Canada bubble is popped

[billybong]

Knowingly linked to yet more fraud even if perhaps indirectly? - the sooner the company is wound up the better.  Next week wouldn't be too soon.

Notice that this all apparently only started to come to the surface after Carney had left his job as governor of the BoC (Bank of Canada) to work for the BoE - in 2013.  When he does actually leave the BoE it'll be interesting to see what might surface in the UK's financial sector following his uninspiring tenure.

Edited April 29, 2017 by billybong

[stormymonday_2011]

2 hours ago, ftb_fml said:

There's an interesting and informative overview of the company in question / their situation courtesy of the Financial Post, here.

I thought it a good explanation for those of us (myself included) who have little understanding of the financial sector

It is a sub prime lender but that is precisely the sector that kicked off all the trouble back in 2007-2008.

These are the institutions that help keep House price bubbles going by allowing people with less than rock solid credit credentials to speculate in property. Once removed markets have a tendency to go from frothy to flat before imploding 

[Democorruptcy]

A bit here about how mortgage insurance works in Canada and some changes in 2016

https://www.fin.gc.ca/n16/data/16-117_2-eng.asp

[stormymonday_2011]

Rush for the exit gathering pace a Home Capital if this ZH article is correct

http://www.zerohedge.com/news/2017-04-29/furious-bank-run-leaves-canadas-largest-alternative-mortgage-lender-verge-collapse

 

[ftb_fml]

On 29/04/2017 at 0:32 PM, stormymonday_2011 said:

It is a sub prime lender but that is precisely the sector that kicked off all the trouble back in 2007-2008.

These are the institutions that help keep House price bubbles going by allowing people with less than rock solid credit credentials to speculate in property. Once removed markets have a tendency to go from frothy to flat before imploding 

Thanks

[Saving For a Space Ship]

According to TD, real estate has accounted for roughly 40% of GDP growth in Canada since 2014  

https://twitter.com/Joe_Castaldo/status/859778657946148865/photo/1

graph 

https://pbs.twimg.com/media/C-6L3YBWsAAbOUd.jpg

Edited May 4, 2017 by Saving For a Space Ship

[Blod]

On 2017-4-29 at 0:25 PM, billybong said:

Notice that this all apparently only started to come to the surface after Carney had left his job as governor of the BoC (Bank of Canada) to work for the BoE - in 2013.  When he does actually leave the BoE it'll be interesting to see what might surface in the UK's financial sector following his uninspiring tenure.

We'll be lucky if it just surfaces rather than gets sprayed everywhere.  

His excuse is Brexit. If we hadn't voted that way everything would have been fine, and he'll even claim he tried to shore up the economy by dropping rates despite that drop further weakened Sterling.

[Democorruptcy]

1 hour ago, Saving For a Space Ship said:

According to TD, real estate has accounted for roughly 40% of GDP growth in Canada since 2014  

https://twitter.com/Joe_Castaldo/status/859778657946148865/photo/1

graph 

https://pbs.twimg.com/media/C-6L3YBWsAAbOUd.jpg

 

Are they anything to do with TD Trust Mortgages....

http://www.tdcanadatrust.com/products-services/banking/mortgages/mortgage-rates.jsp

The message is : real estate is too important for you to let it/us go down?

[DrMartinSanchez]

How Bank of England boss Mark Carney's home country of Canada is trying to defuse its property boom… and is it working?

http://www.dailymail.co.uk/property/article-4353390/How-Canada-defusing-house-price-boom.html

[TheCountOfNowhere]

9 minutes ago, DrMartinSanchez said:

How Bank of England boss Mark Carney's home country of Canada is trying to defuse its the property boom bubble started by him… and is it working?

http://www.dailymail.co.uk/property/article-4353390/How-Canada-defusing-house-price-boom.html

 

[Freki]

http://www.zerohedge.com/news/2017-05-09/home-capital-sells-15-billion-mortgages-unknown-price-shore-liquidity

[zugzwang]

10 minutes ago, Freki said:

http://www.zerohedge.com/news/2017-05-09/home-capital-sells-15-billion-mortgages-unknown-price-shore-liquidity

Wonder if it's Cerberus Capital Management that's bought them up? Rewarding business if the price is right.

Was it really ten years ago? Happy days.

[HovelinHove]

4 hours ago, DrMartinSanchez said:

How Bank of England boss Mark Carney's home country of Canada is trying to defuse its property boom… and is it working?

http://www.dailymail.co.uk/property/article-4353390/How-Canada-defusing-house-price-boom.html

 

 

Quote

Imagine an overseas property market where house prices have increased 40 per cent in just three years.

 

My town Barrie went up 40% in just one year...not a bubble at all! Spoke to a close friend the other day, listed his property for 650, went for 800 in 3 days. Things have cooled down now, but with the lack of detached houses, not convinced prices will collapse.

[Lord D'arcy Pew]

4 hours ago, DrMartinSanchez said:

How Bank of England boss Mark Carney's home country of Canada is trying to defuse its property boom… and is it working?

http://www.dailymail.co.uk/property/article-4353390/How-Canada-defusing-house-price-boom.html

[giggler000]

On 04/05/2017 at 6:56 AM, Saving For a Space Ship said:

According to TD, real estate has accounted for roughly 40% of GDP growth in Canada since 2014  

https://twitter.com/Joe_Castaldo/status/859778657946148865/photo/1

graph 

https://pbs.twimg.com/media/C-6L3YBWsAAbOUd.jpg

 

 

You know all that stuff at the time of the crash - How did Canada escape the price drops and down turn?  Well guess it's been answered, they were behind the curve!  Just took 8+ years to create enough new credit and tank the economy like the rest of the Western nations run by the same people.   Likely they used Canada as "oh we've got to try harder to blow this thing"

http://www.ctvnews.ca/how-canada-escaped-the-worst-of-the-recession-1.430021

"Bank of Canada governor Mark Carney took some heat last month for declaring the recession all but over"

[Guest TheBlueCat]

On 26/04/2017 at 7:24 PM, Bear Hug said:

Question is - why is this not on FT website?  

Why would it be? It's a tiny lender with less than 2% of the Canadian mortgage market, it's basically uninteresting to anyone outside of Canada (and HPC of course). 

[Digsby]

Six Canadian Banks Cut by Moody's on Consumers' Debt Burden

Quote

Six of Canada’s largest banks had credit ratings downgraded by Moody’s Investors Service on concern that over-indebted consumers and high housing prices have left lenders vulnerable to potential losses on assets.

https://www.bloomberg.com/news/articles/2017-05-10/six-canadian-banks-cut-by-moody-s-over-consumers-debt-burden

[Steppenpig]

"Six of Canada’s largest banks" sounds a bit "meh... is that 6 of the top 20, or what?"

 

It is actually turns out it's *the* six largest canadian banks.

 

Still no mention in the FT (assuming my google skills are reliable)

[Funn3r]

https://www.bloomberg.com/view/articles/2017-05-23/what-canada-should-do-about-its-housing-bubble

"The Bank of Canada holds its next policy meeting on May 24. It should at the very least signal an intention to raise rates. The longer it waits, the worse the eventual reckoning will be."

(But they didn't)

 

 

 

[Democorruptcy]

18 minutes ago, Funn3r said:

https://www.bloomberg.com/view/articles/2017-05-23/what-canada-should-do-about-its-housing-bubble

"The Bank of Canada holds its next policy meeting on May 24. It should at the very least signal an intention to raise rates. The longer it waits, the worse the eventual reckoning will be."

(But they didn't)

 

From that article:

Quote

Granted, the bubble bears little resemblance to the U.S. subprime boom that triggered the global financial crisis. Although one specialized lender, Home Capital Group, has had issues with fraudulent mortgage applications, regulation has largely kept out high-risk products. Homeowners haven’t been withdrawing a lot of equity, and can’t legally walk away from their debts like many Americans can. Banks aren’t sitting on the kinds of structured products that destroyed balance sheets in the U.S. Nearly all mortgage securities and a large portion of loans are guaranteed by the government.

It's like 'no worries' - pity a governbankment doesn't have any money of it's own. Profits from winning bets kept by bankers and the losers paid for by taxpayers. 

[Blod]

22 minutes ago, Funn3r said:

https://www.bloomberg.com/view/articles/2017-05-23/what-canada-should-do-about-its-housing-bubble

"The Bank of Canada holds its next policy meeting on May 24. It should at the very least signal an intention to raise rates. The longer it waits, the worse the eventual reckoning will be."

(But they didn't)

So it alright as their government is on the hook for the banks when they fail. They are finally reaching an impasse, crash either now or a little later if they fail to raise rates. We can all guess that they'll find a way to 'look though' the need to raise till the crash is well underway.

[Society of fools]

https://www.bloomberg.com/news/articles/2017-05-24/toronto-bidding-wars-turn-to-homebuyers-remorse-as-market-slows

Read this and try not to laugh out loud.

Bloomberg is sure devoting a lot of coverage to the Canadian housing bubble.

Much more attention than they pay to the UK property bubble, or to the Australian one.

Hopefully news will get around. In the last 6 weeks I've heard both London and Sydney property owners tell me with enormous confidence that " it ( a property crash) simply can't happen here", like it was one of the immutable laws of nature or something....

[Locke]

8 hours ago, Society of fools said:

I've heard both London and Sydney property owners tell me with enormous confidence that " it ( a property crash) simply can't happen here"

 

 

[rollover]

 

Quote

 

In Home Capital’s Mortgage Mess, Blame the ‘Unlucky’ Brokers

Home Capital’s troubles started with “unlucky” brokers. That’s what Canadian banks and insurers call the mortgage merchants who get caught submitting fraudulent loan documents.

Home Capital Group Inc. disclosed that 45 independent brokers submitted loan applications that misstated borrowers’ income and other details. A securities regulator accused the company of misleading investors about the fraud, and that sparked a run on deposits at the lender.

The failure to stop such practices is exposing cracks in Canada’s vaunted regulatory structure, drawing parallels to the U.S. a decade ago. So-called Ninja loans -- an acronym for mortgages made to borrowers with no income, no job or assets -- helped sink the U.S. housing market and led to the worst financial crisis since the 1930s. Bloomberg

 

Recommending to read the article. The history repeats.

[Toast]

3 hours ago, rollover said:

Recommending to read the article. The history repeats.

It's a somewhat equivocal article: it's not calling out the situation directly as a re-run of the US sub-prime scandal, mostly because it claims there aren't exotic mortgages available in Canada. Given the extent of that bubble, my gues is their reassuring words are down to a lack of evidence. Wait till the credit tide goes out, then we'll see if there were exotic mortgages in practice, even if they didn't look like that at the time.

There is a great quote at the end from an investment manager: “You usually don’t find one cockroach. If you find one, there are many more,” he said by phone from Toronto. “We have a tendency to assume the negative event is a one-off. History suggests this assumption is incorrect.”

I'd love Bloomberg to put their neck on the line and call this out as the start of the next credit crunch, but that would have to be in an editorial rather than a news piece.