for sure is that I have been chomping through way too much popcorn over the last several months. It continues to be an interesting show.
Now why do you think that is?
Current US house prices – nearing 2022 high _Garth
Double top ,four touches ….tank! 300,000?
The real Kip (Ret) on 05.23.23 at 2:02 pm
“60% of households don’t even have a mortgage.”
Dang it! So now you’re telling me I’m a 60%er when I’ve been scrambling to be a 40%er (that pay no met tax). This is really getting complex. LOL”
That means that the one who do, are up to their eyeballs in debt.
2.3 Trillion in mortgage debt.
TICK TOCK, TICK TOCK
I live in Gilbert Arizona. We rent a house for 2750 a month, comes with a pool boy. If I was to buy, I would be over 3k a month. Everyone down here, thinks homes are way overpriced.
#3 TurnerNation on 05.23.23 at 1:53 pm
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Excellent Post .
The irony is that after the communists (everywhere ,not only in China ,including my previous country) went after “The rich” (basically every single business owner, homeowner and people with any savings) the next to fall were “The intellectuals ” ,the very same teachers and professors who supported them the most.
Today’s leftist leaning don’t seem to understand that they ,themselves are the biggest danger to the same people they try to bring to power and they would become “enemy of the people” overnight. Why you may wonder ? A: because they are proven thinkers and figthers and the party needs compliance and rules following.
Canada?
Corruption??
Mais Oui.???… Sacre Bleu !!!
QUOTE:
Eglinton-Crosstown LRT and SNC Lavalin
https://gangstersout.blogspot.com/2023/05/eglinton-crosstown-lrt-and-snc-lavalin.html
True North is reporting that “It could be considered the boondoggle of the past decade and proof of how little accountability there is by provincial and municipal governments over major construction projects. I’m referring to the Eglinton-Crosstown LRT build, which is now in its 12th year of construction with no end in sight.
The construction is at least $1B over budget (up to $12.5B which includes operating the system) and the actual opening is likely one year away–four years from the initial target date of fall 2020.”
Ten seconds on Google and the real probelm is revealed. The shell companies work for SNC Lavalin. SNC Lavalin is the Canadian version of Lockheed Martin where Government corruption and Corporate corruption are joined at the hip. They under bid and over charge government contracts then pay a bribe in the form of a political campaign contribution to the dirty politicians that award them the contract. This process happens over and over again.
SNC Lavalin is the reason the Site C Dam doubled it’s initial bid as budget overruns rose to $16 billion. That is organized crime. The NDP defends the extra costs because they receive campaign contributions from SNC Lavalin just like Justin Trudeau does. They all do.
Hydroelectric power is great. SNC Lavalin is not. SNC Lavalin won the contract for the Evergreen line of Skytrain when they were banned from bidding on world projects. Letting SNC Lavalin bid on the Pattullo bridge replacement is organized crime. They hide their involvement through shell companies just like the CIA does. Imagine that.
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COMMENT:
Check the TWITTER feed..whereby
—-The Quebec pension fund owns majority of SNC Lavalin…
—- Saudi Arabia is one of SNV Lavalin’s biggest clients
—-Quebec is against the Energy East Pipeline
—-Saudi Oil is exempt from Carbon Tax
==================
I also follow what goes on in USA…California is awash in oil resources…some of biggest reserves in the world, yet they import Oil from 3rd world countries via tankers …and these foreign Tankers emit some of the worst pollution and some estimate collectively the tankers pollution exceeds what all the cars in California combined emit annually.
Something really stinks here…literally, figuratively and fiscally.
27 percent of households “own their homes outright without a mortgage”
Aren’t they the real homeowners, and the “others” simply mortgage owners?
From Steve Saretzky
More than 75% of all variable mortgages in Canada have Hit Their trigger rate
https://www.youtube.com/watch?v=HLSv1V__STw
National house prices and rents are moving higher. This is creating more inflation and pressuring the Bank of Canada. Some banks are now calling for another rate hike in June.
However the pain has yet to hit many home owners. Only one third of all mortgages have seen their payment increase.
#79 Shawn on 05.22.23 at 9:45 pm
Young people, please pair up and get into a live-in relationship. Formerly single people sleeping together with a partner will free up a lot of housing units.
Do it for yourself and for the country. No need to thank me for this idea.
============
Let’s improve upon your suggestion.
Don’t know where you are but here in BC , that would qualify as “Common Law” after 6 months and the female side of the relationship will walk away ( women initiate 80% of separations) with pretty much everything ,likely spousal support as well.
Better to stay in “situationships” with the opposite sex and get a same sex roomate ,with a clear tenancy sharing agreement and separate bedrooms.
Chumlee is ready for his closeup! He has those movie star good looks & I’m sure gets plenty of compliments.
I agree with Derek’s take on how RE will place pressure on core inflation. How could it not given its weight when rating our economic basket of goods as prices continue to increase across the board? I think a case could be made for RE having a flow through effect on rental increases too. Yes, materials, labor & utility prices have increased but I think the rapid escalation of rents being charged across the board reflects increased RE prices. Call it the rental version of keeping up with the Jones.
#6 Alois
THAT was excellent. Just subscribed to him. A matter of fact guy that tells it like it is.
Classic line of the whole video to me:
https://youtu.be/OlKbssRy5aM?t=595
I still love Canada and I always will but to move back?
No. For healthcare alone, NO.
Hades more compelling if you were to listen to him.
It’s sad to watch a person say they made the wrong decision moving to Canada. Sad indeed.
Did Chrystia Freeland do this?
No, the third of mortgages with extended amortizations was as of the banks’ Q1 which ended February 28 – so before the budget said play nice.
Those “extensions” as of February 28 were mostly automatic since VRM mortgages with fixed payments have variable amortizations by nature and by contract.
Give it up. You are wrong. Variable amortizations are not written into VRM contracts. I think you made that one up. In any case, you think the Departmebt of Finance and OSFI were not talking to the banks a year ago about what was coming when the tightening cycle started? – Garth
QUOTE:
“…..Hmm. Is Holt blowing smoke up our butts? Or is the Houseageddon scenario done? Would a shock like an American debt default (next Thursday, maybe…) spike rates and crash everything?….
”
===================
Why the Debt Ceiling Is Mathematically IMPOSSIBLE
https://www.youtube.com/watch?v=3poZkfEFUi8
“Politicians and pundits alike talk about balancing the budget, paying down the debt and living within our means. They don’t understand that that is deflationary, it is impossible to do under our current monetary system without collapsing the whole economy” – Mike Maloney .
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COMMENT:
I recall the term VooDoo economics.
The current fiat- currency economic system is THE only system in the entire universe that bypasses any/all natural laws.
Rob Peter ….to Pay Paul… (with Mary as a backup if needed.)
Stir and repeat ad infinitum
Good News: = My Gretzky rookie card will be worth $1 BILLION soon !!! (not sure which currency… yet ..hopefully before CBDC rolls in )
#27 Alois on 05.23.23 at 3:15 pm
From Steve Saretzky
More than 75% of all variable mortgages in Canada have Hit Their trigger rate
https://www.youtube.com/watch?v=HLSv1V__STw
National house prices and rents are moving higher. This is creating more inflation and pressuring the Bank of Canada. Some banks are now calling for another rate hike in June.
However the pain has yet to hit many home owners. Only one third of all mortgages have seen their payment increase.
*********************************
Good post Alois
And why would two thirds of those that hit the trigger rate not have seen increased payments?
Kneejerk suspicious reason: The banks did not enforce the contract. Trudeau told them not to.
More likely reason: The contract simply in many cases did not require any increased payment until renewal despite hitting the do called trigger rate. Triggered what? A finger wag letter?
I’m just trying to understand. Anyone on a VRM have a trigger letter and been told your mortgage contract won’t be imposed on you? Or were you never required to increase payment yet. I’m sure mileage differs at different banks.
“Current US house prices – nearing 2022 high”
The graph says “single-family”. Does that mean detached houses only?
If so, the delta between U.S. and Canadian home prices is much larger, as the $716k figure for Canada includes semis, townhouses and condos.
#30 Dolce Vita on 05.23.23 at 3:32 pm
#6 Alois
THAT was excellent. Just subscribed to him. A matter of fact guy that tells it like it is.
============================
COMMENT:
Thanks..glad you enjoyed it…makes it worthwhile posting.
I think many immigrants will realize Canada’s not the “street paved with gold” paradise others claim(and I am speaking as a 1st generation Canadian in my early 60’s aka a “boomer” when opportunity abounded for refugees like my parents.
(My parents..their peers and my generation did live in a more golden age..it is what it is.)
In video…He sarcastically noted that Immigration Lawyers and Realtors seems to be the main ones benefitting from immigration.
I saw an unbeleivable YouTube video about latest generations of agricultural technology..its is mind blowing….(such as an IT driven machines picking ripe apples with suction cups)…the point being many immigrants will not be needed for entry level jobs…whilst at the other end those with skills and degrees etc. may never own their own home.
I understand the RE metrics and main economy, but there is inherently something very wrong when say a combined family income of say $150,000 cannot even afford a basic strata?
There is this huge societal and economic void and disconnect evolving…which we should ALL take heed as I don’t think it will end well otherwise.
Ciao…
#29 Linda on 05.23.23 at 3:25 pm
Chumlee is ready for his closeup! He has those movie star good looks & I’m sure gets plenty of compliments.
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COMMENT:
Actually..met Pawn Stars Chumlee, Corrie and the Old Man a while back at PNE for a meet and greet.
Really nice guys…Sold Corrie a fossil I bought for maybe 25 cents and he offered me $15…I think he was surprised I didn’t dicker.
People teased hell out of Chumlee and he took it in stride. Hilarious.
Got them to autograph the receipt.
Again…..really nice folks.
A prescient analysis, Garth.
Canada will be breaking through 40,000,000 people within weeks.
https://www.cbc.ca/news/canada/canada-record-population-growth-migration-1.6787428
The upward of trajectory of property values looks very solid for the next two decades and beyond. Probably slightly better than what we have seen since 2009.
Don’t miss out.
Livable Land in Canada is 760,000 sq. Miles
Livable Land in US is 1,855,000 sq. Miles
Canadas population is 38,000,000
US population 331,900,000
Do the math…. We have enough land
Steerage seems a little gloomy today. We Sail Aways very much enjoy our home on Vancouver Island for a number of reasons:
-It’s owned (well, leased from the Crown, anyway) free and clear
-Excellent ocean, trout/salmon fishing, hiking, biking, mountain trails within 10 minutes
-Private, well-treed property overlooking Departure Bay
-5 minutes from ferries, 5 minutes from float plane, 5 minutes from work
-Vacation destination, so friends and family preferentially come to visit
-Profitable place to base a company for reasonable property rates and cost of living, while working Vancouver jobs at Vancouver prices. 20 minute floatplane to downtown Vancouver meetings, when needed.
-Very few hunters (this is for Canada, in general), so amazing hunting experiences for the enlightened
-Easy touching distance of the Chilcotin, western Canada and US
-Mt. Benson. Significant, accessible hike year-round. Wear traction devices in winter.
Have any of TurnerNations predictions come true?
I think it’s time to start taking your meds again buddy.
#18 Victoria on 05.23.23 at 2:40 pm
When I was a toddler In 1974 my parents come to Canada sold there small house in Hove that they only owned for 3-4 years and had enough money to by a small new house in Huntington Hills in Calgary for under 20K.
Part of my understanding on leaving England was for opportunities here in Canada, and cheaper housing.
It does not seem a wide a gulf now if any.
25 years of bad monetary policy happened.
But that is slowly being reversed in a once-in-a-lifetime financial transition, which will take a few years to play out.
“What happens when $2 trillion is sucked out of the global economy? It may not be pretty”
https://www.cnn.com/2023/05/19/economy/quantitative-tightening-global-impact/index.html
You said the Big Six run our lives, economy and real estate racket. I admire your honesty, bro. And who runs the Big Six? And do they do it in the interests of the citizens of Canadastan? Lol. Just an arm of the federal government are they.
yawn, I’ve heard , read, lived through all this nonsense for 30 years yet my wealth slowly creeps higher.
How is this a healthy housing market?
When the whole market is dependent on the government of Canada arbitrarily allowing banks to extend mortgage amortizations to 50, 70, 90 years, how is this a healthy market? Who predicted this would happen? Answer: no one.
Now that the government has done this, what will they do next to help keep people in their homes? Answer: anything.
It doesn’t matter if 40%, 50%, 60% of the homeowners own their homes outright, it only takes a small % of people to sell because they can no longer afford their home, resulting in the market going down. Will this happen now? Answer: no.
The Canadian market has never known a decline of more than 30%. The Canadian market has also never known of an increase in housing over the last 20 years of what 2 to to 3 times the rate of inflation? At this point, does it matter, will the Government of Canada allow housing to correct via current owners being forced to sell? Answer: no.
I come here to read the financial news, commentary on our country’s politics, a seasoned opinion and the humour, but as far as predictions on where housing is going, its a fools errand as the system is too big to fail now.
Yes, there were variable amortizations
Give it up. You are wrong. Variable amortizations are not written into VRM contracts. I think you made that one up. In any case, you think the Departmebt of Finance and OSFI were not talking to the banks a year ago about what was coming when the tightening cycle started? – Garth
**************************************
I did not make it up. I concluded that based on math the amortization of a Variable rate mortgage with a fixed payment HAS to be variable.
What I don’t know is what happens at the trigger rate. I would have thought it triggered an increased payment. But unreliable sources told me, no, nothing happens at the trigger rate in many cases. The contract did not require anything to happen. And that would be consistent with all these VRMs hitting trigger rates and 2/3rds getting no payment increase. No way 2/3rds got payment relief (but that is just a belief on my part) The reality of variable amortization however is simple math.
From the link I put up yesterday.
“From 2016 to 2019, Canada welcomed a record high number of immigrants and more than 9 in 10 settled in CMAs.”
More than 9 out of 10 immigrants to Canada settled in urban settings.
More than?
How do you end up with partial people?
Probably because they gave up an arm and a leg to get here…
M48BC
Oh, faron of the many, many, many comments- as you’re “Sittin’ in an All Night Cafe”, do the “Seasons Come, Seasons Go” slowly? Your act is really a “Back Street Affair” if you ask me. “Yonder Comes a Sucker” comes to mind when I think about you. Is it “Sign Off From Faron” time yet? That would be cool. It would be one of those “Moments to Remember” and cherish in my life going forward. Is this another “Hello Walls” lazy day for you? ;]
The rise of Twitter.
Elon’s Twitter is fast displacing the traditional media. Robert Kennedy announced his presidential run on Twitter, and Ron DeSantis is preparing to do the same in a Twitter Spaces, together with Elon.
Then all the media reports the things that happened on Twitter.
Plus, of course, Twitter is already the place to go for context on any story that’s reported elsewhere.
This is good. Very, very good. Journalistic integrity, fact-checking everything, real-time updates. Bias, either side, immediately called out. More, please.
“First-time homebuyers have had the opportunity to amass larger down payments as they have been sidelined and waiting to pounce upon cheaper prices.
This is a bad take.
People have not been saving a bigger down and “caught up” to prices. If anything, people are saving more for a down payment that needs to be higher.
If average prices increased $50K in a year, how many people are able to save the “extra” $12,500 minimum for the “privilege” of taking on more mortgage?
“Hi, Garth! Here’s our boy, Chumlee,” writes Leslie, “after he put up with a home-made haircut from his mom.
_______________________________
What about Jay Powell? Do you style him too?
Lookalikes!
..is a home in a major urban regional market a no-risk asset?
Basically.. Yes as good as it gets.
For it to be as risky as it should be we’d need the same circumstances as now but with a completely different, laissez-faire government at the helm. This is akin to saying “in a parallel universe”. Canadian real estate is too big to fail and homes in major markets will never fall materially for long because it just won’t be permitted. It’s a centrally managed market.
Comments on Derek Holts 5 claims:
Claim 1 -“60% of households don’t even have a mortgage. 27% own their homes outright without a mortgage.” – True but totally meaningless. A paid for house does not command a premium or a discount or affect the market in any way. The price is set by the last sale. ECON 101.
Claim 2 – “Affected households will have a few years of income growth and the opportunity to make adjustments.” – True, but misleading. The majority of individuals were within $200 per month of oblivion BEFORE interest rates spiked. They are also unlikely to get the massive raises needed over the next two years to get their amortizations back into shape.
Claim 3 – “First-time homebuyers have had the opportunity to amass larger down payments as they have been sidelined and waiting to pounce upon cheaper prices.” – Unlikely to untrue and claim is evidence free. The FTHB could not have possibly amassed down payments large enough to account for the the 23% bump in prices, while still qualifying for the mortgage at higher rates. The math behind this claim is impossible.
Claim 4 – immigration boosting prices – Possibly true, but this one sounds more like an urban myth to deflect blame away from our own stupidity. Besides, most new immigrants are of very modest means and would need to qualify under the new higher interest rates, so it would only affect the bottom end of the market. Again, the math isn’t really supporting the claim.
And Claim 5 – Lack of listings. – True, and this one trumps all the previous claims into oblivion. The other four claims are meaningless until this gets sorted out.
Until listings stabilize the market is eating the seed corn and realtors are bragging that it’s a feast.
Nothing healthy or stable happening here.
1 year inflation is 4.4% while 2 year is at 11%. We’re off a very high base number 1 year inflation will pick up in the fall and we’ll see the next round of rate hikes then. Holt sounds researched but the base rate last summer was already 9%, inflation will be hard to build off that.
#109 Steven Rowlandson on 05.23.23 at 10:32 am
“Construction jobs start at 25-30. ”
Ha!, Ha!, Ha!, Ha!, Ha! I started on a framing crew in 1981 for $5 an hour and the next year doing stairs for $4 an hour and now I make $17 an hour and I am going on 63 years of age this summer and no wife, kids or a home yet. If the joke is on me it isn’t funny.
___________________________________
Stevens numbers ring true!
Hey Flop, how about some input.
Canada might be a large country on the map but in reality it is a very small country geographically speaking. we have southern Ontario, the lower mainland, southern Quebec and parts of the Maritimes where people are comfortable living. In contrast although the US has a much larger population most places save the fly over states are livable and they have so many smaller centres which are easily accessible to the larger centres that is what keeps house prices cheaper there.
Canadastan- a nation of horny house flaunting financial illiterates, combined with 1/2 of the citizenry sucking on the government hind tit, no wonder all those jobs remain unfilled. Sounds healthy to me. Not! China is now # 1 in worldwide car sales, surpassing Japan. Chinese Tesla cars are moving briskly also. Soory, faron. :(
#46 Shawn on 05.23.23 at 5:00 pm —Yes, there were variable amortizations
Give it up. You are wrong. Variable amortizations are not written into VRM contracts. I think you made that one up. In any case, you think the Departmebt of Finance and OSFI were not talking to the banks a year ago about what was coming when the tightening cycle started? – Garth
**************************************
I did not make it up. I concluded that based on math the amortization of a Variable rate mortgage with a fixed payment HAS to be variable.
What I don’t know is what happens at the trigger rate. I would have thought it triggered an increased payment. But unreliable sources told me, no, nothing happens at the trigger rate in many cases. The contract did not require anything to happen. And that would be consistent with all these VRMs hitting trigger rates and 2/3rds getting no payment increase. No way 2/3rds got payment relief (but that is just a belief on my part) The reality of variable amortization however is simple math.++++++++++++++++++++
Holy mother of dog! The AMORTIZATION IS FIXED and can be found in the contractural mortgage agreement. Read the damn thing! Period, over and out! Variable rate choice means the payment amount specified in the ‘TERM’ is static, so this means the mortgage account amortization can get ‘OUT OF WACK’ if rates go up, but the contractural amortization remains the same as stated in the contract. Banks send out annual mortgage statements regardless of the TERM length. Smart people read them. Smart people take responsibility for their obligations. They also understand that compounding on variable is different than fixed rates and so the effective rate isn’t the posted rate. ARGUMENTATIVE! Throw this bum out of Garth’s Courtroom! Where are my smelling salts or the bottle of Wild Turkey?!!
Nice hairstyle on that dog, and purple is the colour of magic…
deplorable was the word said the houston mayor
A Housing Bust Comes for Thousands of Small-Time Investors
They were offered the benefits of owning apartment-building rentals without any of the work, in real-estate investments that have already left some people empty-hande – wsj
https://therealdeal.com/national/2023/05/23/small-time-multifamily-investors-go-belly-up/
#39 Sail Away on 05.23.23 at 4:23 pm
Steerage seems a little gloomy today. We Sail Aways very much enjoy our home on Vancouver Island for a number of reasons:
-It’s owned (well, leased from the Crown, anyway) free and clear
-Excellent ocean, trout/salmon fishing, hiking, biking, mountain trails within 10 minutes
-Private, well-treed property overlooking Departure Bay
-5 minutes from ferries, 5 minutes from float plane, 5 minutes from work
-Vacation destination, so friends and family preferentially come to visit
-Profitable place to base a company for reasonable property rates and cost of living, while working Vancouver jobs at Vancouver prices. 20 minute floatplane to downtown Vancouver meetings, when needed.
-Very few hunters (this is for Canada, in general), so amazing hunting experiences for the enlightened
-Easy touching distance of the Chilcotin, western Canada and US
-Mt. Benson. Significant, accessible hike year-round. Wear traction devices in winter.
—————————————————————-
Love the Island, will be fishing out that way for the second time this year, in June. Usually one winter steelhead trip, and one salmon trip out of Ukee or Tofino annually. Over the years have fished Renfrew, Bamfield (lots), Winter Harbour, Kyuquot, Tofino, Ukee and multiple rivers like the Stamp, the Cowichan, Nanaimo. Great place if you like to play outdoors.
Only downside to the Islands, for me, is the time it takes to get on and off it via ferry. While the sailings are reasonably short, the waiting / loading and occasional delays are a pain, could be 300kms somewhere else in the time it takes to go 50Km. Almost always fly in these days.
pitches from syndicators?
… At one point, the firm was one of the city’s largest landlords and had $500 million worth of multifamily holdings across 7,000 units in the region
The Houston apartments, acquired by Applesway in 2021 and 2022, were described by The Houston Chronicle, which reported the foreclosures, as “rat and roach-infested.”
https://www.dallasnews.com/business/real-estate/2023/04/14/dallas-apartment-investor-loses-houston-properties-to-foreclosures/
A major reason was the rise of floating interest rates, which sent monthly payments upward, outpacing rents.
Ron DeSantis will be DOA when he makes his big announcement. As for Robert Kennedy Jr, enough has already been tweeted about him on Twitter. None of it good.
#60 Mattl on 05.23.23 at 6:01 pm
Love the Island, will be fishing out that way for the second time this year, in June. Usually one winter steelhead trip, and one salmon trip out of Ukee or Tofino annually. Over the years have fished Renfrew, Bamfield (lots), Winter Harbour, Kyuquot, Tofino, Ukee and multiple rivers like the Stamp, the Cowichan, Nanaimo. Great place if you like to play outdoors.
———-
Nice! Have fun. I’d be happy to pass along our favourite charters…
The total area of the places where almost everyone lives in this country could easily fit into most American states. We’re a group of islands separated by vast distances of frozen isolation.
https://imgur.com/a/YRHIBMD
Viktor Orban, the Hungarian “strongman” is talking crazy again. Yeah- ceasefire, peace talks, and other sane things about the Special Intervention by the Russians in the former Ukraine. Kind of like the adult among the toadies, I mean leaders of the E.U. Amazingly, Ukraine was the most prosperous former Soviet satellite pre- breakup. Now just a corrupt shell of itself. Pity. And keep those donations coming, BTW. Could faron intervene with his huge brain and save humanity? Stay tuned.
Floating Amortization
Holy mother of dog! The AMORTIZATION IS FIXED and can be found in the contractural mortgage agreement. Read the damn thing! Period, over and out! Variable rate choice means the payment amount specified in the ‘TERM’ is static, so this means the mortgage account amortization can get ‘OUT OF WACK’ if rates go up, but the contractural amortization remains the same as stated in the contract.
*****************
Calm down. Your own words here show that the amortization is variable – how else does it get “out of whack”. I never said anything about a contractual amortization. I refer to amortization, as in how many years to pay off the mortgage. Which obviously floats up on a VRM with a fixed payment. Again, calm down. Take a few deep breaths. The pictures people show of 75 year amortizations are the result of automatic math and not extensions given by the bank.
Look no further….The Banks are the biggest real estate pumpers in Canada…They create mortgages out of thin air by creating fake fiat money..Easy Money and Usury … Great Plan…all losses will go to the Cdn Taxpayers
IEP off another buck today. AKA an eighth of a year’s dividend… assuming Icahn can keep the dividend Ponzi alive. Down 47% from average values before it was exposed. Remember, a 50% drop requires a doubling to return to base price.
Newsflash for Greens/way beyond off topic
I saw freshly mowed and some tedded and even windrowed hay in the Annapolis Valley today, May23rd.
Seems early to an old guy.
I remember ice on a lake between Gravenhurst and Bala the weekend before May 2-4 in ’73.
Ontario has better weather than down east, righteo?
The Regional Fraud Unit of Halton Police has announced to arrest ‘Little Creek Homes’ owner Philip Bradley in a fraud investigation of a home designer/builder specializing in tiny houses.
Authorities believe there may be more victims and urge anyone with information to contact the Halton Police Regional Fraud Unit.
Laura Steiner, Local Journalism Initiative Reporter, The Milton Reporter, Milton Reporter
Wrk.dover on 05.23.23 at 5:37 pm
#109 Steven Rowlandson on 05.23.23 at 10:32 am
“Construction jobs start at 25-30. ”
Ha!, Ha!, Ha!, Ha!, Ha! I started on a framing crew in 1981 for $5 an hour and the next year doing stairs for $4 an hour and now I make $17 an hour and I am going on 63 years of age this summer and no wife, kids or a home yet. If the joke is on me it isn’t funny.
___________________________________
Stevens numbers ring true!
===========================
Maybe Stevie could look at being a Lifeguard?
I heard the rate for experienced ones can be 25 bucks an hour.
From a couple o’ years ago…
https://www.courtenay.ca/EN/main/city-hall/employment-opportunities/summer-lifeguard-instructor.html
Cheers, R
Unchecked greed and grossly overpriced real estate is draining the life out of big Canadian cities, specifically Toronto and Vancouver. Cue the rattled realtors and investor’s trying to deny reality.
Donnie G.
The topic is “the cartel”.
You must be an expert.
Care to comment?
#55 Wrk.dover on 05.23.23 at 5:37 pm
#109 Steven Rowlandson on 05.23.23 at 10:32 am “Construction jobs start at 25-30. ”
Ha!, Ha!, Ha!, Ha!, Ha! I started on a framing crew in 1981 for $5 an hour and the next year doing stairs for $4 an hour and now I make $17 an hour and I am going on 63 years of age this summer and no wife, kids or a home yet. If the joke is on me it isn’t funny. ___________________________________
Stevens numbers ring true!
Hey Flop, how about some input.
////////////////////////////////////////////////////
Where to start?
I’ve seen guys writing on here that some construction labourers in Vancouver and Toronto are getting $25 basically to push a broom and be a gopher, that is true, in Vancouver at least.
I just don’t know how to help Steven, when he stated he was living in his Honda Civic, and at that stage I think he said he was making something around $15 an hour, I did put up a few posts asking if anyone knew anyone hiring to try and get him out of that situation.
Barrie, I think it was, but it’s been a few thousand posts since then.
Maybe 10 years ago, I was working on a new build on the Westside of Vancouver, was feeling restless, a Stairmaker had lost his sidekick and asked me if I wanted to help him out on a few projects.
I took a decent pay cut, but just like during my apprenticeship, at least I was getting paid to learn.
I built stairs for maybe 9 months, the guy I was working with was hitting the bottle hard each night, so I never really knew if he was coming to work or not.
Perhaps miraculously, I actually did some half decent work by myself even though I didn’t really know was I was doing.
My pay was around $20 to start, and I never pushed for a raise before I left and went back to my trade.
I’m not sure how Steven only gets $17 an hour, if it’s Barrie that’s probably not the big smoke, but still, with his experience he should be getting at least $35
I know b-grade carpenters in Vancouver getting $50 an hour.
I tried, he hasn’t frozen in his car yet, so he must be doing something right…
M48BC
When Uncle Garth went to the washroom, I looked to see what’s happening on the GIC front.
Got sidetracked.
My Financial / Mental Institution is offering 4.50% bonus interest on USD High Rate Savings Account for new deposits.
It’s happening.
America must truly be running out of money, if they’re hitting me up for a loan…
M48BC
38 Victoria
“Livable Land in Canada is 760,000 sq. Miles
Livable Land in US is 1,855,000 sq. Miles”
——————————————————
Source?
https://www.cbc.ca/news/business/household-debt-gdp-1.6852027
“Households now owe more than Canada’s entire GDP, housing agency warns.
Households in other countries are paying down debt, but that’s not the case in Canada.”
*****
Bravo…Canada, well done!
#66 Shawn on 05.23.23 at 6:58 pm
Floating Amortization
Holy mother of dog! The AMORTIZATION IS FIXED and can be found in the contractural mortgage agreement. Read the damn thing! Period, over and out! Variable rate choice means the payment amount specified in the ‘TERM’ is static, so this means the mortgage account amortization can get ‘OUT OF WACK’ if rates go up, but the contractural amortization remains the same as stated in the contract.
*****************
Calm down. Your own words here show that the amortization is variable – how else does it get “out of whack”. I never said anything about a contractual amortization. I refer to amortization, as in how many years to pay off the mortgage. Which obviously floats up on a VRM with a fixed payment. Again, calm down. Take a few deep breaths. The pictures people show of 75 year amortizations are the result of automatic math and not extensions given by the bank. +++++
Calm down? Easy for you to say, though I give you full points for correcting the spelling error on ‘wacks versus whacks’. High performance engines don’t exist in environments that call for ‘calming down’. It’s always a five alarm fire kept under containment hoping nobody will notice……
Living in the Edmonton area of Alberta with a Cape Breton upbringing no doubt provides the ‘slippery slope -laissez-faire’ approach to uncovering the true meaning of amortizations run amok. There is only one way to settle this matter:
Pistols at dawn. Well….maybe we could just meet half way in Red Deer. And maybe the reasonable way to settle it is with an old fashioned Indian leg wrestle. ( can I still say that? too late…).
Out back of Las Palmeras Mexican Restaurant. I’ll be waiting with my bodyguards River and Sunny.
Housing?
What about the homeless and the endless announcements for funding for the homeless?
6pm News tonight.
Abbotsford BC.
A Park and Ride next to Hwy #1 Trans Can Hwy.
For the last EIGHT YEARS it has been a homeless camp.
Growing in size and anarchy.
Police have been called 10,000 times to the camp.
(yep 10,000 calls in 8 years)
The violence has escalated.
Stabbings, assaults, beatings, arsons are the norm.
2017 had 34 violence calls to 911
2019 66 violence calls.
2021 120 calls
2023 has been worse.
The land is owned by the Province of BC.
The Mayor of Abbottsford is fed up.
They cant remove the burnt cars, the garbage, the total anarchy on the perimeter of their town.
The provincial NDP is, “working on a solution”….
#49 Sail Away on 05.23.23 at 5:20 pm
The rise of Twitter.
Elon’s Twitter is fast displacing the traditional media. Robert Kennedy announced his presidential run on Twitter, and Ron DeSantis is preparing to do the same in a Twitter Spaces, together with Elon.
Then all the media reports the things that happened on Twitter.
Plus, of course, Twitter is already the place to go for context on any story that’s reported elsewhere.
This is good. Very, very good. Journalistic integrity, fact-checking everything, real-time updates. Bias, either side, immediately called out. More, please.
———
It’s a great thing, as long as Elon Musk or another pro free speech billionaire owns it.
“It’s the debt, stupid.” Highest level of household debt to GDP among G7 countries, 107% – CMHC
https://www.cmhc-schl.gc.ca/en/blog/2023/risks-canadas-economy-remain-high-household-debt-levels-continue-grow
#9 Don Guillermo on 05.23.23 at 2:16 pm
Ooh, neat. You are also engaging in defamation. Nice. Please elaborate. Just recall the maxim:
Better to remain silent and be thought a fool than to speak out and remove all doubt.
#77 ““Households now owe more than Canada’s entire GDP, housing agency warns.”
—————————————————————–
Considerable debt bubbling below the surface.
“An estimated 27% of homeowners in Canada hold $200 billion in HELOC debt.
According to CMHC data, the avg. monthly HELOC payments in Canada’s biggest cities have almost DOUBLED between 2022 and 2023….
Approaching $1000 per month!”
https://twitter.com/Tablesalt13/status/1661162212612796422
Viktor Orban, one of the few remaining puppets of Putin, is desperately trying to save his master from a complete embarassment. Putin’s armies stalled in Ukraine and can’t make any substantial gains, while the Russian economy is suffering from sanctions and going down the drain.
The only sane option for Putin is to pull his troops out of Ukraine and stop the war. But the kremlinfuhrer doesn’t want to accept his defeat. He hopes that his puppets will help him negotiate a truce and hold some of the illegally occupied land.
Europe should never resume buying oil and gas from Russia until that country reverts to democracy. The cash flow from the oil and gas exports empowers the corrupt Kremlin dictator and his fake-capitalist friends. And some of that cash flows back to Europe through the spy networks and is used to bribe unscrupulous politicians, such as Orban.
Ron Butler
@ronmortgageguy
·
15h
How Bad Is It When Recent Immigrants Decide To Go Back Home?
Or leave Canada to go to another country?
Because we are hearing more and more about that happening
I spoke to a family last week: one spouse works in Healthcare the other in IT originally from the Philippines
2/
73 Ponzius Pilatus on 05.23.23 at 7:25 pm
Donnie G.
The topic is “the cartel”.
You must be an expert.
Care to comment?
???????
Why not. Easy to avoid cartel violence. Don’t get involved in their business. Random crime is harder to avoid which is what’s happening across Canada. Fortunately for you Surrey isn’t the worst in Canada. It’s Lethbridge. Sadly it’s mostly native on native crime.
I found a Crime index website a few weeks ago. I didn’t want to bring it up as you were getting thoroughly beaten up on this blog that week. I have compassion. Surrey comes up worse than Mazatlan and no it’s not a Mexican site. I can’t be bothered to find it again. It’s easy to find if you’re interested.
Lack of listings means lack of demand. Wake up fools.
82 Faron on 05.23.23 at 10:30 pm
#9 Don Guillermo on 05.23.23 at 2:16 pm
Ooh, neat. You are also engaging in defamation. Nice. Please elaborate. Just recall the maxim:
Better to remain silent and be thought a fool than to speak out and remove all doubt.
???????????
Feeling a little guilty? No one mentioned your name.
Your little maxim is dated. Try finding something better.
#6 Alois on 05.23.23 at 1:57 pm
Thank you, Alois, for wonderful link.
I left this fake “country” Kanadastan, 10 years ago,
After living in Kanadastan for 15 years.
Kanada is the worst reincarnation of the Soviet Union – same draconian leftist dictatorship.
I am absolutely recommending to all new immigrants who was allured by deceitful demagoguery and evil kanadian propaganda to live this frozen fake “country” ASAP, before it be to late.
typo:
to leave, not to “live”
#39 Sail Away
-5 minutes from ferries, 5 minutes from float plane, 5 minutes from work
==================================
Slow down. Takes me 8 minutes to the ferry and float plane and I’m closer than you are.
#9 Don G
My phrasing might have confused you as to who I refer to as the “stocker.”
I quite appreciate Sail Away and several others mentioning interesting stocks. I have made money on the few I decided to play after doing a little DD.
The strange one is the guy who tracks every stock mentioned by SA and calculates theoretical gains and losses.
SA should keep him busy lol.
I think he does less harm “stocking” his obsession than he does doing his actual job.
Wow, every other country is raising rates and stating lots more coming down the pipe, inflation not under control and one has to wonder what the BoC knows as they are done raising rates and inflation is tamed.
I guess lots of people are literally betting the house that rates are coming down in the much foretold “pivot”
https://www.msn.com/en-ca/money/topstories/rbnz-hikes-rates-by-25-bps-as-expected-flags-more-economic-pain/ar-AA1bBjUx?ocid=msedgntp&pc=U531&cvid=6857ff9e8a954323ac0d5e36669daeae&ei=30
Senior Russian Deputy Minister of Science and Higher Education Pyotr Kucherenko, 46, fell ill on a plane returning from Cuba and has died . He had critcized Putin’s war in Ukraine in the past and now becomes the 15th recent mysterious death of an upper echelon Russian.
#67 Harvey on 05.23.23 at 7:02 pm
Look no further….The Banks are the biggest real estate pumpers in Canada…They create mortgages out of thin air by creating fake fiat money..Easy Money and Usury … Great Plan…all losses will go to the Cdn Taxpayers
—————————————————————-
Canadian banks have made all of this madness possible. They are criminally responsible for exactly what you state above. Tapping a few keys and validating the ever increasing ballistic prices everywhere in this meat locker we call a country.
No loan approval after any $200K – $500K over asking bidding war, no real estate bubble. Simple.
It is amazing to what lengths supposedly smart people will go to in order to convince themselves and others that things really aren’t that bad.
So what if 60% of people don’t have a mortgage. What percentage of mortgage holders have to start defaulting before there is a downward spiral in pricing?
As I said a few weeks ago, inflation is far from “fixed” (as anyone with any memory of the 70s could’ve told you). Interest rates will continue to rise.
What then? 120 year amortizations to prevent people from defaulting on their loans?
The entire premise of this blog from 15 years ago was that the Canadian housing market was ripe for correction. Since then, home prices and mortgages had shot through the roof, but now the tone of this blog has changed and suggests things aren’t all too bad. It’s super weird turn in editorial tone, tbh, and suggests that anyone who followed this blog’s advice from 2008-2019 did so erroneously and should’ve been loading up on real estate.
And this insane idea from Mr. Holt that immigrants will continue to flock to Canada when COL is exploding. Let me clue you in. People used to come to Canada because an average family could build a decent life, and within a generation, their kids would be better off than them. This made Canada far more attractive than for instance Europe. This is no longer true. When a shanty in Toronto costs $1.5M, and most jobs are concentrated in the densely populated parts of Canada, the economics of migration to Canada are fundamentally broken. Yes yes, some people are still coming, and will continue to come, but the pent up demand to come here will dwindle. Yes, we have a beautiful country. But if you can’t afford to live here, what’s the point of coming? Nevermind the insane woke politics being jammed down people’s throats that often are far at odds with the values of immigrants that come here.
The abject nonsense of people like Mr. Holt and those who continue to steer our nation to the brink is crazy.
Savers rejoice!!!
Rates likely going up in the U.K. and elsewhere.
Way. Overdue.
Unless of course, governments wish to completely trash the global economy.
Rates should parallel the varying stupidity level of consumers at any given time.
10% ought to do it.
Finessing rates obviously doesn´t work.
90 expat on 05.24.23 at 1:11 am
typo:
to leave, not to “live”
————————-
Not a typo.
Freudian slip.
Sorry to hear that you’ve been extradited for posting stupid comments.
“An estimated 27% of homeowners in Canada hold $200 billion in HELOC debt.”
++++
A coworker’s husband passed away 5 months ago.
She was going through the financials for the estate.
137k in a HELOC.
She had no idea they owed that much.
He had lots of new toys.
Truck, 3 motorcycles, vintage car, boat, etc.etc.etc.
The house is being sold to pay for it all and the rest of the mortgage…..she is walking away with about 50% of the estimated value of the prop ($1.2 )and happily investing/renting.
If you are not worried about short term capital depreciation, the Big Six are a good place to park a hunk of dough in order to generate a secure income stream.
In the long term, the capital value will stabilize and increase. Uppa Uppa.
In the short term, who cares? They are paying you handsomely. Steady Eddy.
I believe it’s a good deal.
Better than GICs.
My American cousin asked me the other day, if anyone has tried unplugging Canada and plugging it back in?
LOL!
It’s a rainy day, so…let it rain?
>>>
Canadians’ household debt is surging – this is a grave problem
https://www.theglobeandmail.com/business/commentary/article-canadian-household-debt-rising/
Consumer insolvencies in Canada have risen to their highest level in three years.
https://www.canadianmortgagetrends.com/2023/05/latest-in-mortgage-news-consumer-insolvencies-at-highest-level-since-2019/
Business insolvencies at 12-year high
https://www.theglobeandmail.com/business/article-business-insolvencies-increase-canada/
Bank of Montreal misses expectations on higher loan-loss provisions
https://www.theglobeandmail.com/business/article-bank-of-montreal-misses-expectations-on-higher-loan-loss-provisions-as/
Scotiabank profit falls short as loan-loss provisions rise
https://www.theglobeandmail.com/business/article-scotiabank-profit-falls-short-as-loan-loss-provisions-rise-economic/
All I’m saying is…SOMETHING IS NOT ADDING UP.
GO DEBT GO! BOOOOOOOROOOOOW!
My expose a troll comment on Viktor Orban worked like a charm. Once again #84- Michael of North York took the bait. Lol. Your information sources have failed you again, dude. But then, who believes anything that Ukrainian Pravda says? Are you and faron related?
Can we put in a special request to Derek Holt to see what he thinks about possible ‘shadow banking’ impact ( private mortgages, secondary financing ) in Canada’s mortgage markets? Elephant hiding in the closet of the room? This isn’t on the radar of the general public, but BOC acknowledges the risk, and it could be the fuse that lights the dynamite……Here’s a snippet comment from Andrey Pavlov, a professor of finance at British Columbia’s Simon Fraser University who specializes in risk management and real estate:
“Allowing borrowers to over-extend themselves, either through insufficient income verification or through certain loan features, such as no amortization, increases the risk of default,” Pavlov said, adding that if defaults begin to rise in private mortgage lending, there could be “contagion” in pockets of the housing market where such mortgages are dealt out in higher concentrations.
“If an entire city has a high concentration of risky mortgages, then a few random defaults could put sufficient downward pressure on prices to generate more defaults by otherwise prudent borrowers.”
A Bank of Canada report published in 2021 noted that mortgage investment corporations — significant players in private real estate lending — were “highly concentrated in large urban centres.”
Banks report mortgage amortizations > 30 years
Scotia reports 28% of residential mortgages at 25 to 30 year amortizations and less than 1% above 30 years. My guess is they don’t play the variable rate with fixed payment game. Looks like they do allow contractual 30 year mortgages. Basically they had no change in the figures versus last quarter except the > 30 year went down from 1.4% to 0.7%.
Bank of Montreal mortgages above 35 year went down in Q2 from 32.0% to 31.4%. and includes those on negative amortization. Looks to me like payments did not have to increase when they went to negative amortization.
P.S. The Jaguar, I enjoyed your response above.
#66 Shawn on 05.23.23 at 6:58 pm
The AMORTIZATION IS FIXED and can be found in the contractural mortgage agreement. Read the damn thing! Period, over and out! Variable rate choice means the payment amount specified in the ‘TERM’ is static, so this means the mortgage account amortization can get ‘OUT OF WACK’ if rates go up, but the contractural amortization remains the same as stated in the contract.
*****************
…Your own words here show that the amortization is variable – how else does it get “out of whack”. I never said anything about a contractual amortization. I refer to amortization, as in how many years to pay off the mortgage. Which obviously floats up on a VRM with a fixed payment.
_________
You are of course correct Shawn. I had a VRM for years. Interest rates go up the amortization term goes up. Interest rates go down the amortization goes down.
It’s only when the amortization goes above 25 years that the payments would be triggered to increase. The point you’ve been making is this isn’t as hard and fast a rule as it’s made out to be. Also true.
Your critic is what’s known as book smart. Quoting a contract without understanding what happens in the real world.
That is likely untrue. We have not been in a tightening cycle of this magnitude for decades. Variable rate mortgage holders have not seen a trigger rate hit for a long, long time. – Garth
#92 AnonyMusk on 05.24.23 at 1:44 am
9 Don G
I think he does less harm “stocking” his obsession than he does doing his actual job.
&&&&&&&&&&&&
Hahaha, you got that right AM!
#103 Really? Not! on 05.24.23 at 10:02 am
My expose a troll comment on Viktor Orban worked like a charm. Once again #84- Michael of North York took the bait. Lol. Your information sources have failed you again, dude. But then, who believes anything that Ukrainian Pravda says? Are you and faron related?
________________________________________
Oh don’t you mind or pay no heed to the Dork from North York. He’s been babbling rhetoric for over a year now.
He’s kind of like Muzak on an elevator. Background noise but no one really pays attention.
If you are not worried about short term capital depreciation, the Big Six are a good place to park a hunk of dough in order to generate a secure income stream.
In the long term, the capital value will stabilize and increase. Uppa Uppa.
In the short term, who cares? They are paying you handsomely. Steady Eddy.
I believe it’s a good deal.
Better than GICs.
+++++++++++
Right you are. BMO and BNS just raised their dividends. More banks to follow.
IEP dancing around being off another full dividend payment as of writing. Almost 25% capital loss since Sail Away’s purchase at $34.
Approaching Hindenburg’s fair value. Might be a buy here or very soon.
#103 Really? Not! on 05.24.23 at 10:02 am
You mention me frequently.
I couldn’t care less about you.
Orban is a lite fascist.
That is all
Actually situation is a lot worse in Canada if you consider our incomes are 1/3rd less, tax burden in more and mortgage interest is non-deductible.
Goodness gracious.
China spies on it’s “allies” for new military tech?
https://www.reuters.com/world/russian-hypersonic-scientist-accused-betraying-secrets-china-sources-2023-05-24/
#103 Really? Not! on 05.24.23 at 10:02 am
Well, well. Keep exposing your delusions. You are doing a good job embarassing yourself. It works like a charm.
What did Jesus say? What you do to the least of my brethren you do to me.
#91 Ronaldo on 05.24.23 at 1:28 am
#39 Sail Away
5 minutes from ferries, 5 minutes from float plane, 5 minutes from work
———
Slow down. Takes me 8 minutes to the ferry and float plane and I’m closer than you are.
———
Mild deception is part and parcel of the ‘stay alert, stay alive’ gamebook
102 Theory
“Bank of Montreal misses expectations on higher loan-loss provisions…….Scotiabank profit falls short as loan-loss provisions rise.”
——————————————————-
I like “provisions”. Just a forecast, and good to be a little pessimistic. Drives stock price down.
Then apply Dharma100 method.
#130 Linda on 05.23.23 at 3:52 pm
#105 ‘the Jaguar’ – I have to say I’m totally puzzled by the ‘Compassionate Care Act’ as presented by Ms. Smith & her UCP colleagues. The puzzlement is this: the self same group of people who had a collective cow over mask wearing/vaccines being ‘forced’ upon people are apparently happy to forcibly confine anyone considered ‘at risk’ due to addiction(s). Forcible treatment, not by choice. Which I have to say seems doomed to failure, as the first step in recovery is admitting one has a problem & accepting that one needs assistance to correct the situation. Can’t see anyone cited under the ‘Compassionate Care Act’ being on board with the suggested catch & ‘maybe’ release concept of the UCP. Can even see said ‘Act’ being used in ways ‘not intended’ but by that time too late for regrets.
^^^^^^^^^^^^^^^^^^^^^^^^^
Freedom for me but not for thee. Oftentimes, these are the same people who are pro forced birth. Isn’t that right Jag?
#88 Don Guillermo on 05.24.23 at 12:47 am
You spoke. Ooops.
Here’s a lesson for all of us, including myself, but most poignantly you Don Guillermo. This will sting a little, so brace yourself.
You disappeared from steerage for a while and seem to have experienced a potentially life threatening medical issue (your words). Correct? Seems that it was bad enough that taking care of it was more important than commenting here. You aren’t a spring chicken.
Still, you drizzled back here and eventually resumed your practice of arguing with me and Ponz and even engaging in lite insults and trolling and generally being a fully accredited member of steerage’s “smug asses” club.
Did you not gain a single morsel of perspective? Is steerage really that important to you as to sit in the hierarchy just above not being on your deathbed? Seriously!
Again, this goes for all of us commenting here, including myself, who appears more than once or twice a week. Life is short. Do something else.
A challenge for you, me and all the other hypercommenters (crowdedelevatorfartz, Ponzi, the Jaguar, me, flop, Sail Away, alois, really not etc. etc.): take a week off. After a week, see if your QOL is improved. If anyone takes me up on this, I’ll do it.
#89 expat on 05.24.23 at 1:08 am
I’m on board big time. I may sell all my assets and leave.
I phoned up CRA bc Gov they didn’t even know what to do with UHT.
Prop transfer tax, Spec tax, UHT, LOTA tax the foreigners but we need imigration sand on and on.
They have no idea what they are doing…I mean destroying.
It’s getting pretty ugly here.
#98 Ponzius Pilatus on 05.24.23 at 7:56 am
Are you blind? I spend my days dealing with beaucracy. That’s non productive time btw.
My bankster says costs of running the Credit union are going way up do to the same.
Grab a brain.
For all the folk that think the yuan will become the global reserve currency think again real hard.
No communist country has ever had that title.
Also their crapy stock marked got wacked to 25% of the high. Now in a dead cat bounce looks good on them. T2 can go hang out over there when he’s done.
No inquiry on the election interference eh?
Jesse I wonder why?
#118 Faron on 05.24.23 at 11:39 am
A challenge for you, me and all the other hypercommenters (crowdedelevatorfartz, Ponzi, the Jaguar, me, flop, Sail Away, alois, really not etc. etc.): take a week off. After a week, see if your QOL is improved. If anyone takes me up on this, I’ll do it.
——–
I enjoy commenting here and interacting with the friendly folks makes me happy. This is good for mental health. Some other things I enjoy are investing, mountain running, business, pullups, bird hunting, mushroom picking, sailing, fishing, practicing hand to hand combat, and visiting with friends and family.
Things beneficial to one’s well-being should be prioritized in life. Reading and commenting on this blog is one of those for me, and hence, it holds a priority position. Ergo, I will decline your challenge. You should go ahead, though. Maybe try a month to start?
Thanks for the blog, Garth!
Great 10 minutes on debt ceiling, equities, volatility, fed funds and the sell in may narrative.
https://twitter.com/i/broadcasts/1OdKrzvjjrYKX
#116 Sail Away on 05.24.23 at 11:33 am
#91 Ronaldo on 05.24.23 at 1:28 am
#39 Sail Away
5 minutes from ferries, 5 minutes from float plane, 5 minutes from work
———
Slow down. Takes me 8 minutes to the ferry and float plane and I’m closer than you are.
———
Mild deception is part and parcel of the
‘stay alert, stay alive’ gamebooklie through your teeth to make your life and equity holdings appear more awesome than they are to shore up your Fabergé ego in fron of your internet “friends” playbook.Fixed it for ya.
#123 Sail Away on 05.24.23 at 12:17 pm
things I enjoy are investing
—
Whatever floats your boat. IEP down another $3 on the day (11+%). Can’t make this stuff up folks.
Congrats on enjoying what you are terrible at. IMO, challenging one’s self, failing and getting up again and being humble are valuable life lessons. Good on you.
That said, given the numerous violent homeless people in your neck of the woods, I hope you are better at hand to hand combat than you are investing.
#119 Faron on 05.24.23 at 11:39 am
A challenge for you, me and all the other hypercommenters (crowdedelevatorfartz, Ponzi, the Jaguar, me, flop, Sail Away, alois, really not etc. etc.): take a week off. After a week, see if your QOL is improved. If anyone takes me up on this, I’ll do it.
—————————————
Why do you need other participants? Be the bigger *genderneutralperson* and give it a try all on your own.
Can’t speak to your own, but would tremendously improve the QOL of everyone else here.
After listening to Mccarthy speak the odds of default went waaay up.
Look out below for equities.
Rbc at 5% div plz.
#110 Faron on 05.24.23 at 11:08 am
IEP dancing around being off another full dividend payment as of writing. Almost 25% capital loss since Sail Away’s purchase at $34.
Approaching Hindenburg’s fair value. Might be a buy here or very soon.
——–
That’s cool.
I would strongly suggest folks do their own due diligence before investing.
:-)
I am early with a post. Just to keep you on your toes. My mother had an influence on me. She would go to war with me. Yet, she said you attract more flies with honey than you do with vinegar. My father on the other hand wanted me to fight to defend. Men spoke to reverence about him, and he was friendly. Kind of funny too.
I could not have chosen better parents on my own. It seemed like hell at times trying to decide who was righter. It worked out but was not easy.
So what is going on with my battle with economics. The cost of living is going beyond my ability to pay. Fortunately, I have reserves, but they have a life expectancy. So, I search for worthy people and companies.
#123 SA
I enjoy commenting here and interacting with the friendly folks makes me happy. This is good for mental health. Some other things I enjoy are investing, mountain running, business, pullups, bird hunting, mushroom picking, sailing, fishing, practicing hand to hand combat, and visiting with friends and family.
++++++++++++
You’re a joke. Please consider taking some time off. You troll waaaaay too much on this blog. “Hand to hand combat”…ya right. Braggart.
A bit of sabre rattling in the Artic Ocean?
https://www.reuters.com/world/europe/worlds-biggest-aircraft-carrier-sails-into-oslo-nato-exercises-2023-05-24/
#119 Faron on 05.24.23 at 11:39 am
#88 Don Guillermo on 05.24.23 at 12:47 a
This will sting a little, so brace yourself.
A challenge for you, me and all the other hypercommenters (crowdedelevatorfartz, Ponzi, the Jaguar, me, flop, Sail Away, alois, really not etc. etc.): take a week off.
@@@@@@@@@@@@
68 Faron on 05.23.23 at 7:09 pm
#82 Faron on 05.23.23 at 10:30 pm
#110 Faron on 05.24.23 at 11:08 am
#111 Faron on 05.24.23 at 11:10 am
#119 Faron on 05.24.23 at 11:39 am
#124 Faron on 05.24.23 at 12:24 pm
#125 Faron on 05.24.23 at 12:27 pm
#126 Faron on 05.24.23 at 12:35 pm
Busy morning. Must be a slow day on the climate disaster reporting.
Why don’t you lead by example? Take SA’s suggestion on a month or maybe more.
You’re a bit of a standing joke around here so don’t worry any thing you say to me can be amusing but will never sting.
#133 Don Guillermo on 05.24.23 at 2:05 pm
I provided useful life advice to you and others which I have been following (my post frequency is down albeit with spikes when the clowns start to dance). I provided some cautionary notes about the folly of following stock picking charlatans, and I passed along a fantastic video outlining the current macro equity environment.
100% of your comments today have involved copy pasta and negativity aimed at me. My advice to you and others is sound. You responded to sound, if critical, advice with anger.
Also, to be helpful, your last sentence would read better with a couple of commas and by replacing “any thing” with “anything”.
#129 Sail Away on 05.24.23 at 12:54 pm
I would strongly suggest folks do their own due diligence before investing.
:-)
—
We agree! A new leaf!
In this case, Hindenburg’s or any professional would be a good start. IEP pushing for a two dividend payment capital drop today alone. Down almost 1/3 from your recent purchase.
Importantly, steerage would have heard none of this if I hadn’t let you know. Just one of many cockroaches eating away at the balsa core of the SS Dunning-Kruger.
#133 Don Guillermo on 05.24.23 at 2:05 pm
#119 Faron on 05.24.23 at 11:39 am
#88 Don Guillermo on 05.24.23 at 12:47 a
This will sting a little, so brace yourself.
A challenge for you, me and all the other hypercommenters (crowdedelevatorfartz, Ponzi, the Jaguar, me, flop, Sail Away, alois, really not etc. etc.): take a week off.
@@@@@@@@@@@@
68 Faron on 05.23.23 at 7:09 pm
#82 Faron on 05.23.23 at 10:30 pm
#110 Faron on 05.24.23 at 11:08 am
#111 Faron on 05.24.23 at 11:10 am
#119 Faron on 05.24.23 at 11:39 am
#124 Faron on 05.24.23 at 12:24 pm
#125 Faron on 05.24.23 at 12:27 pm
#126 Faron on 05.24.23 at 12:35 pm
Busy morning. Must be a slow day on the climate disaster reporting.
Why don’t you lead by example? Take SA’s suggestion on a month or maybe more.
You’re a bit of a standing joke around here so don’t worry any thing you say to me can be amusing but will never sting.
*********
Enough already!
Besides leave Uncle Crowded and Uncle Ponzie out of it…they are better examples of how to disagree and move on.
#133 Don Guillermo on 05.24.23 at 2:05 pm
Or just get a life? Good lord
#131 You’re a Joke…. on 05.24.23 at 1:34 pm
Xxxxxx
Sounds like you volunteered to spar. This should be interesting.
I skim the comments and only read those by Summertime and occasionally The Jaguar.
oh, any anything Garth has responded to in italics.
The rest is a complete waste of time.
Garth, What is your take on David Johnston and the no on the public inquiry. Politics aside this is a democracy and we have the right to know, don’t we.
You have the absolute right to be diverted from what really matters and which leaders can’t seem to fix, yes. – Garth
#118 ‘Observer’ – exactly. Funny how on board folks are to impose rules on others, because hey, said rules will never be applied to them. Even funnier how when said folks are suddenly in a situation where ‘the rules’ DO apply to them. I wonder if any of them ever recall they were the ones to put said rule in place in the first place? Too late for regrets, indeed.
Here’s proof from the bank of Canada that in SOME cases NOTHING happens at the trigger rate. Negative amortization and infinite amortizations is allowed in some cases. How many? – I suspect a lot. In these cases the 75 year and infinite amortizations are not the result of any extensions – it’s just how the mortgage contract worked.
“When borrowers reach their trigger rates
Canadian lenders take different approaches for borrowers who reach their trigger rate.
Some lenders will automatically increase the mortgage payment so that it continues to cover the interest portion of the payment. With this approach, if interest rates rise further in subsequent months, the payment will also need to increase to cover the larger interest payment (similar to a variable-rate mortgage with variable payments).
Other lenders allow for negative amortization, where the interest payment is permitted to exceed the total mortgage payment. Principal payments are therefore negative, so the balance owed on the mortgage increases from month to month.”
Source: Bank of Canada
https://www.bankofcanada.ca/2022/11/staff-analytical-notes-2022-19/
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