Hope someone is keeping a sharp eye on our Canadian banks to ensure that they do not follow suit.
Sunday, October 18, 2009
Everything is wrong with the USA banking establishments. Grrrrrrrrrrrrrrr
They have resumed handing out easy mortgages with a vengence, as if to make up for lost time. If they go into yet another downward spiral, that's it folks... that's it. What kind of madness is making these establishments hand out easy mortgages to people that their instincts, even instincts that are half dead or frozen, must be telling them not to. Could it be another directive from the madmen and madwomen in the WH? Anything is possible. There is no way banks can be this foolhardy and survive.
Hope someone is keeping a sharp eye on our Canadian banks to ensure that they do not follow suit.
Hope someone is keeping a sharp eye on our Canadian banks to ensure that they do not follow suit.
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I know Garth Turner is a dirty word around here but he is right in this article.
ReplyDeletehttp://www.howestreet.com/articles/index.php?article_id=11176
Two years ago when RBC did its annual survey of homebuying intentions it asked first-time buyers how much of a down payment they planned on making. Twenty-one per cent said their down would be “between $1 and $5,000.”
That was in 2007. Since then there’s every indication things have gotten worse. In fact, for people taking out mortgages today it’s estimated the average amount of equity they have is just 6%. The leaves 94% of the house value as debt. And while reliable statistics on this are hard to find, my banker buddies tell me that virtually every new loan they write these days is for 5% down, with a 35-year mortgage. After all, if you’re buying in Vancouver. Calgary or Toronto, that’s the only way banks can swing the deal.
And these days, Canada Mortgage and Housing Corporation is turning into a financial behemoth, as Ottawa uses it to fuel a housing boom that’s clearly turned into an asset bubble. Last year alone, CHMC did 919,780 deals worth a staggering $148 billion, or about twice what it had planned. To accommodate that, the feds have raised its allowable insured mortgage limit to $600 billion, or about double what it was two years ago.
Kevin - I just finished reading his article. He is absolutely right! So, it looks like we too have a similar malaise in Canada. Garth ends with:
ReplyDelete"CMHC is now larger than at least one of the Big Six banks and is, comparatively speaking, unregulated. A nation of debtors. Guaranteed."
What I don't understand is how these institutions who have already been burnt once are now shamelessy at the same game again.