Canada Phasing Out Risky Mortgages All-together

[Economy 52,842]

https://www.google.ca/amp/business.financialpost.com/personal-finance/mortgages-real-estate/new-mortgage-rules-could-depress-housing-demand-by-another-10-td/amp

 

Canada looks to continue to cool a still hot housing market by introducing yet more rules to finish phasing out risky mortgages all together.

 

Mortgage applicants now must qualify for a mortgage with 2% higher interest rates than what is in their contract so that if interest rates rise they will not default. In addition Ottawa will relinquish some of their mortgage insurance protection back to private sector to make banks pickier

 

Past changes in the last 7 years to slow down the housing bubble include:

 

-Max amortizations lowered from 35 years to 25 years

- 20% minimum downpayment without default insurance

- Limits per year on insurances banks give to mortgages with less than 20% downpayment.

- Homes over $500,000 require 20% downpayment regardless of insurance

- You cannot refinance more than 80% of equity

[Economy 52,842]

@Luc @GagaMonster

@Woolfsmck

Economists, is this enough to prevent a US style crash? Some of the changes at the bottom were made years ago

 

I want a big drop so I can afford to buy that condo, but not such a hard crash that economy goes into recession and I loose my job cause then that wont help  

[Woolfsmck 2,763]

1 hour ago, Economy said:

@Luc @GagaMonster

@Woolfsmck

Economists, is this enough to prevent a US style crash? Some of the changes at the bottom were made years ago

 

I want a big drop so I can afford to buy that condo, but not such a hard crash that economy goes into recession and I loose my job cause then that wont help  

The U.S. economy as a whole was impacted as much as it was because a larger than usual purportion of the GED was tied to the property values.  Which were inflated due to the fair housing act which eased the loan requirements and increased gov. guarantee's to banks with defaulted home loans.

[Luc 4,776]

I honestly have no clue  why isn't the private sector building enough houses to lower the housing prices anyways? Canada didn't have a bubble bursting in 2008 (which could've led to less construction), so what's the problem there? Or do people really really want to live in city centres this badly?  

 

Besides, weren't housing prices falling already in the biggest cities? Wouldnt'these measures only make that fall bigger?

[Economy 52,842]

6 hours ago, Luc said:

I honestly have no clue  why isn't the private sector building enough houses to lower the housing prices anyways? Canada didn't have a bubble bursting in 2008 (which could've led to less construction), so what's the problem there? Or do people really really want to live in city centres this badly?  

 

Besides, weren't housing prices falling already in the biggest cities? Wouldnt'these measures only make that fall bigger?

Construction has been robust but somehow demand has gobbled up all the homes these past several years regardless... i dont get it... but then again most of Canada isnt growing and the areas that are growing REALLY are.

 

Like Toronto grows by over 100,000 population a year for example

 

Also some cities struggle to keep up with new infrastructure. My city (Bramptom) grows by nearly 20,000 people a year. Home builders would build even more homes a year for more people but the city only allows zoning and building permits at a rate in which they can keep up with infrastructure such as roads and schools

 

Some Provinces have flat or negatives growth, but the areas that are growing are exploding because people want to live i  specific areas as many parts of Canada are cold, harsh, underpopulated and undesirable.

 

Nobody wants to live in Atlantic Provinces, the Territories or Manitoba. Ontario, British Columbia and Alberta get like 90% of pop growth even tho theres like 10 other Provinces

 

And home prices were falling in Vancouver last year and started falling but then started going up again and in Toronto there was an innitial sudden chill after some new rules but already it seems like Vancouver, the chill was temporary and its already showing signa of stabalizing

 

The Central Bank raised rates another 25 basis points this week tho so lets see what happens 👀

[Goosey 3,017]

Aw. This means it's harder for me to get a mortgage?

[Economy 52,842]

8 minutes ago, Goosey said:

Aw. This means it's harder for me to get a mortgage?

Depends how much money u have for downpayment. Getting mortgage with less than 20% downpayment is much more difficult than before (although they still allow a certain amount per year per bank)

 

Also the stress test means disposable income is a bigger deal

 

Mortgages have recently gone up to about 3% I think... But with the new rules the bank has to see if youd be able to afford your mortgage if rates rose 2% from the time you apply

 

That means its not good enough for you to be able to just pay the 3% mortgage. You would need to still qualify if hypathetically it rose to 5%

[Goosey 3,017]

45 minutes ago, Economy said:

That means its not good enough for you to be able to just pay the 3% mortgage. You would need to still qualify if hypathetically it rose to 5%

Sounds like bad news to me! What if I need to mortgage my place to afford that nice SUV?

[Luc 4,776]

4 hours ago, Goosey said:

Sounds like bad news to me! What if I need to mortgage my place to afford that nice SUV?

Well, houses and mortgages aren't becoming more expensive... maybe even cheaper because of these rules. It just guarantees that you can actually pay for your mortgage and that the banks will not suddenly fall like in 2008.

Best would be to start saving up if you want a mortgage I guess.

[Economy 52,842]

4 hours ago, Luc said:

Well, houses and mortgages aren't becoming more expensive... maybe even cheaper because of these rules. It just guarantees that you can actually pay for your mortgage and that the banks will not suddenly fall like in 2008.

Best would be to start saving up if you want a mortgage I guess.

Cheaper probably because by forcing you to qualify for rates 2% higher than they are, the amont people will qualify to take out will be lower

 

If this doesnt lower home prices significantly I dont know what will

[Gaga Monster 13,001]

On 9/9/2017 at 0:24 PM, Economy said:

@Luc @GagaMonster

@Woolfsmck

Economists, is this enough to prevent a US style crash? Some of the changes at the bottom were made years ago

 

I want a big drop so I can afford to buy that condo, but not such a hard crash that economy goes into recession and I loose my job cause then that wont help  

I hope! I would look at the Dodd Frank Act, the act Obama passed after the crash to prevent it from happening again. 

The US crashed pretty hard, we had a negative GDP, lost millions of jobs, gas prices were through the roof, millions lost their homes, it wasn't good. A lot of small mortgage and banks went out of business because of the regulations but they were needed because we couldn't have another recession caused by this especially with the massive bailout. Thankfully, Obama passed a $900 Billion Stimulus Package to help jobs return which in my opinion worked and was needed, although we haven't achieved 3% GDP Yearly Average since then and it has been a slow economy since then. 

[Economy 52,842]

2 hours ago, Gaga Monster said:

I hope! I would look at the Dodd Frank Act, the act Obama passed after the crash to prevent it from happening again. 

The US crashed pretty hard, we had a negative GDP, lost millions of jobs, gas prices were through the roof, millions lost their homes, it wasn't good. A lot of small mortgage and banks went out of business because of the regulations but they were needed because we couldn't have another recession caused by this especially with the massive bailout. Thankfully, Obama passed a $900 Billion Stimulus Package to help jobs return which in my opinion worked and was needed, although we haven't achieved 3% GDP Yearly Average since then and it has been a slow economy since then. 

Lmao no one is getting 3% growth average anytime soon in the developed world.

 

Canada got it this last 12 months (4.5% growth) but that was after years of barely 2% and they expect it to go back down to those levels. Was just a 1 year blip

 

aging boomers, ppls refusal to accept higher retirement wages, high consumer and Government debt causing drag on growth, expensive (but needed) green investments, lazy generation having productivity issues at work, and Corporate greed...

 

Theres issues stemming from all sources and classes of people right now being a drag on growth