Baby, we got a bubble!?

[interested]

He was cought with the pants off by this depressed sales and he is pumping it up.
What do you expect him to say ? He is a developer!

Hence my statement: Let's assume he is telling the truth.

 

[klb86]

Anyone keeping an eye on the bond market? Mortgage rates have been on the move lately.
"This is the biggest 4-day up move in the 5yr yield since 2009. Expect a mad dash for those remaining lenders w/ 10yr rates <= 3.69%"

 

[Eug]

Anyone keeping an eye on the bond market? Mortgage rates have been on the move lately.
"This is the biggest 4-day up move in the 5yr yield since 2009. Expect a mad dash for those remaining lenders w/ 10yr rates <= 3.69%"

Well, home owners in general still avoid 10-year mortgage terms. However, what you say may have a grain of truth in it for the very near term, because 5-year rates have jumped up in many instances to over 3% now (more like 3.5% actually), so suddenly the 10-year doesn't look as bad as it used to in comparison. However, count on 10-year rates to spike too very soon, I'm guessing to over 4%.

However, the time to get a mortgage was May with people commonly getting 2.79% for a 5-year fixed. (I got 2.89% last year for an early renewal.)

 

[rbt]

Genworth Market Report

"After three years of varied periods of growth and decline across the country, the Canadian housing market is starting to stabilize, according to the latest housing report released by Genworth Canada. While the economy continues to strengthen, modest growth in the housing market is the trend for the next five years."

http://www.newswire.ca/en/story/1189567/in-the-canadian-housing-market-stable-is-the-word


Genworth is basically the fallback plan for people who do not qualify for CMHC mortgage insurance.

 

[js97]

Well, home owners in general still avoid 10-year mortgage terms. However, what you say may have a grain of truth in it for the very near term, because 5-year rates have jumped up in many instances to over 3% now (more like 3.5% actually), so suddenly the 10-year doesn't look as bad as it used to in comparison. However, count on 10-year rates to spike too very soon, I'm guessing to over 4%.

However, the time to get a mortgage was May with people commonly getting 2.79% for a 5-year fixed. (I got 2.89% last year for an early renewal.)

Curious if next spring, banks will again edge lower to capture more of the market share...

 

[daveto]

Curious if next spring, banks will again edge lower to capture more of the market share...

The banks didn't choose to edge lower with rates this past spring. Their rates reflected the CAD Gov't 5-yr Treasury yield of 1.1% at that time.

Similarly, they didn't choose to raise rates to 3.39% last week, but rather moved in response to the rise of the 5-yr Treasury yield to 1.8%.

 

[daveto]

I'm curious about how the yield spike might affect end of June sales (and perhaps July as well).

I'd figure someone on the fence might want to close a deal so they can use their locked in sub-3% rate, which would otherwise expire soon. But at the same time, I'd figure banks would want to wriggle off the hook for those rate guarantees via aggressive credit checks, disputing the value of the property to be purchased. So my prediction is that June/July will see good sales, but then a higher than normal # of deals fall through.

The great thing about my prediction in the above paragraph is that we'll have to wait until 2014 before we get data on the deal that fell through...so I'm safe from being wrong for time being!

 

[Eug]

The banks didn't choose to edge lower with rates this past spring. Their rates reflected the CAD Gov't 5-yr Treasury yield of 1.1% at that time.

Similarly, they didn't choose to raise rates to 3.39% last week, but rather moved in response to the rise of the 5-yr Treasury yield to 1.8%.

True. However, I also get the impression that the banks tend to get a bit more competitive with each other during the spring real estate sales rush. In fact, my specific prior mortgage deal from 2010 was a spring deal. It was also available in the 2009 spring prior, but disappeared in the intervening fall and winter.

 

[interested]

I'm curious about how the yield spike might affect end of June sales (and perhaps July as well).

I'd figure someone on the fence might want to close a deal so they can use their locked in sub-3% rate, which would otherwise expire soon. But at the same time, I'd figure banks would want to wriggle off the hook for those rate guarantees via aggressive credit checks, disputing the value of the property to be purchased. So my prediction is that June/July will see good sales, but then a higher than normal # of deals fall through.

The great thing about my prediction in the above paragraph is that we'll have to wait until 2014 before we get data on the deal that fell through...so I'm safe from being wrong for time being!

I am not sure we will know this ever daveto. I am not sure that it will be published as to how many applications were turned down compared to previous years. I can't see why the banks would publish this data but perhaps it is available. The post suggests it will be as you say we will know by next year.

They could also say as you point out that due to the frenzy, the overvaluation of all properties required more prudent lending standards or that due to stricter CMHC guidelines and less available insurance they are taking on "less business" . They then would mark to market more the value of the property rather than actually acknowledging that they were doing more aggressive credit checks or not wanting to meet previous obligations.

My suspicion is they will honour if reasonable previous rates unless they really rapidly rise much more. I.E. la 0.5% rise in rates is not going to make the banks not honour their commitment. Now over 1%...I am less certain.

 

[interested]

From the Toronto Star:

Royal Bank boosting its residential mortgage rates again on Tuesday
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By: The Canadian Press, Published on Fri Jun 28 2013
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Royal Bank of Canada is once again boosting some of its home mortgage rates effective Tuesday.

The increases will range from one-tenth to three-tenths of a point, depending on the type of mortgage.

Royal Bank says its special discounted four-, five-, seven-, and ten-year rates are going up to 3.39, 3.69, 3.99 and 4.29 per cent respectively.

Royal increased some of its mortgage rates earlier this month following a plunge in bond prices in May.

Scotiabank and TD Bank have also recently increased their special discounted

 

[klb86]

Like I said, keep an eye on the bond market.

Big banks ratcheting up mortgage rates again

Some of Canada's biggest banks have been inching up their mortgage rates in recent weeks, with Royal Bank being the latest to announce an increase Friday. The hike is the second in a month and will take effect next week.

The bank said it is boosting some of its special discounted fixed-rate mortgages, effective next Tuesday.

The four-year closed-rate mortgage is moving up 10 basis points to 3.39 per cent, the seven-year is increasing by 20 basis points to 3.99 per cent, the 10-year is moving up by 30 basis points to 4.29. And perhaps most significantly, the five-year closed rate mortgage will increase by 20 basis points to 3.69 per cent.

The vast majority of first-time homeowners go with fixed-rate mortgages, and five years is the most popular term.

The hikes are small in percentage terms, but they add up over time. Under Royal Bank's old five-year rate, a $300,000 25-year mortgage would cost $1,496.23 a month. That same mortgage will cost $32 more per payment to finance starting next week, which will add up to more than $9,500 over the life of the mortgage.

The bank has already moved once this month to raise a few of its fixed-rates mortgages in reaction to suddenly higher borrowing costs on the bond market, which is where the bank finances most of its fixed-rate mortgages.

Scotiabank and TD Bank have also recently increased their special discounted rates.

http://www.cbc.ca/news/business/story/2013/06/28/business-mortgage-rates.html

 

[CN Tower]

Off topic but this may be my final day in this forum. The mod AlvinofDiaspar has chosen to censor my comments in the Rob Ford thread and I refuse to participate in a discussion where my efforts are erased at the whim of paper dictator with contrary views. I've long ago established my credibility and civility here and to have my voice muffled simply because I believe in a little due process before an extermination of a man's career and possibly his entire life, well call me a radical then. I don't want any part of it. Frankly I'm too old, too established, too respected and too successful in my career to tolerate such pettiness online. I came here for info on the real estate world to compliment my own research for the benefit of my clients but really there are other places for such info now with the prevalence of social media.

To Interested, Dave, Eug, Urbandreamer and KA1(and many others) it has been a pleasure conversing with you over the years. Keep searching for truth in numbers and in neighbors

Perhaps we shall all meet again in another forum or venue where freedom of speech is more tolerated. Perhaps I shall start one if only I can find the time.

 

[Condo George]

That really sad CN. This is the exact same thing you did to my posts, you played mod, no matter what the post was......you put a negative spin on it. So you see, in the end you are taking the same road I took, why bother posting if they are being deleted or twisted 100% of the time. I am for constructive argument but there was no argument, it was slam every post by George in your mind.

That's really too bad though, I enjoyed a lot of your posts if not posted in reply to mine.

Still open to have a coffee with you, not for business, but life is too short we should all get along.......

It would be a loss to many here if you do leave, re consider.....

 

[KA1]

Off topic but this may be my final day in this forum./QUOTE]

CN Tower, it is sad to see you go. Really enjoyed mature conversation with you.

Hopefully, with the passing of time, you will overcome your shock/anger and come back.

Au Revoir.

 

[urbandreamer]

Everytime I see the CN Tower, I think about this thread. Check out twitter.

Check out the latest NCG--a developer is "giving away" (yeah right ) a $35,000 value lease on any BMW purchased at a certain dealership--a sign of the times. I'd rather just see a price check.