kingofsurrey Posted June 12, 2018 Share Posted June 12, 2018 (edited) Went to look at a few condo projects yesterday.. they were pre-order higher end projects. Didn't pull the strings on a deal though.... I think i will wait for the 20 % off sale later this year. Edited June 12, 2018 by kingofsurrey Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 12, 2018 Share Posted June 12, 2018 6 hours ago, taxi said: The individual banks don't put the higher restrictions in place. The Bank of Canada, which is controlled by the Minister of Finance, puts those rules into place. The individual banks have already slashed their lending rates pretty close to prime and the Bank of Canada is expected to increase interest rates. So if anything it will be harder to get a mortgage over the next few years, not easier. Interest rates will probably rise another .5% over the coming year. Canada's debt to income ratio is way out of wack. It's at the point now where the IMF and international lenders are starting to worry about Canada's sustainability. Currently our benchmark interest rate is 1.25%. It's predicted that the rates will have to go up to 2.5% to put us in any kind of normal economic position. Part of the reason for the stress test was to see if borrowers could deal with the increased interest rates, either due to variable lending rates or after a mortgage renewal. Yes the Bank of Canada does control the restrictions being put into place, but it's up to the individual banks to follow those rules. If a bank wants to push through more mortgage deals they simply have to ease up on their own restrictions, i.e. the GDS and TDS ratios for income qualification. Unless the mortgage is CMHC insured, it's up to the individual bank to set the bar on how risky a mortgage they want to approve. For example, RBC can approve a mortgage even though the buyer's total debt service ratio is 50 or 60%, even though the maximum is technically 44%. It doesn't matter what the Bank of Canada does. It's ultimately up to the individual bank or lender if they want to approve that riskier mortgage. If the bank's mortgage portfolio is down 30-50% this year, it's possible the banks will indeed start to approve those riskier mortgages. Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 12, 2018 Share Posted June 12, 2018 Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 12, 2018 Share Posted June 12, 2018 2 hours ago, kingofsurrey said: Went to look at a few condo projects yesterday.. they were pre-order higher end projects. Didn't pull the strings on a deal though.... I think i will wait for the 20 % off sale later this year. Pre-sales aren't dropping 20% this year. Or next year. What project is it? Link to comment Share on other sites More sharing options...
kingofsurrey Posted June 12, 2018 Share Posted June 12, 2018 (edited) 8 minutes ago, Frankie Sinatra said: Pre-sales aren't dropping 20% this year. Or next year. What project is it? Upper Montrose in Abbotsford..... Maybe time for me to leave the most beautiful city in BC . ( Surrey ) and make a move to the city in the country.... Edited June 12, 2018 by kingofsurrey Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 12, 2018 Share Posted June 12, 2018 Just now, kingofsurrey said: Upper Montrose in Abbotsford..... Ah Montrose. That's a nice one, right downtown. You should pick one up. Link to comment Share on other sites More sharing options...
kingofsurrey Posted June 12, 2018 Share Posted June 12, 2018 (edited) 4 minutes ago, Frankie Sinatra said: Ah Montrose. That's a nice one, right downtown. You should pick one up. 550 i think starting.... 5 % down now. 10 % down in 6 months... At least they come with 2 parking stalls..... i think 1100 sq ft. in the unit.. not the parking stall . LOL ' Seems pricey for the valley... Looked at 4 . developments.. La Galeria ( sold out now ) , Mill District, Montrose and the Mahogany Edited June 13, 2018 by kingofsurrey Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 13, 2018 Share Posted June 13, 2018 12 minutes ago, kingofsurrey said: 550 i think starting.... 5 % down now. 10 % down in 6 months... At least they come with 2 parking stalls..... i think 1100 sq ft. in the unit.. not the parking stall . LOL ' Seems pricey for the valley... Looked at 4 . developments.. La Galeria ( sold out now ) , Mill District, Montrose and the Mahogany Downtown Abby is growing. Could be a great investment opportunity... 1 Link to comment Share on other sites More sharing options...
taxi Posted June 13, 2018 Share Posted June 13, 2018 26 minutes ago, Frankie Sinatra said: Yes the Bank of Canada does control the restrictions being put into place, but it's up to the individual banks to follow those rules. If a bank wants to push through more mortgage deals they simply have to ease up on their own restrictions, i.e. the GDS and TDS ratios for income qualification. Unless the mortgage is CMHC insured, it's up to the individual bank to set the bar on how risky a mortgage they want to approve. For example, RBC can approve a mortgage even though the buyer's total debt service ratio is 50 or 60%, even though the maximum is technically 44%. It doesn't matter what the Bank of Canada does. It's ultimately up to the individual bank or lender if they want to approve that riskier mortgage. If the bank's mortgage portfolio is down 30-50% this year, it's possible the banks will indeed start to approve those riskier mortgages. We have a bank lawyer in the house? I don't actually think this is true. I believe the chartered banks have to follow the qualification rules. Things are different for private lenders. At the end of the day, rising interest rates are not going to hurt banks. The total number of mortgages might drop, but the profit off each individual mortgage will rise, which is a better scenario for banks. 1 Link to comment Share on other sites More sharing options...
Warhippy Posted June 13, 2018 Share Posted June 13, 2018 Man the more I read the more I realize how unique my family position is. We owe literally no money to anyone. LIke literally have zero debt. We have close to 80,000 saved up to buy, with access to another 65,000 so in essence upwards of $145,000 downpayment But we're renting a beautiful little character home, and while a shade small for our family for only $900 a month and we keep saving money. Roughly $15,000 ish a year I keep seeing people going all out jumping in to a market in wich a simple PEST or SWAT analysis would show people is on the road to a severe downturn in the same way capitalism has failed. IE; Infinite growth is not possible based on the construct of monetary viablity. Or in essence, you cannot go higher than the populace can afford and we reached that point about 18 months ago. Where in Penticton a 3 bedroom shack was just losted at $2500 a month rent, $1250 deposit upfront and an additional $1250 for any pet. So essentially your first months rent being $5000. In Penticton. Where the yearly median income is $19,800 on the low end and averages out to $27,400 on the high end per person. I cannot fathom how prices can keep increasing with supply now starting to grow faster than in recent memory. I also cannot fathom buying in this ridiculous market even with our current downpayment Link to comment Share on other sites More sharing options...
kingofsurrey Posted June 13, 2018 Share Posted June 13, 2018 18 minutes ago, Warhippy said: Man the more I read the more I realize how unique my family position is. We owe literally no money to anyone. LIke literally have zero debt. We have close to 80,000 saved up to buy, with access to another 65,000 so in essence upwards of $145,000 downpayment But we're renting a beautiful little character home, and while a shade small for our family for only $900 a month and we keep saving money. Roughly $15,000 ish a year I keep seeing people going all out jumping in to a market in wich a simple PEST or SWAT analysis would show people is on the road to a severe downturn in the same way capitalism has failed. IE; Infinite growth is not possible based on the construct of monetary viablity. Or in essence, you cannot go higher than the populace can afford and we reached that point about 18 months ago. Where in Penticton a 3 bedroom shack was just losted at $2500 a month rent, $1250 deposit upfront and an additional $1250 for any pet. So essentially your first months rent being $5000. In Penticton. Where the yearly median income is $19,800 on the low end and averages out to $27,400 on the high end per person. I cannot fathom how prices can keep increasing with supply now starting to grow faster than in recent memory. I also cannot fathom buying in this ridiculous market even with our current downpayment Yes your rent is certainly lower than any potential mortgage payments.. The question is what will the appreciation be over the next 2-3 years if you bought now... I am with you. I just don't see the appreciation potential right now. I just see a crash. I see risk. I think young people are better off right now to invest in blue chip stocks that pay dividends..... and put off buying. Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 13, 2018 Share Posted June 13, 2018 4 hours ago, taxi said: We have a bank lawyer in the house? I don't actually think this is true. I believe the chartered banks have to follow the qualification rules. Things are different for private lenders. At the end of the day, rising interest rates are not going to hurt banks. The total number of mortgages might drop, but the profit off each individual mortgage will rise, which is a better scenario for banks. Well my alter ego does play a lawyer... Chartered banks can make exceptions. They do have some flexibility depending on the amount of the downpayment. Credit Unions can still qualify based on the contract rate, so the banks are currently losing alot of business to the credit unions. Private lenders don't really care about debt service ratios, as long as you put down 35% and the physical property is acceptable to the lender they will take on the mortgage, and some private lenders will still lend regardless if the rate is high enough. Rising rates will still hurt banks because at the end of the day a 30-50% portfolio drop is worse than a 1-1.5% increase in mortgage rates. Also, rising rates means rising savings rates as well. Banks will have to pay more to entice people to save, i.e. GIC's and other savings vehicles. At the end of the day it all depends on the spread, savings rates versus borrowing rates. If banks are losing money they can put enough pressure on the government to change the rules again. The rules keep changing all the time. 1 Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 13, 2018 Share Posted June 13, 2018 51 minutes ago, Warhippy said: Man the more I read the more I realize how unique my family position is. We owe literally no money to anyone. LIke literally have zero debt. We have close to 80,000 saved up to buy, with access to another 65,000 so in essence upwards of $145,000 downpayment But we're renting a beautiful little character home, and while a shade small for our family for only $900 a month and we keep saving money. Roughly $15,000 ish a year I keep seeing people going all out jumping in to a market in wich a simple PEST or SWAT analysis would show people is on the road to a severe downturn in the same way capitalism has failed. IE; Infinite growth is not possible based on the construct of monetary viablity. Or in essence, you cannot go higher than the populace can afford and we reached that point about 18 months ago. Where in Penticton a 3 bedroom shack was just losted at $2500 a month rent, $1250 deposit upfront and an additional $1250 for any pet. So essentially your first months rent being $5000. In Penticton. Where the yearly median income is $19,800 on the low end and averages out to $27,400 on the high end per person. I cannot fathom how prices can keep increasing with supply now starting to grow faster than in recent memory. I also cannot fathom buying in this ridiculous market even with our current downpayment My friend my advice to you is to sit tight and wait it out. Things are changing right now in a big way and although I don't really see a market crash per se I think there will be deals out there to be had over the next few months to a year. Inventory levels are over 11,000 units right now which is quite a bit higher than last year at this time,so there could be a correction coming this summer. Don't wait too long though as you want to start to build up some equity in your future new home. Interest rates are still at historically low levels, so even a mortgage rate of 3.80% which is what you can get right now on a 5 year fixed rate is historically quite cheap, so that mortgage principal will get paid down quickly. Spend the summer looking around and see what is out there. Are you still in Penticton? If you come to Vancouver shoot me a message and we can go for a beer. I can fill you in on the market and what is going on. P.S. That Trump thread is toxic. Such anger and hate in there. Glad I am out of there. Life is too short to be that angry all the time. Life is good right now for me. Hopefully everything is good for you as well. Peace and love bro... 1 Link to comment Share on other sites More sharing options...
taxi Posted June 13, 2018 Share Posted June 13, 2018 1 hour ago, Frankie Sinatra said: Well my alter ego does play a lawyer... Chartered banks can make exceptions. They do have some flexibility depending on the amount of the downpayment. Credit Unions can still qualify based on the contract rate, so the banks are currently losing alot of business to the credit unions. Private lenders don't really care about debt service ratios, as long as you put down 35% and the physical property is acceptable to the lender they will take on the mortgage, and some private lenders will still lend regardless if the rate is high enough. Rising rates will still hurt banks because at the end of the day a 30-50% portfolio drop is worse than a 1-1.5% increase in mortgage rates. Also, rising rates means rising savings rates as well. Banks will have to pay more to entice people to save, i.e. GIC's and other savings vehicles. At the end of the day it all depends on the spread, savings rates versus borrowing rates. If banks are losing money they can put enough pressure on the government to change the rules again. The rules keep changing all the time. Are we going to see 50% fewer mortgages though. Theoretically once prices drop and locals using mortgages, instead of foreigners buying with cash own homes, there could be more mortgages not less. Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 13, 2018 Share Posted June 13, 2018 48 minutes ago, taxi said: Are we going to see 50% fewer mortgages though. Theoretically once prices drop and locals using mortgages, instead of foreigners buying with cash own homes, there could be more mortgages not less. Sales are down 34% from April to May. That means 34% fewer mortgages are being approved. Not many people buying property with cash out there. Sales could slump 50% in the summer, so it's theoretically possible the banks could see 50% fewer mortgages on their books if you factor in all the business they are losing from the credit unions and private lenders. October 31 is year end for the banks. We will see at that time what their balance sheet looks like and their profits for the last fiscal year. If profits are way down and share prices drop, you could see the banks putting pressure on the OSFI and the government to relax the mortgage rules. Link to comment Share on other sites More sharing options...
taxi Posted June 13, 2018 Share Posted June 13, 2018 8 hours ago, Frankie Sinatra said: Sales are down 34% from April to May. That means 34% fewer mortgages are being approved. Not many people buying property with cash out there. Sales could slump 50% in the summer, so it's theoretically possible the banks could see 50% fewer mortgages on their books if you factor in all the business they are losing from the credit unions and private lenders. October 31 is year end for the banks. We will see at that time what their balance sheet looks like and their profits for the last fiscal year. If profits are way down and share prices drop, you could see the banks putting pressure on the OSFI and the government to relax the mortgage rules. Sales relate to new mortgages, not existing ones. Interest rates are also up about 30% from their all time lows of a couple years ago. So the number of mortgages has stayed the same but the value of the non-fixed ones has increased. So far since the slow down bank profits are "soaring": http://www.cbc.ca/news/business/peter-armstrong-big-banks-1.4426733 I'm sorry I just don't see a scenario where the government of Canada allows the chartered banks to drop the stress test on a large scale. Link to comment Share on other sites More sharing options...
Warhippy Posted June 13, 2018 Share Posted June 13, 2018 4 minutes ago, taxi said: Sales relate to new mortgages, not existing ones. Interest rates are also up about 30% from their all time lows of a couple years ago. So the number of mortgages has stayed the same but the value of the non-fixed ones has increased. So far since the slow down bank profits are "soaring": http://www.cbc.ca/news/business/peter-armstrong-big-banks-1.4426733 I'm sorry I just don't see a scenario where the government of Canada allows the chartered banks to drop the stress test on a large scale. But that would involve hands on government bailouts in the event of a worst case, which would scare off foreign speculation which would curb investment in large scale projects would it not? Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 13, 2018 Share Posted June 13, 2018 2 hours ago, taxi said: Sales relate to new mortgages, not existing ones. Interest rates are also up about 30% from their all time lows of a couple years ago. So the number of mortgages has stayed the same but the value of the non-fixed ones has increased. So far since the slow down bank profits are "soaring": http://www.cbc.ca/news/business/peter-armstrong-big-banks-1.4426733 I'm sorry I just don't see a scenario where the government of Canada allows the chartered banks to drop the stress test on a large scale. That article is from December 4, 2017. The new stress test rules didn't come into effect until January 1, 2018. Let's see what the bank profits are on October 31. Link to comment Share on other sites More sharing options...
taxi Posted June 13, 2018 Share Posted June 13, 2018 31 minutes ago, Frankie Sinatra said: That article is from December 4, 2017. The new stress test rules didn't come into effect until January 1, 2018. Let's see what the bank profits are on October 31. By December 4, 2017, sales were already down across the country. Q1 profits for the banks have been great too: http://www.cbc.ca/news/business/cibc-first-quarter-earnings-dividend-1.4546539 https://www.fool.ca/2018/03/05/which-of-the-big-5-banks-performed-best-in-q1/ Strong interest rates are one of the driving forces of the banks' profits. Link to comment Share on other sites More sharing options...
Frankie Sinatra Posted June 13, 2018 Share Posted June 13, 2018 (edited) 25 minutes ago, taxi said: By December 4, 2017, sales were already down across the country. Q1 profits for the banks have been great too: http://www.cbc.ca/news/business/cibc-first-quarter-earnings-dividend-1.4546539 https://www.fool.ca/2018/03/05/which-of-the-big-5-banks-performed-best-in-q1/ Strong interest rates are one of the driving forces of the banks' profits. That CBC article is from February and shows CIBC's Q1 earnings which are from Nov-Jan. It says right in the article that CIBC boosted its earnings and offset it's slower mortgage portfolio by aquiring a US bank, which makes perfect sense since the US economy is booming. The second article again shows how the 5 big banks have beneifted from their US operations, noting also that BMO had a write down of $425 million because of the new US tax reform. You really have to dig deep and look at the financials closely to see the whole picture. The picture to me is the banks in the first quarter made money from other operations that offset their slower mortgage portfolio. That isn't going to last forever. At some point a 30-50% decrease in mortgage growth is going to hit the banks hard. Like I said let's see the numbers at year's end. Edited June 13, 2018 by Frankie Sinatra Link to comment Share on other sites More sharing options...
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