Is the real estate bubble about to pop?
- Thread starter nottyboi
- Start date
funny enough, moody's or one of those rating agencies said the other day our banks will be in trouble should real estate prices plummet. I guarantee you there will be a bailout in the future. itll be interesting to see how far housing falls could be up to 25% over the next 2-3 years. mind you carney can always cut rates and I think he will since europe and america are easing monetary policy carney wont cite housing he'll talk about downside risks to the broader economy
some girl at my work just bought a house with her boyfriend, everyone at work was telling her how good it was to buy and not rent I was the lone voice of reason and told her to wait a year or two but you know how women are, spring 2012 was the worst time to buy a house in probably canadian history
I'm not saying the rating agency is wrong, I'm certainly not an expert. But since such a high percentage of the mortgages are insured with CMHC it would seem to me that it is us, the tax payers, that are shouldering most of the risk, not the banks.
Hard to say, the CMHC only insures the difference between the actual downpayment and a 25% downpayment....the banks own the rest of the risk. Of course if the problem gets bad the govt will buy all the mortagages from the banks as they did last time.
Are you sure about that? I've been reading about this issue for months and this is the first time I've heard this.
Does not make sense when the fee schedule goes to 45% down.
http://www.cmhc-schl.gc.ca/en/co/moloin/moloin_005.cfm
cmhc is our fannie mae & freddie mac. in the states fannie and freddie failed as well as the banks. remember the banks have all the real estate assets on their books. alot of ignorant canadians have made themselves insolvent by remortgaging their properties assuming housing prices will keep rising. the banks know they will be bailed out so they had no reason not to approve loans. now things wont be as bad as the states bc during their bubble you didnt have to put any money down or show proof of income when rates spiked ppl either couldnt afford the payments or just walked away as prices fell after all they put no money into the house why keep paying a mortgage on an underwater property. in canada you at least have credit worthy people but many are just getting by, they bought a house or condo bc the conventional wisdom is prices are only going higher and if their mortgage rate doubled which would be historically normal they would be in alot of trouble, if they only put 5% down they may be tempted to walk away or have no choice but to default. carney is gonna keep rates low for as long as he can. the average canadian is drowning in debt, money is tight for them and rates are the lowest in like 60 years it aint pretty we'll see how this saga plays out
from the CMHC site :
Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5% — with interest rates comparable to those with a 20% down payment.
I assume the rates for the other stuff are for other circumstances, poor credit rating etc etc .
The banks have been purchasing mortgage insurance on not only high ratio mortgages but conventional ones as well. As for Mr. Carney, he's actually welcoming lower home prices, reminds me of Greenspan and "irrational exuberance" on stock prices. Granted right now he is taking non conventional ways of lowering house prices. Unfortunately, when this all shakes out and prices can fall alot, we the Canadian taxpayer will hold the bag through CMHC. Oh and please do not pretend that we Canadians have a much higher "credit standard" than our Americian friends. Liar loans, reset loans all exist in the Canadian market. You just have to know where to look.
GG
GG
goodguy1977 What are you still doing up Porn or overseas trading.
Got any stock tips.Lol.. both... with the fed doing what they are doing.. in the short term.. buy everything!
Goodguy
Goodguy
Hello Green Monster,
I'd say pretty much anything in terms of equity. So indexes, US financials, technology (ex-Rim), if you buy now 4-5 months from now you should be sitting good. Especially if there is a nice pullback.
Goodguy
I'd say pretty much anything in terms of equity. So indexes, US financials, technology (ex-Rim), if you buy now 4-5 months from now you should be sitting good. Especially if there is a nice pullback.
Goodguy
