Comments on: Has the Canadian Government Become one of the Largest Backers of Risky Mortgages in the World? http://informedvote.ca/2009/10/27/has-the-canadian-government-become-one-of-the-largest-backers-of-risky-mortgages-in-the-world/?utm_source=rss&utm_medium=rss&utm_campaign=has-the-canadian-government-become-one-of-the-largest-backers-of-risky-mortgages-in-the-world Informed Vote (informedvote.ca) will keep Canadian voters informed on Canadian Politics such as Stephen Harper, Michael Ignatieff, Jack Layton, Liberals, Conservatives, NDP, Green, as well as foreign issues like the Israel palestine conflict and local issues like the CUPE strike Sun, 04 Dec 2011 07:31:29 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Matt Dyck http://informedvote.ca/2009/10/27/has-the-canadian-government-become-one-of-the-largest-backers-of-risky-mortgages-in-the-world/comment-page-1/#comment-3642 Matt Dyck Wed, 28 Oct 2009 23:15:19 +0000 http://informedvote.ca/?p=1188#comment-3642 That's a good question Tamir. Its difficult to find numbers but here are a few links: About the UK: http://www.reuters.com/article/idUSLM13252820090622 Canada: http://findcalgary.files.wordpress.com/2009/09/percentagebyprovince.jpg America: http://www.freeratesearch.com/en/newsroom/mortgage_statistics/ The American is especially interesting as it says that in 2004, 31% of all American mortgages were INTEREST only! No wonder they had a collapse. The evidence seems to suggest that Canada has a much lower default rate than the US and UK as examples. My worry is that the policy of directing the CMHC to allow riskier mortgages backed by the Federal Government may be putting the country at risk if defaults were to increase if the economy were to get worse or if the steadily increasing markets in places like Vancouver hit a critical point where they collapse. Higher housing prices, to me, mean more individuals with less than 25% down requiring a CMHC backing, which if they default, means that federal dollars pay the bank. The Banks in Canada are really sheltered by CMHC. That’s a good question Tamir.

Its difficult to find numbers but here are a few links:

About the UK:
http://www.reuters.com/article/idUSLM13252820090622

Canada:
http://findcalgary.files.wordpress.com/2009/09/percentagebyprovince.jpg

America:
http://www.freeratesearch.com/en/newsroom/mortgage_statistics/

The American is especially interesting as it says that in 2004, 31% of all American mortgages were INTEREST only! No wonder they had a collapse.

The evidence seems to suggest that Canada has a much lower default rate than the US and UK as examples.

My worry is that the policy of directing the CMHC to allow riskier mortgages backed by the Federal Government may be putting the country at risk if defaults were to increase if the economy were to get worse or if the steadily increasing markets in places like Vancouver hit a critical point where they collapse. Higher housing prices, to me, mean more individuals with less than 25% down requiring a CMHC backing, which if they default, means that federal dollars pay the bank. The Banks in Canada are really sheltered by CMHC.

]]> By: Tamir Birk http://informedvote.ca/2009/10/27/has-the-canadian-government-become-one-of-the-largest-backers-of-risky-mortgages-in-the-world/comment-page-1/#comment-3639 Tamir Birk Wed, 28 Oct 2009 21:47:23 +0000 http://informedvote.ca/?p=1188#comment-3639 Thanks for the article Matt! Did you happen to compare the rate of mortgage defaults in Canada with other countries around the world? I'm not sure exactly where we'd rank but it would definitely give a sense of how comparatively risky our banks are being. Thanks for the article Matt!

Did you happen to compare the rate of mortgage defaults in Canada with other countries around the world? I’m not sure exactly where we’d rank but it would definitely give a sense of how comparatively risky our banks are being.

]]> By: peedeecee http://informedvote.ca/2009/10/27/has-the-canadian-government-become-one-of-the-largest-backers-of-risky-mortgages-in-the-world/comment-page-1/#comment-3638 peedeecee Wed, 28 Oct 2009 21:15:34 +0000 http://informedvote.ca/?p=1188#comment-3638 The Harper government eased restrictions on CMHC mortgages under the radar, and the information is just now coming out. For a while, it looked as though the government was managing the economy well - we just didn't have access to the fine print. Sneaks. The Harper government eased restrictions on CMHC mortgages under the radar, and the information is just now coming out. For a while, it looked as though the government was managing the economy well – we just didn’t have access to the fine print.

Sneaks.

]]> By: Matt Dyck http://informedvote.ca/2009/10/27/has-the-canadian-government-become-one-of-the-largest-backers-of-risky-mortgages-in-the-world/comment-page-1/#comment-3625 Matt Dyck Tue, 27 Oct 2009 23:14:14 +0000 http://informedvote.ca/?p=1188#comment-3625 To clarify a few points: The payments in the CMHC affordability calculator are per month payments (not that one has $250 in debt, but is making $250 in debt minimum payments per month) My reasoning is that when the government allowed 40 year amortizations and zero down it allowed the prices of houses to inflate drastically as more people could get into the market. This is how that government policy caused housing prices to increase and affordability to drop I did manage to find a house under 200 000 in Kamloops. It was completely gutted and needed a complete renovation... To clarify a few points:

The payments in the CMHC affordability calculator are per month payments (not that one has $250 in debt, but is making $250 in debt minimum payments per month)

My reasoning is that when the government allowed 40 year amortizations and zero down it allowed the prices of houses to inflate drastically as more people could get into the market. This is how that government policy caused housing prices to increase and affordability to drop

I did manage to find a house under 200 000 in Kamloops. It was completely gutted and needed a complete renovation…

]]>