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Old 02-01-2012, 10:58 AM   #2001
chemgear
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Originally Posted by Realtor 1 View Post
Anyone know if a stat for % put down on your mortgage over the past 20 or so years in Canada exists?
I found this back in 2010 and posted it in this thread then.

http://2.bp.blogspot.com/_0YOsyi5WbL...quity+5%25.Bmp

I haven't seen updated numbers in it - it's pretty nuts if it is correct though. It looks like it shows average overall equity for all owners, not just the downpayment for people who are just buying in. How many 0% or 5% downpayments do you need to drag down the average when you include people who have paid off most of their home already.

Last edited by chemgear; 02-01-2012 at 11:53 AM. Reason: Poor wording on my part
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Old 02-01-2012, 11:07 AM   #2002
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BMO reported yesterday that they felt that the Canadian market would slowly decline. I know that goes against the feel good narrative that many in this thread like to see, but its a conclusion and prediction that is pretty hard to argue with for the most part. In other words, no bubble in Canada.
It is interesting that all the banks and newpapers have been making note of it. But really, it's not like income has suddenly dropped this month or that debt and home prices have suddenly spiked this week. It's really just a continuation trends over the course of previous years - heck, this tread is a historical record of it (and people discussing opinions about it.)

I found this interesting from the BMO report:


http://calgaryrealestatereview.com/2...ny-other-name/

Don’t call it a bubble, it’s a balloon.

In an interview aired on November 29, 2005, NAR’s then chief economist David Lereah had some eerily similar thoughts on the US housing market. Below are some highlights:

DAVID LEREAH: Balloons don’t burst. You can put air in a balloon and it can expand or you can deflate a balloon, where air comes out. So if you’re looking at different metro markets around this country that got real hot over the last four years, I like to use the imagery of balloons because they’re getting hot. You’re putting more air into those balloons. The prices are going up. But now air can come out of the balloon rather than the balloon popping.
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Old 02-01-2012, 11:11 AM   #2003
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TDs 5% cash back mortgage is lagging behind. What are they thinking? CIBC will eat them alive.

https://www.cibc.com/ca/mortgages/ar...t-csh-bck.html
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Old 02-01-2012, 11:13 AM   #2004
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How is it taxpayer subsidization? When was the last time CMHC went to the government for funds for their commercial operations? Oh that's right, never! When was the last time CMHC wasn't a profitable business? The CDN Government has earned over $14 billion from CMHC over the past decade.
When was Fannie Mae ever in trouble?

Before the crash that is.
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Old 02-01-2012, 11:26 AM   #2005
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Originally Posted by chemgear View Post
I found this back in 2010 and posted it in this thread then.

http://2.bp.blogspot.com/_0YOsyi5WbL...quity+5%25.Bmp

I haven't seen updated numbers in it - it's pretty nuts if it is correct though. It shows equity, not even the downpayment. How many 0% or 5% downpayments do you need to drag down the average when you include people who have paid off most of their home already.
Doesn't that graph only show purchases though? Not overall equity.

As a result of stringent and prudent underwriting standards, the quality of CMHC’s loan portfolio is strong. As reported in CMHC’s 2010 Annual Report, (p. 46 of annual report) 58 per cent of CMHC-insured mortgages have outstanding balances with a loan to value ratio less than 80 per cent, based on the original lending value. As reported in CMHC’s third quarter Quarterly Financial Report, if the current value of the properties is considered, more than 73 per cent of these mortgages have loan to value ratios less than 80 per cent.
Additionally, homeowners with outstanding CMHC-insured mortgages had, on average, equity of 45 per cent of the value of their homes.
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Old 02-01-2012, 11:35 AM   #2006
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Originally Posted by ranchlandsselling View Post
Doesn't that graph only show purchases though? Not overall equity.
Not sure, like I mentioned in the 2010 post in this thread, it wasn't something I was able to cross reference very well at the time. That being said, I have a hard time believing that in 2003, the average person (including the many first time buyers) was buying a house with 50% down in cash.
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Old 02-01-2012, 11:41 AM   #2007
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Originally Posted by chemgear View Post
Not sure, like I mentioned in the 2010 post in this thread, it wasn't something I was able to cross reference very well at the time. That being said, I have a hard time believing that in 2003, the average person (including the many first time buyers) was buying a house with 50% down in cash.
The way you interpreted it in your most recent post doesn't make sense. The math simply doesn't work. I'm not going to go digging back for your original post to see what you said then.

That said, your question about 2003 makes sense and I wondered the exact same thing. Unless in 2003 the majority of new purchasers were putting 25% down. Likely in that case the people who were selling those houses and moving somewhere were possibility putting down a large portion. I know my mom bought her house in 07 with 84% down. I'll likely live in 2 more houses before I'm 58 and I doubt my third purcahse will be less than 50% down. My next house I plan on buying 35% down.

What the graph probably shows is that in 2003 the purchases were likely a nice distribution between new home buyeres and second and third time buyers. Whereas closer to the end of the graph it's all the new home buyers that bought up and drove up the market and were buying with 5% down. .

Last edited by ranchlandsselling; 02-01-2012 at 11:48 AM.
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Old 02-01-2012, 11:41 AM   #2008
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question for the board.
let's say I want to buy a $400,000 house. I have enough for a 5% downpayment, but would like to wait and save up until I have 20% (to avoid the cmhc fees). Is it better to jump in now at the low rates, or wait 2 or 3 years until I have the 20%?
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Old 02-01-2012, 11:46 AM   #2009
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^^ Your best off speaking to a mortgage broker although there are 2 trains of thought...

20k down for 5%
80k down for 20%

Say 11k for CMHC

Can you make 11k investing 60k over the period it will take you to save up for your 20%? Obviously this does not factor in the difference in interest rates and what not.
If the answer the the question is yes and you believe in the housing market strengthening then I would say now, if you are unsure on the market and unsure on the investing side then I would say wait.
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Old 02-01-2012, 11:52 AM   #2010
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Originally Posted by ranchlandsselling View Post
The way you interpreted it in your most recent post doesn't make sense.
^ Yeah, the wording in my post was pretty terrible - went back and cleaned it up a little.
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Old 02-01-2012, 11:52 AM   #2011
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Originally Posted by ranchlandsselling View Post
Doesn't that graph only show purchases though? Not overall equity.

As a result of stringent and prudent underwriting standards, the quality of CMHC’s loan portfolio is strong. As reported in CMHC’s 2010 Annual Report, (p. 46 of annual report) 58 per cent of CMHC-insured mortgages have outstanding balances with a loan to value ratio less than 80 per cent, based on the original lending value. As reported in CMHC’s third quarter Quarterly Financial Report, if the current value of the properties is considered, more than 73 per cent of these mortgages have loan to value ratios less than 80 per cent.
Additionally, homeowners with outstanding CMHC-insured mortgages had, on average, equity of 45 per cent of the value of their homes.
I didn't really even spend much time looking, but just reading the MD&A of Fannie's 2006 it seems they thought they had great underwriting standards too.

From Fannie Mae's 2006 Annual Report MD&A:

Quote:
By holding the line on lending standards, we also
maintained the quality of our credit book of business, with
strong risk characteristics relative to most major mortgage
investors. Our single-family mortgages have about 45
percent equity support and strong homeowner credit
(averaging 720 FICO).
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Old 02-01-2012, 12:00 PM   #2012
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Has anyone looked into a 19% down payment. To insure that last percent they charge 1%.
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Old 02-01-2012, 12:13 PM   #2013
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When was Fannie Mae ever in trouble?

Before the crash that is.
So you can't answer my question. Didn't think so.

Pierre Serré, Vice- President, CMHC Insurance Product and Business Development

"We focus on prudent underwriting practices and the adequacy of our capital levels. CMHC is well positioned through its available capital to handle even extremely adverse economic conditions.”
He noted that CMHC has a total of $17.4 billion that could be used to back-up its insurance business and pay claims.

$17.4 billion.
Portfolio of $540 billion.
23% of portfolio is above 80% LTV.
That's $124 billion.

So, we need houses prices to drop 14% and everyone of those people to lose their jobs, default and walk on their mortgages and CMHC can cover all the banks loses on those mortgages.

If all that happens I'll apply your broad useless generalization and say that you'd be a taxpayer subsidization before CMHC would.

Last edited by ranchlandsselling; 02-01-2012 at 12:29 PM.
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Old 02-01-2012, 12:14 PM   #2014
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Man would it suck to be buying your first house now. I think I saved up $3500 for my first down payment (mind you it was three of us).
My parents bought their first house for 74k once upon a time when they were making 40k/year salaries.

My wife and I are looking at a house in the 350k range, lets just say my yearly salary doesn't allow me to pay off my house in two years time.

I've got about 60k saved up for a down deposit so I will be close to the 20% needed to avoid CMHC.

Where has the disconnect between wages and home prices come from in the last 30 years?
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Old 02-01-2012, 12:21 PM   #2015
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Has anyone looked into a 19% down payment. To insure that last percent they charge 1%.
They'd insure the entire 81%
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Old 02-01-2012, 12:23 PM   #2016
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It rhymes with shroom


BOOOOOOOM
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Old 02-01-2012, 12:23 PM   #2017
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Originally Posted by chemgear View Post
^ Yeah, the wording in my post was pretty terrible - went back and cleaned it up a little.
Still doesn't make sense.

If you look at CMHC's 2011 2nd quarter report
72% of CMHC portfolio was less than 80% LTV
19% was between 80-90%
7% was between 90-95%
2% was greater than 95%.

EDIT: Nevermind, I think I follow you now. Still think there's something odd about the graph though. All the people selling their houses to the knobs buying in 07 (me included) had to move somewhere with all that equity. Unless they spent it all on boats, but I don't see every second house in Calgary with a boat, and if everyone was doing that the above stats wouldn't exist.

Last edited by ranchlandsselling; 02-01-2012 at 12:27 PM.
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Old 02-01-2012, 12:23 PM   #2018
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It gets better. Purchasers will need to prove their income now.

Nope, sub prime was a USA problem only :-)

http://www.thestar.com/business/arti...ng-market?bn=1
Isn't that just Firstline?
Correct me if I'm wrong, but aren't they the 2nd largest non-bank lender in Canada after First National and ahead of MCAP?

Anyone know if the big banks (or First National) will follow suit?
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Old 02-01-2012, 12:27 PM   #2019
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So you can't answer my question. Didn't think so.
I believe I did. Your question is quite irrelevant.
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Old 02-01-2012, 12:28 PM   #2020
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Isn't that just Firstline?
Correct me if I'm wrong, but aren't they the 2nd largest non-bank lender in Canada after First National and ahead of MCAP?

Anyone know if the big banks (or First National) will follow suit?
Scotia said they aren't changing anything.
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