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Bloomberg also pulled the plug on CDOR and 3M OIS Swap about six months ago. Let's face it, our government is a control freak on data disclosure.
You can also get daily quotes here along with many other useful rates. http://www.pfin.ca/canadianfixedincome/Default.aspx
Bloomberg.com Pulls the Plug on 5-Year Bond Data
Quotes on Canada’s 5-year government bond yield are no longer displayed on Bloomberg.com. Since bond yields usually precede changes in fixed mortgage rates, Bloomberg’s 5-year yield page has been a useful tool for mortgage observers. That is, until today. Apparently, the company feels it will...
And what was Genworth's insurance-in-force for Q3 again?
Genworth & First National Nuggets
Last week saw two earnings reports of note in the mortgage business: One from First National (the biggest non-bank mortgage lender), and One from Genworth MI (Canada’s biggest private default insurer). There are always little treasures in these reports and this time was no exception. Below ar...
Household debt is a small variable in the BoC's policy decisions. Primary mandate is exchange stability. Today's announcement is a photo op like every other.
Rates Stay Put as BoC Keeps Rate Hike Bias
Mortgage holders won’t find much to fret about in today’s statement from the Bank of Canada. The Bank left its policy rate unchanged, which means that prime rate should exit 2012 at the same level it’s been for 25 months, 3.00%. Carney & co. said that, “Over time, some modest withdrawal of mone...
Until delinquent payments overflows and they can't bailout out homeowners anymore. Volatility is what poses the greatest risk.
Mortgage Rules, Margins & Risk
Regulatory changes are keeping RBC’s Canadian banking head, David McKay, up at night. And funny enough, his competitor, TD, has been one of the parties lobbying for regulatory changes—so says McKay’s TD counterpart, Tim Hockey. These were among the facts shared by the two executives at a recen...
Okie dokie VJ. But when CMHC and Genworth's insurance cap is breached and banks wind down loans (as they have been), just remember this post.
CMHC’s Reuters Retort
CMHC has fired back at Reuters for its Wednesday article criticizing CMHC’s “emili” underwriting system. The nation’s largest default insurer states that Reuters’ story contains inaccuracies. Specifically: “The article implies that emili relies primarily on information provided by home sellers...
Banks are risk adverse? Here read a Noble prize written working paper on real estate, governments and banks. http://ideas.repec.org/a/bin/bpeajo/v24y1993i1993-2p1-74.html
"Bankruptcy for profit occurs most commonly when a government guarantees a firm's debt obligations"
Hmmm that sounds familiar...
Nothing is different here. It's the same fraudulent scheme again and again.
CMHC’s Reuters Retort
CMHC has fired back at Reuters for its Wednesday article criticizing CMHC’s “emili” underwriting system. The nation’s largest default insurer states that Reuters’ story contains inaccuracies. Specifically: “The article implies that emili relies primarily on information provided by home sellers...
The lack of disclosure in Canada is absolutely poor compared to other G7 countries, and without full disclosure, people will draw their own conclusions whether it's right or wrong.
Before anyone defends CMHC, they should ask why hasn't CMHC released hard numbers or a comprehensive report comparing Emili to on-site inspections? Or providing other crucial information that is abundantly available in other developing nations? i.e. foreclosures, second mortgages, foreign investment, HELOCs, etc.
Identifying and Deflating Asset Bubbles by Hugh C. Beck, a member of the SEC: http://blogs.law.harvard.edu/corpgov/2009/07/11/identifying-and-deflating-asset-bubbles/
"A bubble inflates as public information about an asset class diverges from private information possessed by the public information’s sources. Accordingly, the key to deflating a bubble is to gather relevant private information, compare it to the corresponding public data, and then publish the comparison for all market participants to see."
As I stated in an earlier post, there is already a blueprint for how this crisis will unfold. Nothing is different about our housing bubble compared to any other. You can debate right or wrong facts all you want — it's irrelevant — it is however, dependent on the disclosure of private and institutional information for the public to conclude it's views on.
CMHC’s emili Under Fire
The Globe and Mail’s top story on Wednesday suggested that CMHC is overvaluing the homes it uses as mortgage collateral. It insinuated that the automated valuation model (AVM) built into CMHC’s “emili” underwriting system routinely overestimates property values. The implication is that taxpaye...
According to CMHC's home purchase report, the average market share for first-time buyers during 2010-12 is 35%; CAAMP's survey is weighted 56% of first-time buyers, which suggests the results were skewed to a self-serving opinion.
Insured Buyers are the Majority
Mortgage insurance is typically mandatory for homebuyers without 20% equity. Putting down 10% on the average $350,152 home, for example, means you’ll cough up a $6,302 insurance premium (given fully documented income and decent credit). Since insurance premiums are tacked on to your mortgage, t...
The only people who are 'warped' on this issue are those who believe the government could continue subsidizing loans without other economic consequences. If Ottawa hadn't tighten mortgage rules, CMHC and Genworth's insurance limit would have been breached by the middle of next year. That's a big problem for our banks.
Yes, people will lose their equity, jobs and homes, because that's what happens to overly-subsidized markets that must eventually return to private market funding. We already have many blueprints for how this unfolds and blaming those who warned of unsustainable schemes has no part in it.
Insured Buyers are the Majority
Mortgage insurance is typically mandatory for homebuyers without 20% equity. Putting down 10% on the average $350,152 home, for example, means you’ll cough up a $6,302 insurance premium (given fully documented income and decent credit). Since insurance premiums are tacked on to your mortgage, t...
Anti-real estate propaganda by far. There is much more at stake here then falling home prices. Very soon you will know why.
Insured Buyers are the Majority
Mortgage insurance is typically mandatory for homebuyers without 20% equity. Putting down 10% on the average $350,152 home, for example, means you’ll cough up a $6,302 insurance premium (given fully documented income and decent credit). Since insurance premiums are tacked on to your mortgage, t...
Is this good news or CAAMP's fear mongering tactic?
Insured Buyers are the Majority
Mortgage insurance is typically mandatory for homebuyers without 20% equity. Putting down 10% on the average $350,152 home, for example, means you’ll cough up a $6,302 insurance premium (given fully documented income and decent credit). Since insurance premiums are tacked on to your mortgage, t...
My bad, just read Moody's report. No CMHC coverage. Surprisingly.
CMHC and Genworth are approaching their limit anyways. http://i47.tinypic.com/5vajxt.png
RBC’s Historic Covered Bonds
The rate you pay on your mortgage largely depends on what it costs your lender to raise capital. That’s why RBC’s latest covered bond issuance is noteworthy. RBC issued $2.5 billion worth of covered bonds on September 12. (Covered bonds are bonds backed by both the issuer’s credit and a pool of...
A large portion was CMHC insured and this issue was under a contractual covered bond framework. Good luck to RBC trying maintain overcollateralization when assets are denominated in CAD while home prices are falling.
RBC’s Historic Covered Bonds
The rate you pay on your mortgage largely depends on what it costs your lender to raise capital. That’s why RBC’s latest covered bond issuance is noteworthy. RBC issued $2.5 billion worth of covered bonds on September 12. (Covered bonds are bonds backed by both the issuer’s credit and a pool of...
They couldn't loosen slowly because the q/q accumulation rate of total insurance-in-force would have breached the limit by mid-late 2013. F wasn't not going to increase the debt limit and risk Canada's credit rating just to keep the house of cards from falling.
It's game over. Deal with it. You want to borrow and lend money? Go get it in the open market and pay what the market prices you at. Keep the taxpayers out it.
Did OSFI Kill the Smith Manoeuvre?
Tens of thousands of Canadians employ leveraged investing strategies like the Smith Manoeuvre. They rely on these techniques to magnify their investment gains and to pay down their mortgage faster. For those not familiar with it, the Smith Manoeuvre entails: re-borrowing your regular mortgage ...
My point is that a proposal is most likely to be arranged between the 15 day of notice and 90 day arrears, therefore is does not show in CBA stats.
Speaking of consumer proposals (CP), just released by OBA.
Alberta CP up 16.4% y/y in June.
British Columbia CP up 8.4% y/y in June.
Ontario CP down 4.4% y/y in June.
Canada CP up 3.1% y/y in June.
Hiding bad statistics has been around for years too Jim.
CMHC Insurance at $576 Billion
Canada’s largest mortgage default insurer has $24 billion to go until it hits its $600 billion government-imposed insurance limit. As of June 30, 2012, CMHC had $576 billion of insurance-in-force, one per cent higher than the prior quarter and two per cent higher year-over-year. That figure is...
Ahh yes, "work-outs", otherwise known as consumer proposals (debt restructuring); so we can kick CBA's mortgage in arrears stats to the curb as it only indicates an overflow of delinquencies not 'worked-out'.
CMHC Insurance at $576 Billion
Canada’s largest mortgage default insurer has $24 billion to go until it hits its $600 billion government-imposed insurance limit. As of June 30, 2012, CMHC had $576 billion of insurance-in-force, one per cent higher than the prior quarter and two per cent higher year-over-year. That figure is...
It can be used to monitor a particular market, but nowhere near an entire market. A 1.5% vacancy rate for Toronto is a fallacy and will rise as fast as it did for Vancouver in Q1. http://postimage.org/image/oj3bsrmp7/
Speculative markets reverse extremely faster then most assume.
Newton’s Third Law of Housing
It was 325 years ago that Sir Isaac Newton wrote his “third law of housing.” (Or was it “motion?”) Whatever. Either way, he concluded: “To every action there is…an equal and opposite reaction.” In real estate, this principle applies routinely. One action that’s currently shaking up housing in ...
The key punch line from CMHC's rental survey.
"The survey targets only privately initiated structures with at least three rental units, which have been on the market for at least three months."
Newton’s Third Law of Housing
It was 325 years ago that Sir Isaac Newton wrote his “third law of housing.” (Or was it “motion?”) Whatever. Either way, he concluded: “To every action there is…an equal and opposite reaction.” In real estate, this principle applies routinely. One action that’s currently shaking up housing in ...
No, the free market knows best, and just for the record I would have preferred no rules imposed. But can we really have a free market? Would the government allow a large bank or CMHC to fail should the market turn badly? No.
Solutions in practical terms and understanding the market is non-linear is what parses industry from government thinking.
Canadians Deserve More Answers
Boris Bozic, CAAMP Chair and President/CEO of Merix Financial wrote this about the latest mortgage rule changes: “…Stakeholders have every right to call out decision makers if there’s concerns that [mortgage rule changes] may have unintended consequences. We also have every right to ask decisi...
Stakeholders aren't even discussing fundamental problems, or even offering solutions for that matter. What do you expect the government to do? Wait?
I'm always amused how brokers/borrowers don't evaluate government balance sheets, as would a pension fund or large institution who intends to lend long-term. We've been lucky the spotlight has been on Europe for the time being; as 'time' is something the government is learning not to take advantage of in a financial market that goes from zero-to-sixty in no time.
If the housing industry, or even the general public don't understand the fundamental issues, then the government has every right to enact preemptive measures to prevent what could be an even worse disaster in the future. If it isn't being discussed, then the latest round of criticism is nothing more then a cry for taking away the punchbowl.
Tell me: Whose job was it to warn OREA about those futures assignment contracts it created, or warning developers about selling new homes on deposit structures?
These are some of the flaws that had them worried about the state of the market.
Canadians Deserve More Answers
Boris Bozic, CAAMP Chair and President/CEO of Merix Financial wrote this about the latest mortgage rule changes: “…Stakeholders have every right to call out decision makers if there’s concerns that [mortgage rule changes] may have unintended consequences. We also have every right to ask decisi...
@Robert McLister
You have yet to identify F and OSFI's concern, or, you're just ignoring it.
Hint#1: Who's funding lenders and how will they return to private capital rates without going bankrupt?
Hint#2: The BoC and all domestic banks have purchased and now hold 40% of all Canadian government/provincial bonds.
Do we change course? Or do we set sail to become like Europe?
Canadians Deserve More Answers
Boris Bozic, CAAMP Chair and President/CEO of Merix Financial wrote this about the latest mortgage rule changes: “…Stakeholders have every right to call out decision makers if there’s concerns that [mortgage rule changes] may have unintended consequences. We also have every right to ask decisi...
And while the BoC and every quant freak economist formulates useless micro-equations to forecast the decision of every small business and corporate CEO, here is one useful statistic (one that matters) of Toronto's employment rate. http://postimage.org/image/6r1nui9dt/
There is nothing central banks can do at this point (without losing their credibility) that can save the economy, when it is 'less' central bank and government intervention that restores economic equilibrium.
One day the broker community will realize they should have been encouraging higher rates for the sake of their own jobs. I guess they'll never know until major problems materialize. Then it's too late.
Simulating Economic Hazards
Rising indebtedness has elevated concerns about the ability of borrowers to cope with economic stress. The Bank of Canada (BoC) weighed in on this topic last week. In its semi-annual Financial System Review, the BoC performed a variety of simulations to estimate how job losses and rate hikes mi...
You don't need luck at this point, but you do need a BoC 'get out of jail free card.' http://postimage.org/image/622zpsmuv/
http://postimage.org/image/5y6k5p17n/
Home Capital’s MBS Strategy Could Set Precedent
International Financial Reporting Standards (IFRS) have raised the cost of mortgage lending for financial institutions. That’s because IFRS now require that securitized mortgages (mortgages sold to investors) be held on the lender’s balance sheet. Prior to 2011, this wasn’t the case. Having mor...
For the blog poster under the name P. http://i46.tinypic.com/3rl2q.png
http://i45.tinypic.com/34j3vj5.png
CAAMP’s Spring Mortgage Report 2012
For mortgage and real estate buffs, CAAMP's semi-annual reports are among the best of the best sources of market stats. This year's survey seemed to have more data than ever, including insights on the: speed at which borrowers prepay their mortgages potential effects of a 10% minimum down pay...
Right, and you think Ben Tal is just going to come out and say payments are not affordable when the bank he works for is holding re assets and currently increasing their sales force. http://tinyurl.com/7q69gk2
He knows damn well that when adjusting for inflation and accounting for interest on savings, mortgage payments have 'increased' over the past 20-30 years, not decreased.
The Housing Indicator to Watch
National home prices are inflated by almost every measure, including: median price/median income, prices/rents and prices/GDP. In this week’s Globe column, we look at the one demand-related gauge of housing cost that matters most. And its readings are anything but unreasonable (for now). More: ...
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