Zero’s correct about one thing.
Many Canadians are insecure and need constant affirmation of their worth.
CBC has mastered the genre.
Are you f@ckin nut’s?
way to go general generalizer…i don’t need to be stroked or told anything . I say let the chips fall were they may .
I certainly don’t need affirmation of my worth either , our banking systems aren’t perfect but they are good and strict at least in the lending sence .
Paul, please take a look at this article: http://www.mises.ca/posts/articles/the-canadian-moral-hazard-corporation/
“The Canadian mortgage market is dominated by the Canadian Mortgage and Housing Corporation (CMHC) and this government-owned company operates in much the same way as Fannie Mae and Freddie Mac. The CMHC insures and guarantees mortgages as well as buys mortgages from banks in order to issue mortgage-backed securities that trade in the secondary market. In comparison to Fannie Mae though, the prognosis of the CMHC is notably worse. For instance, at the height of the housing boom in 2007 Fannie Mae had guaranteed over $2.3 trillion in mortgages[2], nearly a quarter of the market.[3] As of 2010 the CMHC guaranteed over $900 billion in mortgages, about 90% of the market.[4] Fannie Mae had approximately $44 billion in net assets to cover those guarantees, giving them a leverage ratio of about 50:1. The CMHC has about $9 billion in net assets to cover theirs, with the ratio working out to a staggering 100:1. To make matters even worse, 74% of the CMHC’s assets are invested in those very same mortgage-backed securities. If the Canadian housing market ever took a dive the CMHC would be bankrupt in the blink of an eye.”
If we think that our “banks” lend so much better than those in the states, you are greatly mistaken. There are more checks and balances, but the bankstas are cut from the same cloth. Don’t trust them, they are not your friend…ever!!!
I have started to pull my cash out the banks I deal with…. there are other places to stash it … if the Banks aren’t going to pay me a decent return, I am not longer lending it to them to use for free.
They still have a multitude of profitable loans out to the public. There no excuse to not be able to get at least four or five percent return even in these economic time. Plus, who knows, I may save myself a lot of trouble when people start running on the banks if not to protect against failure, at least to hide it from possible confiscation by a bankrupt government.
glacierman: The main difference is that Canadian banks don’t issue high-risk mortgages. The process of qualifying for a mortgage in Canada is nothing what it was like in the USA. As well, the layers of mortgage backed securities that collapsed in the USA … DO NOT exist in Canada.
Apples … Oranges; and anyone who says otherwise is selling crap.
Thanks to Paul Martin, Stephen Harper’s and Preston Manning’s whining to deregulate the Canadian financial industry did not come about. Had Harper and Manning had their way, we’d be hooped, but for now we are likely the most stable mortgage market on the planet simply because those who receive mortages in Canada are vetted; and our banks and CMHC are not leveraged through up to five layers of re-packaged garbage debt. Articles like the one you link to are for people who don’t know the facts; especially the following line of bunkum:
“74% of the CMHC’s assets are invested in those very same mortgage-backed securities”
… that, my friend, is against the law in Canada.
Cjunk: exactly
NINJA loans in Canada never existed: No Income No Jobs or Assets.
As one who has worked for years in the financial industry, many of those years in retail banking issuing mortgages, I can tell you that CMHC was very strict in its lending guidelines.
I’m not saying they’re not badly leveraged. If the numbers cited are correct, it is worrying. At the same time, however, the portfolio of mortages insured by CMHC is high quality.
An employee of mine, just applied for a mortgage, minimum 20% downpayment. Yeah, not quite a NINJA.
The leveraging is the problem. If the economy crashes in relation to the US, once the house starts to sway, it won’t be long until it comes down.
That said, when it happens, (only a matter of time now, the 2nd depression is here) it doesn’t matter anyway.
Bankstas are still bankstas.
The rules that bankstas have created are for their advantage, that is why we are sitting on so many resources with limited investment opportunities. A double-edged sword.
Our son got a mortgage when the percentage of down payment required was at the lowest about 5 years ago and we were nervous. Then a couple of years later they remodeled the kitchen and reworked the mortgage. We thought they were exercising bad judgement and would be in trouble if the rates ever went back to the 7-8 percent range, never mind rates in the teens like they were in the early 1980s.
ok, now I am embarassed that I read Zerohedge. Not because they worry about this, but because they are so financially illiterate.
They have ginned up a number using total assets, which is moronic. A modern Canadian bank does not risk “assets”. Assets include things that are never at risk, as far as the bank is concerned: Mutual funds, stock accounts, assets under adminitration, trust accounts, etc.
From Scotiabanks annual report (I am a shareholder, so I am most familiar with them):
Total assets: 526 Billion
Total Deposits: 361 Billion
Total Equity: 23 Billion
Total Assets under Administration (mutual funds, etc): 243 Billion
Total Assets under Management: 48 Billion
so, add the last two together, and subtract from thefirst one: 235 Billion.
23 Billion in equity for 235 Billion of assets at risk is an equity ratio of about 10%. Seems pretty solid to me, for a bank type thing.
American banks do not always own mutual funds, etc. they just sell other peoples, so those assets are on someone elses balance sheet.
Rick
See i told you glacierman 😛
jk you make good point’s but we here in canada do not give mortgages to black’s or indians just becasue they are black or an indina get it . you have to have credibility , you can’t just have a jobby you must have had that jobby for a pretty long time about two years is the low end but even then that requires alot of other proof of credibility. And don’t tell me anything different i held two mortgages at two different institutions , one was through CMHC and the other was not. I still had to jump through the hoops , and when they saw that i was self employed for only a few month’s they denied my aplication flato ut and there was no hey come back in a few month’s none of that they shut me down cold i had to terminate my company (i was the only employee) and get a job in my field/trade and i had to work there for at least a year and provide x amount of proof of a minimum income it was either through the royal bank or the mank of montreal i am not sure now …but it is all good i do the smith manouver and my mortgage will be done in 2 years and the doom and gloomers (myself included) can say what they like but at the end of the day i have lot’s of silver ,stored food ,water , all i need is medical supplies guns and ammo. so if it is going to crash it is going to crash hard and i ma ready as i can be …oh yeah i also have my bible to just incase i am …eli (from the movie book of eli)..lol.
As well the bank of canada will be forced to keep rates low for atl east the next year or so ,
I like the CHMC but i also hate it at the same time i like it because it holds high risk borowers to a high standard as it we will take a shot at you but it will cost you , not i hate it becasue those who do desire to own there home they end up paying about 7% of the value of there origional mortgage witch adds time and risk to the borower so i have mixed feeling’s about it i think it is another govornment money grab descised as a legitimate mortgage insurer . dunno i still have mixed feeling’s .
Paul, good on ya for being prudent and getting and sticking to your principles!
That doesn’t change the fact that CMHC is still leveraged waaaaay beyond a healthy or financially stable position. The ones who disagree are the same ones who say that the financial institutions were also TBTF. That just ain’t so. Doesn’t matter when and where, they stick their necks out, somebody’s going to get disconnected.
http://globaleconomicanalysis.blogspot.com/2009/11/canadian-says-short-canada.html
The next crash will drag Canada into a recession (some would argue we never left one) and trigger the mother of all corrections in the real-estate markets in the big centers.
Anyone buying a home in the next year is nuts unless you plan to stay in it forever and are paying cash.
“That doesn’t change the fact that CMHC is still leveraged waaaaay beyond a healthy or financially stable position” glacierman
It seems that I recall that CMHC also backs GE Ninja Mortgages in Canada (GE markets in Canada under another name)…The Regina Liberal MP set up the plan (got all the perks as Minister of Finance ), but Harper Gov’t OK’d it
Could be wrong!
I think financial institutions are NEVER to big to fail , it is the main reason why i will never ever buy a new chev or dodge ever and i mean EVER i was very upset at our govornment for this and trust me i would be equaly as mad if it were a financial institution .
@SLAP SHOT
I have never ever ever herd of someone in canada ever being approved for a mortgage with out not just a job but a steady paying job that they have been at for atl east two years sorry man i am calling .b.s. . I have a few freinds that own homes and everyone including myself felt like they were criminals being prosicuted and having to provide facts when they applied for a mortgage and i do agree with this rule as it ensures the right people are getting the mortgages ..i am sure some slip through the cracks but an the whole canada hasa pretty darn strict mortgage policy ….no jobby definatley no homey!!!
ZeroHedge’s guest post on the risk of the Canadian real estate bubble is also very relevant at the moment.
http://www.zerohedge.com/news/guest-post-more-insights-mass-psychology-and-canadas-real-estate-obsession
Zero’s correct about one thing.
Many Canadians are insecure and need constant affirmation of their worth.
CBC has mastered the genre.
Are you f@ckin nut’s?
way to go general generalizer…i don’t need to be stroked or told anything . I say let the chips fall were they may .
I certainly don’t need affirmation of my worth either , our banking systems aren’t perfect but they are good and strict at least in the lending sence .
Paul, please take a look at this article: http://www.mises.ca/posts/articles/the-canadian-moral-hazard-corporation/
“The Canadian mortgage market is dominated by the Canadian Mortgage and Housing Corporation (CMHC) and this government-owned company operates in much the same way as Fannie Mae and Freddie Mac. The CMHC insures and guarantees mortgages as well as buys mortgages from banks in order to issue mortgage-backed securities that trade in the secondary market. In comparison to Fannie Mae though, the prognosis of the CMHC is notably worse. For instance, at the height of the housing boom in 2007 Fannie Mae had guaranteed over $2.3 trillion in mortgages[2], nearly a quarter of the market.[3] As of 2010 the CMHC guaranteed over $900 billion in mortgages, about 90% of the market.[4] Fannie Mae had approximately $44 billion in net assets to cover those guarantees, giving them a leverage ratio of about 50:1. The CMHC has about $9 billion in net assets to cover theirs, with the ratio working out to a staggering 100:1. To make matters even worse, 74% of the CMHC’s assets are invested in those very same mortgage-backed securities. If the Canadian housing market ever took a dive the CMHC would be bankrupt in the blink of an eye.”
If we think that our “banks” lend so much better than those in the states, you are greatly mistaken. There are more checks and balances, but the bankstas are cut from the same cloth. Don’t trust them, they are not your friend…ever!!!
I have started to pull my cash out the banks I deal with…. there are other places to stash it … if the Banks aren’t going to pay me a decent return, I am not longer lending it to them to use for free.
They still have a multitude of profitable loans out to the public. There no excuse to not be able to get at least four or five percent return even in these economic time. Plus, who knows, I may save myself a lot of trouble when people start running on the banks if not to protect against failure, at least to hide it from possible confiscation by a bankrupt government.
glacierman: The main difference is that Canadian banks don’t issue high-risk mortgages. The process of qualifying for a mortgage in Canada is nothing what it was like in the USA. As well, the layers of mortgage backed securities that collapsed in the USA … DO NOT exist in Canada.
Apples … Oranges; and anyone who says otherwise is selling crap.
Thanks to Paul Martin, Stephen Harper’s and Preston Manning’s whining to deregulate the Canadian financial industry did not come about. Had Harper and Manning had their way, we’d be hooped, but for now we are likely the most stable mortgage market on the planet simply because those who receive mortages in Canada are vetted; and our banks and CMHC are not leveraged through up to five layers of re-packaged garbage debt. Articles like the one you link to are for people who don’t know the facts; especially the following line of bunkum:
“74% of the CMHC’s assets are invested in those very same mortgage-backed securities”
… that, my friend, is against the law in Canada.
Cjunk: exactly
NINJA loans in Canada never existed: No Income No Jobs or Assets.
As one who has worked for years in the financial industry, many of those years in retail banking issuing mortgages, I can tell you that CMHC was very strict in its lending guidelines.
I’m not saying they’re not badly leveraged. If the numbers cited are correct, it is worrying. At the same time, however, the portfolio of mortages insured by CMHC is high quality.
An employee of mine, just applied for a mortgage, minimum 20% downpayment. Yeah, not quite a NINJA.
The leveraging is the problem. If the economy crashes in relation to the US, once the house starts to sway, it won’t be long until it comes down.
That said, when it happens, (only a matter of time now, the 2nd depression is here) it doesn’t matter anyway.
Bankstas are still bankstas.
The rules that bankstas have created are for their advantage, that is why we are sitting on so many resources with limited investment opportunities. A double-edged sword.
Our son got a mortgage when the percentage of down payment required was at the lowest about 5 years ago and we were nervous. Then a couple of years later they remodeled the kitchen and reworked the mortgage. We thought they were exercising bad judgement and would be in trouble if the rates ever went back to the 7-8 percent range, never mind rates in the teens like they were in the early 1980s.
ok, now I am embarassed that I read Zerohedge. Not because they worry about this, but because they are so financially illiterate.
They have ginned up a number using total assets, which is moronic. A modern Canadian bank does not risk “assets”. Assets include things that are never at risk, as far as the bank is concerned: Mutual funds, stock accounts, assets under adminitration, trust accounts, etc.
From Scotiabanks annual report (I am a shareholder, so I am most familiar with them):
Total assets: 526 Billion
Total Deposits: 361 Billion
Total Equity: 23 Billion
Total Assets under Administration (mutual funds, etc): 243 Billion
Total Assets under Management: 48 Billion
so, add the last two together, and subtract from thefirst one: 235 Billion.
23 Billion in equity for 235 Billion of assets at risk is an equity ratio of about 10%. Seems pretty solid to me, for a bank type thing.
American banks do not always own mutual funds, etc. they just sell other peoples, so those assets are on someone elses balance sheet.
Rick
See i told you glacierman 😛
jk you make good point’s but we here in canada do not give mortgages to black’s or indians just becasue they are black or an indina get it . you have to have credibility , you can’t just have a jobby you must have had that jobby for a pretty long time about two years is the low end but even then that requires alot of other proof of credibility. And don’t tell me anything different i held two mortgages at two different institutions , one was through CMHC and the other was not. I still had to jump through the hoops , and when they saw that i was self employed for only a few month’s they denied my aplication flato ut and there was no hey come back in a few month’s none of that they shut me down cold i had to terminate my company (i was the only employee) and get a job in my field/trade and i had to work there for at least a year and provide x amount of proof of a minimum income it was either through the royal bank or the mank of montreal i am not sure now …but it is all good i do the smith manouver and my mortgage will be done in 2 years and the doom and gloomers (myself included) can say what they like but at the end of the day i have lot’s of silver ,stored food ,water , all i need is medical supplies guns and ammo. so if it is going to crash it is going to crash hard and i ma ready as i can be …oh yeah i also have my bible to just incase i am …eli (from the movie book of eli)..lol.
As well the bank of canada will be forced to keep rates low for atl east the next year or so ,
I like the CHMC but i also hate it at the same time i like it because it holds high risk borowers to a high standard as it we will take a shot at you but it will cost you , not i hate it becasue those who do desire to own there home they end up paying about 7% of the value of there origional mortgage witch adds time and risk to the borower so i have mixed feeling’s about it i think it is another govornment money grab descised as a legitimate mortgage insurer . dunno i still have mixed feeling’s .
Paul, good on ya for being prudent and getting and sticking to your principles!
That doesn’t change the fact that CMHC is still leveraged waaaaay beyond a healthy or financially stable position. The ones who disagree are the same ones who say that the financial institutions were also TBTF. That just ain’t so. Doesn’t matter when and where, they stick their necks out, somebody’s going to get disconnected.
http://globaleconomicanalysis.blogspot.com/2009/11/canadian-says-short-canada.html
The next crash will drag Canada into a recession (some would argue we never left one) and trigger the mother of all corrections in the real-estate markets in the big centers.
Anyone buying a home in the next year is nuts unless you plan to stay in it forever and are paying cash.
“That doesn’t change the fact that CMHC is still leveraged waaaaay beyond a healthy or financially stable position” glacierman
It seems that I recall that CMHC also backs GE Ninja Mortgages in Canada (GE markets in Canada under another name)…The Regina Liberal MP set up the plan (got all the perks as Minister of Finance ), but Harper Gov’t OK’d it
Could be wrong!
I think financial institutions are NEVER to big to fail , it is the main reason why i will never ever buy a new chev or dodge ever and i mean EVER i was very upset at our govornment for this and trust me i would be equaly as mad if it were a financial institution .
@SLAP SHOT
I have never ever ever herd of someone in canada ever being approved for a mortgage with out not just a job but a steady paying job that they have been at for atl east two years sorry man i am calling .b.s. . I have a few freinds that own homes and everyone including myself felt like they were criminals being prosicuted and having to provide facts when they applied for a mortgage and i do agree with this rule as it ensures the right people are getting the mortgages ..i am sure some slip through the cracks but an the whole canada hasa pretty darn strict mortgage policy ….no jobby definatley no homey!!!