“Our decision to tighten underwriting standards was driven by economic systemic concerns,” said Siddall, the former Goldman Sachs banker who has run the country’s main housing finance agency since 2014.
“There is no doubt that we have willingly chosen to forego some profitable business that our competitors would find appealing,” he said. “CMHC’s purview extends beyond our narrow commercial interests to macroeconomic impacts and there is a dark economic underbelly in this business that I want to expose.”
Toronto mortgage delinquencies are rising from all-time lows a few years ago. The rate reached 0.11% in Q1 2020, unchanged from the quarter before. Compared to the same quarter last year, this was 10.0% higher. This was the biggest Q1 for mortgage delinquencies since 2017. A key difference between then and now being it was falling back then, and it’s rising now.
The alternative mortgage lender’s deferrals fell from 9,903 mortgages worth more than $3.9-billion as of April 30 to 2,698 loans with a combined balance of $1.3-billion by July 31, according to second-quarter financial disclosures Home Capital released on Thursday. Most borrowers whose deferrals expired returned to making normal payments or restructured their loans to allow them to make lower payments over a longer period.
“You can see from the results we are reporting today that people still want to own homes, and not even a global health crisis has changed that,” said Yousry Bissada, Home Capital’s CEO, during a conference call with analysts and investors.
While many smaller corporations and even more small businesses, such as corner stores and restaurants, go under, companies and individuals with a solid base and a strong cash flow can borrow at historically low rates — allowing them to stock up on assets they expect will keep their value once the crisis is over.
Mr. Anastasio was an associate of John Aquino, Bondfield’s then-CEO, who the monitor has also alleged took part in the scheme. In addition to $2-million in proceeds that allegedly flowed from the phony companies to Mr. Anastasio, forensic auditors also allege they have traced $5.2-million that flowed to Mr. Aquino from 2014 to 2019, court records show. For his part, Mr. Aquino, who was terminated from his position at Bondfield in 2018, has denied any wrongdoing, saying in an affidavit, “I am implicated in a matter that I believe is without merit.”
Mortgage experts expect the Bank of Canada to cut its benchmark five-year mortgage rate to 4.79 per cent from the current 4.94 per cent as soon as this Wednesday, as the majority of the big Canadian banks now have a five-year posted rate of 4.79 per cent. The central bank sets its benchmark according to the rate that appears most frequently among the six biggest banks.
Canadian mortgage credit may have seen annual growth peak for the year. The balance of credit reached $1.68 trillion in June, up 0.55% from a month before. This represents an increase of 5.59%, when compared to the same month last year. This is very substantial growth, but there’s a few non-obvious takeaways.
Canadian home building spiked in July, as developers broke new ground on condos in major cities and oil-producing regions, marking the second straight month of robust activity after work stoppages from the novel coronavirus pandemic.
The goal was to make it harder to get an insured loan, in the hopes that borrowers already stretched thin would not be able to get one and thus not be able to get in even further over their heads by buying a house they may not be able to afford. But things didn't quite work out that way.
The City is seeing rental inventory rise very rapidly, something that hasn’t happened in a very long time. There were 8,346 new listings for rentals in July, up 82.1% (!) from the same month last year. The number of new listings for rentals hasn’t been this high since at least 2016, when condo apartment prices began their rapid ascent. Even though the data only goes back to 2016, this trend likely goes back at least a few more years.
Homeowners counting on mortgage payments being deferred beyond the six-month break they have received during the pandemic might want to reconsider, as home-loan insurers that have permitted postponements appear cool towards extending the holiday.
Canadian home sales and prices surged to a record high in July, as buyers flooded the market and took advantage of low mortgage rates after the coronavirus pandemic briefly slowed activity in the spring.
U.S. home builder confidence rose for a third straight month in August to match its highest level ever as record-low interest rates spur buyer traffic, data released on Monday showed in the latest indication the housing market is a rare bright spot in the economic crisis triggered by the coronavirus pandemic.
Transactions for existing properties reached 62,355 in the month, up 26% from a month earlier, the Canadian Real Estate Association reported. Benchmark prices were 2.3% higher on the month, as pent-up demand for homes collided with extremely low inventory levels.
Notably absent from the letter was almost a page of reasons supporting his concern. In the portion absent, he outlined why first-time buyers and the economy had a lot to lose. Despite this, the industry is proceeding, knowing borrowers have more to lose than the industry. He said this resembles the scenario explained in Reckless Endangerment, making it the first direct government comparison to the US housing crisis in over almost a decade.
Transactions for existing properties reached 62,355 in the month, up 26 per cent from a month earlier, the Canadian Real Estate Association reported. Benchmark prices were 2.3 per cent higher on the month, as pent-up demand for homes collided with extremely low inventory levels.
Canadian home prices rose in July, led by the Quebec City and Ottawa-Gatineau markets, though it was the smallest July advance in 15 years, data showed on Thursday, confirming the slowing of the housing market in the wake of the COVID-19 pandemic.
“Canada does rely on having large numbers of people coming to the country to fuel growth and, if we see these large declines, one concern could be that people may decide maybe they don’t want to come to Canada anymore,” said report author Andrew Agopsowicz, a senior economist for RBC who studies labour trends.
The highest percent of balances on payment deferral are what people expect – subprime borrowers. Subprime borrowers have deferred payments on the balance of 25% of loans as of June 30. Prime borrowers have deferred payment on the balance of 16% of loans. Super prime borrows deferred the smallest percent of balances, having paused payments on 8% of loans. Despite the high rate of deferrals for subprime borrowers, it’s a small segment of debt.
A 2018 report by McKinsey Global Institute estimated that neural networks-based deep learning algorithms have the potential to “enable the creation of between $3.5 trillion and $5.8 trillion in value annually.” But such value creation is possible when the sophistication of algorithms is matched by the richness of the available data.
Four criteria must be satisfied under the Income Tax Act in order for a property to qualify as your principal residence: the property must be a housing unit; you must own the property (either alone or jointly with someone else); you, your spouse or kids must “ordinarily inhabit” the property; and, you must “designate” the property as a principal residence.
Toronto real estate is seeing a big slow down for immigration. Only 7,135 permanent residents arrived in June, down 41.6% from last year. Year-to-date the number reached 61,430 permanent residents, down 24.3% compared to last year. There’s fewer new permanent residents, but the spike in the first-two months of the year softened total declines.
The scale of this buy wasn’t really clear until the latest mortgage credit data. At the end of June, outstanding residential mortgage credit reached $1.68 trillion, rising $29.24 billion from March. That means the BoC injected $1 into CMBs, for every $4 increase in outstanding mortgage credit. A mind blowing amount of stimulus to buy an asset that is typically dependent on employment for price growth.
Greater Toronto new home sales are on fire, everywhere but in the actual city. Data from Altus Group and BILD GTA shows new home sales had the biggest July in over a decade. Surprisingly, this trend is driven almost exclusively by suburban home sales. In the City of Toronto, new home sales have dropped by nearly half, despite the 905 setting new records.
The housing market will have to reckon with significant short-term uncertainty, as well as falling housing demand from weaker household incomes in the medium term, the Crown corporation said on Friday.
Canada’s banking regulator is rolling back two emergency programs introduced at the beginning of the pandemic, including a crucial measure that made it easier for banks to offer loan payment deferrals to clients.
American real estate buyers are regretting the decision to jump into the market during a pandemic. LendEdu, a US rate comparison site, surveyed homeowners that bought after March. The survey found a significant number of happy homeowners, taking advantage of record low rates. However, the majority of buyers have regrets about pulling the trigger on their new home purchase.
As the COVID-19 pandemic continues to dampen economic activity across Canada, building supply and home builders’ organizations are advocating for a potential solution: home renovation tax credits. Member associations of the Building Materials Council of Canada, each representing different regions of the country, have been lobbying the federal and some provincial governments to instate a home renovation tax credit similar to the 2009 tax credit implemented by the Harper government.
In the BoC’s adverse scenario outlined in 2019, Canada’s GDP took a large hit, unemployment spiked, and house prices tanked. The scenario sees Canada’s GDP dropping 8.2%, unemployment peaking at 12.6%, and house prices dropping 40.9%. They also assume a duration of 7 consecutive quarters. This scenario is much worse than any other previous scenarios Canada has seen. In fact, they’re testing for what seemed like a near doomsday scenario.
Toronto’s housing market hit new record highs in August, with sales and prices spiking, as low mortgage rates fuelled competition for homes despite economic uncertainty brought on by the novel coronavirus pandemic.
The total of loans secured by residential real estate is slipping from all-time highs. The total outstanding balance is $304.95 billion in June, down 0.27% from the month before. The drop works out to a 0.90% decline from the same month last year. June marks the third consecutive monthly decline, and the lowest 12-month growth since 2016. Breaking this down, personal loans are where the majority of the weakness is.
The price of a home in Greater Toronto is up significantly, especially the suburbs. The benchmark price across TRREB reached $890,400 in August, up 11.09% from the same month last year. The City of Toronto benchmark is now $971,800, up 9.34% from last year. Since TRREB is growing faster than the City, this means home prices in the 905 are moving even faster.
VersaBank (“VersaBank” or the “Bank”) (TSX: VB) today announced that it has partnered with Simply Group Financial Corp. (“Simply Group Financial”) for its Point-of-Sale Financing business. Simply Group Financial is a subsidiary of Simply Green Home Services Inc., parent corporation of the “Simply Group”, one of Canada’s fastest growing home energy solution, home improvement and consumer lending businesses. As partners, VersaBank will provide Simply Financial with financing to facilitate ongoing loan origination utilizing VersaBank’s proprietary software solution. In their first transaction, VersaBank has initially provided Simply Group Financial with a financing facility of $72 million.
Canadian banks are starting to see mortgage payment deferrals expire, and households resume payments. Canada’s Big Six banks reported Q3 earnings last week, which ended on July 31, 2020. Mortgages on payment deferrals have dropped by nearly a fifth in the latest quarter. While that doesn’t tell us how many people actually needed the deferral, it does bring the market closer to finding how many do.
Rental housing markets across Canada are seeing weaker demand this fall as some postsecondary students pivot to online learning and stay in their hometowns, resulting in a spate of empty bedrooms and mounting losses for landlords.
If you’ve been following the news lately, it will come as no surprise that there have been numerous writers raising the possibility of a tax on the principal residences of Canadians. It seems to have started with a report that Canada Mortgage and Housing Corp. has provided a $250,000 grant to researchers at the University of British Columbia, where the focus is on housing wealth and inequality, according to the CMHC. The project is considered the first one sponsored by the Crown corporation as part of the Liberal government’s National Housing Strategy.
Canadian mortgage debt rose in May at the fastest annual rate in three years, boosted by a jump in property sales and record levels of mortgage payment deferrals due to the coronavirus pandemic, data from the national housing agency showed.
As of July31, banks had provided mortgage deferrals of up to six months to more than 775,000 homeowners. That represents about 16 per cent of the banks' residential mortgage portfolios, up from 10 per cent in April, according to their industry group, the Canadian Bankers Association.
National housing starts rose 7 per cent in August compared with July, to a seasonally adjusted annual rate of 262,396, according to the Canada Mortgage and Housing Corp. That was the highest level since September, 2007, and another month that bucked the agency’s forecast for a precipitous drop this year.
As the Bank of Canada fretted over bloated household debts for the better part of the past decade, its biggest fear was that stretched-to-the-limit mortgage holders would collapse under the weight of the next major economic shock.
If you follow the housing debates in Toronto and Vancouver, you’ll have undoubtedly heard the claim that the affordability challenges facing both cities are the result of supply problems. Common complaints include a lack of new housing, burdensome regulation and flawed zoning.
Housing starts surged to 262,396 units in August on an annualized basis, up 6.9% from an already elevated 245,425 units a month earlier, Canada Mortgage and Housing Corp. said Wednesday in Ottawa. The highest monthly total since September 2007 was powered by new construction in Toronto and Vancouver, particularly multiple units like condos.
Canada's housing market continued its improbable run in August, as average prices jumped by almost 20 per cent from where they were a year earlier, and the number of homes sold shattered the monthly record.
Permanent residents arriving in Canada are back to making steep declines. There were 13,645 permanent residents admitted in July, down 60.29% from the same month a year before. Year-to-date the country has seen 220,500 people admitted, down 38.25% compared to the same period last year. June showed improvements in the trend, but those rolled back in the latest numbers.
Canadian seniors are hammering away at their home equity at a very fast pace. Reverse mortgage debt reached $4.30 billion in July, up 0.62% from the month before. This represents an increase of 13.63% when compared to the same month last year. Yes, that’s huge growth and a new record all-time high.
The Deposit Note was priced at 150 basis points over comparable term Government of Canada bonds, and will carry a coupon of 1.774%. The bond was supported by a broad investor base expressing record interest in the purchase of Equitable Bank deposit notes. The Deposit Note ranks equally and ratably with all present and future unsecured and unsubordinated liabilities of the Bank. It is not eligible for Canada Deposit Insurance Corporation insurance.
The number of permanent residents admitted to Toronto is seeing declines become larger. There were 4,450 permanent residents admitted in July, down 64.0% from the same month last year. Year-to-date there were 69,825 people admitted, down 40.82% compared to the same period last year. July’s decline is almost 50% larger than June, so the declines are getting much larger. The year-to-date rate of decline is also smaller, confirming July’s acceleration. The drops aren’t getting better, they’re getting worse.
Canada’s federal housing agency is sticking to its pessimistic forecast for the future of the country’s housing market, citing “tremendous” risks from the Covid-19 pandemic.
Canada Mortgage and Housing Corp. forecast in May that average prices would fall between 9% and 18% from pre-pandemic levels before beginning to recover in the first half of 2021. Chief Economist Bob Dugan reiterated that forecast, though he cautioned that it’s difficult to predict the “peaks and troughs” and there are many moving parts.
“When I say I stand by our forecasts, it’s really with respect to what are the broad trends we expect moving forward,” Dugan said Monday on a conference call with reporters. “When I look at the housing market there are a tremendous number of risks.”
Canada’s housing market has not only defied expectations of a slowdown, it’s booming, even as the economy suffers from the deepest downturn since the Great Depression. Demand for homes combined with tight inventory levels and historically low interest rates are driving gains.
Canadian real estate has a moderate level of vulnerability. There are now 7 major markets displaying a moderate level of vulnerability. This is up from 5 during the February report. New markets to join these ranks are Moncton, Halifax, and Ottawa. The only market to see the rating lower back to a “low” degree of vulnerability is Regina.
Moody’s previous forecast didn’t expect the market to show signs of weakness until Q3, and they’re doubling down. The report’s economist expects stimulus, mortgage deferrals, and interest rates to contain damage until Q3. They expect by Q3, the optimism of those programs will begin to wear thin. The reality of how meaningful the improvements are, should be apparent by then. The optimism should then fade. It’s at this point they believe prices can no longer defy employment, vacancy, and delinquency rates.
The price of a typical condo apartment across Canada, peaked right after the pandemic broke out. The aggregate benchmark reached $478,700 in August, up 6.45% from last year. This number is down about $700, or 0.15%, from the all-time record high reached in April 2020. As you might expect, not everywhere moved in the same direction. Three markets were able to push condo prices to a new all-time high.
Commercial properties hit by the economic effects of coronavirus could have lost as much as one-quarter of their value or more, laying bare the scale of the damage being wrought across American malls, hotels and other commercial buildings.
The residential real estate market has been a bright spot in Canada’s economic recovery from Covid-19. Last month, home prices and sales reached a record from pent-up demand combined with low interest rates and tight inventory. Although the market has defied expectations, economists predict the gains will peter out in line with other data that shows a slow down in activity as cases rise and restrictions get re-imposed.
Canadian mortgage debt is slowing in growth, after a surge at the beginning of the pandemic. Bank of Canada (BoC) data shows outstanding mortgage credit reached a new high in August. At the beginning of the pandemic, the rate of growth had accelerated due to payment deferrals. Deferrals are beginning to expire now, sending growth back down to pre-pandemic levels.
For millions of America’s renting families, threats to housing security are a persistent fact of life, even at the best of times for the broader economy. A significant unplanned expense or a temporary interruption to employment can mean the difference between a rent payment made and a payment missed. The relative health of the labor market proves crucial in maintaining a measure of housing stability in the United States.
The pandemic has already caused a mini-exodus out of New York City, and with lower taxes, lower interest rates, and — for the wealthiest among us — higher earnings thanks to stock market gains and some helpful bailouts, the housing market is roaring outside of urban America.
Darrin Williams thinks it was probably a Fox News interview he did in early April that caught the eye of the White House and got him invited later that month to a videoconference with President Trump, his daughter Ivanka, and other top advisers. The pandemic was raging, and Trump had convened a lineup of financial luminaries to discuss how to save the economy. Treasury Secretary Steven Mnuchin took notes as Brian Moynihan, chief executive officer of Bank of America Corp., and Goldman Sachs Group Inc. CEO David Solomon opened the conversation. Then came Williams, who runs Southern Bancorp Inc. in Little Rock.
In other words, if an appraiser is calculating the value of a home in a Black neighborhood by comparing it to houses recently sold around it, then chances are she is comparing it to other Black-owned houses that, because of the legacy of segregation, have handicapped values in the market compared to similar homes in white communities appraised at higher prices.
While Britain’s economy shrank by a fifth during the second quarter of 2020, house prices were about 1.7 per cent higher than a year before in July, according to the Nationwide Building Society. Official data is not yet out but transactions also appear to be on the rise: a closely watched survey by the Royal Institution of Chartered Surveyors showed new instructions from sellers and inquiries from buyers were up sharply during July.
As China’s economy picks up after the pandemic, the last thing you might expect is a renewed credit squeeze in the real estate industry. So the imposition of leverage thresholds for developers has come as a surprise, weighing on shares of highly indebted companies from China Evergrande Group to Greenland Holdings Corp. The concerns may be overstated.