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As always good and thought provoking article Rob. In reading that G&M piece there wasn't enough distinction between what was a broker and what was a lender. d. Under the new rules it really doesn't matter who you are with at renewal time, if you have missed a payment or have any other issues with your payment, employment etc. you would likely have to be fully underwritten again rather than just have access to an easy refi/roll.
All I have heard simply tells me that the intended impact is exactly what it should be, with a Bank of Canada that had its hand tied (to increase rates). In my simple mind this represents a good dampening of that bubble concern.
I believe the government took the right course in providing some dampening effects to the market. Anecdotically or otherwise it was evident that we certainly have some degree of bubble in certain regional markets; but reasonably one can't possibly ask a Federal government to create specifically regional rules, that wouldn't make sense. CMHC provides lots of very detailed publically available data on housing stats for those that want to look, some of which I have seen here on CMT. I suspect only time will tell with regards the actions that have been undertaken; but my sentiment would be that it has provided an opportunity for the market to slow down somewhat. It seems to me in many instance some folks will be put off their decision to purchase a little longer and enter the market. At the end of the day the three biggest threats to the mortgage market is Unemployment, The House Price/Affordability Index, and Interest Rates in that order, with first one being the largest threat and far outweighing the other factors. Now one could reasonably use this to challenge my assertions as a reason for the FEDS to do nothing; however the low rate regime and likely continued low rate regime means that folks may get fooled into a false sense of complacency, not unlike the person that referenced the BOC unlikely to move more than 1% at a time, if you are a rates trader you might want to make that bet; otherwise I will stay with my contention that Flaherty has made a reasonable move in what he has done at the margins. All in some great input and dialogue.
Anything indicating percentage of buyers that are investors, flippers, etc. in the condo market?
CW - Can you elaborate somewhat on this statement please. "Pretty much what I stated on March 21st on this blog, except that covered bond legislation has already been ruled out by the Supreme Court. Flaherty et al are just posturing with the public."
Hi Fran, the institutional memory is extremely short. My observations would indicate that despite the recent ugliness observed during the GFC of 2008 via the growth of the shadow banking system, the "smart" folks in the market are already looking at ways to either arb the system or simply deliver variations on a theme. On the notion of self-sacrifice, I don't believe its a standard human condition. Self and selfishness are in my mind closer to the norm as those aspects represent our inherent desire for survival.
Hi Robyn< i suspect hoarding of cash is going global and more people seem to be diversifying into gold and of course silver. Looking at how far silver has coming in the last 6 years, it makes how far gold has come look on a percentage basis insignificant. The hoarding of cash is taking place everyhwere, as corporate balance sheets are quite buoyant and banks have a problem lending as access to bond markets so damn cheap. Australia seems to have been ahead of the curve in terms of recovery and hiking rates and its dynamics somewhat different based I assume on Asia as a larger trading partner more so than the USA; but the effects of the global malaise is being felt everywhere.
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Aug 18, 2011