First time home buyers are fucked: CMHC tightening rules

[ThePenIsMightier]

Banks and lenders are protected by whom? When the government protects banks they use tax dollars. Tax dollars are paid by tax payers.
It all results in future and existing taxpayers getting eff'd in the A by new fees, shittier rates and more penalties. I can sit her drinking fine whiskey thinking how lucky I am to be unscathed by this particular storm; but, I'll have more difficulty swallowing that for the next 20 years while I pay off the free money given to others for poor decisions made by a government that has actively treated my success as an evil that needs to be redistributed to Sociology and PoliSci majors who I already paid to go to school.
Thank Allah I didn't buy a quarter of the house the Marth claimed I could "afford". Or shit, maybe I should have and at least I could enjoy that luxury for several years before sending the bank the jingling envelope with the keys in it a couple years from now.

Am I misinterpreting your argument wildly? Apologies if I am.

[ercchry]

I honestly can’t tell if you’re for or against more government intervention with that post

But I think you bring up a good point? Basically putting in place a policy designed to erode values will actually cause the taxpayers to have a better chance of being on the hook for defaults, which again. Would be pretty rare. Also jingle mails does not apply to these insured loans, but the fall out of say... any post 2016 $1m plus purchase losing close to ANOTHER 20% could actually trigger this... which would cause your “higher fees and rates” scenario as lenders are on the hook for those, but that’s an Alberta problem so would really only take out ATB

[mazdavirgin]

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What? Tax payer covers $0, cmhc’s portion of the loss comes out of the borrow’s pockets/future earnings/garnishment/etc

So how does a crown corporation pay out on their mortgage default insurance when it doesn't have sufficient capitalization? I'll give you a hint it starts with Tax...

[Disoblige]

In my opinion, I think you are making it sound worse than it is (for existing homeowners). Agree it will make it tougher for new homebuyers though.

I just bought a house. There doesn't seem to be a lot of desperate people to sell so if people see huge value lost in their homes, they will find other ways to adapt and selling low is usually the last resort. How many people out there are in a situation where they are completely fucked due to this and have to sell? I don't think too many at all.

[ercchry]

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So how does a crown corporation pay out on their mortgage default insurance when it doesn't have sufficient capitalization? I'll give you a hint it starts with Tax...

Okay, first off... the insurance does NOT cover the borrower, they come after the person for everything, forever till they recover the loss. Second, for them to actually post up a loss the default rates would have to be massive as they are paid on not only every single high ratio loan, but also any insurable loan as well. With the lenders having to cover part of any loss on top of that as well their exposure is piss all. Cmhc will never post a loss, will never need a top up from tax dollars, and if they ever do we have way larger issues and you might as well be leveraged to the tits when that day comes as the gov will be seizing banks at that point and your money will be gone

[MalibuStacy]

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In my opinion, I think you are making it sound worse than it is (for existing homeowners). Agree it will make it tougher for new homebuyers though.

I just bought a house. There doesn't seem to be a lot of desperate people to sell so if people see huge value lost in their homes, they will find other ways to adapt and selling low is usually the last resort. How many people out there are in a situation where they are completely fucked due to this and have to sell? I don't think too many at all.

Thanks for some realism!

[ThePenIsMightier]

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In my opinion, I think you are making it sound worse than it is (for existing homeowners). Agree it will make it tougher for new homebuyers though.

I just bought a house. There doesn't seem to be a lot of desperate people to sell so if people see huge value lost in their homes, they will find other ways to adapt and selling low is usually the last resort. How many people out there are in a situation where they are completely fucked due to this and have to sell? I don't think too many at all.

I think it's a lot more than you realize. I can see five houses for sale from my lawn and ten if I go get the mail. Cheap interest rates got a lot of people into houses they could just afford.

[Disoblige]

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I think it's a lot more than you realize. I can see five houses for sale from my lawn and ten if I go get the mail. Cheap interest rates got a lot of people into houses they could just afford.

Just because their house is for sale doesn't mean they are willing to take a 10%+ hit on their house or that they are desperate. Hard to judge people's situation until you put in the house offer and see what happens.

[MalibuStacy]

Only if you are doing a cmhc mortgage with less than 20 percent down...

[ercchry]

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Thanks for some realism!

Well, I guess I can’t fault either of you for not being exposed to the financial situations I see every single day, but I can tell you right now, a job loss compounded with say, a family event and a 20% loss in equity on top completely takes out any sort of option for a lot of regular people to stay in their homes.


I mean there is always an alternative to how this plays out, as these sorts of policy changes rarely yield the results that they are intended to... and that is house values continue to rise, first time buyers are beyond priced out of the market, the wealth gap expands, as the majority of sales go towards the rental pool, and we create a whole new broken system 20 years from now

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Only if you are doing a cmhc mortgage with less than 20 percent down...

Uh, ffs... no, unless it’s a refi, purchase over $1m, a rental, or amortization over 30yr it’s god damn insured

[MalibuStacy]

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Well, I guess I can’t fault either of you for not being exposed to the financial situations I see every single day, but I can tell you right now, a job loss compounded with say, a family event and a 20% loss in equity on top completely takes out any sort of option for a lot of regular people to stay in their homes.


I mean there is always an alternative to how this plays out, as these sorts of policy changes rarely yield the results that they are intended to... and that is house values continue to rise, first time buyers are beyond priced out of the market, the wealth gap expands, as the majority of sales go towards the rental pool, and we create a whole new broken system 20 years from now

Exposed to what financial situation. I moved out of the house after a sever family crisis with no money to speak of and worked my but off to buy a house I could reasonably afford, I just dont share the view of many, don't buy a house unless you are financially stable enough to afford it.

Like I do believe this will hurt the housing market, but I also think it is unreasonable to buy a home which is way outside your budget

[Disoblige]

Agree ercchry, you dealing with this day-to-day puts you on a different perspective. It can be for the better or maybe sometimes makes you a bit jaded.

Anyways, still appreciate the perspective. Partially hope you are wrong so I don't lose 5% of my home value by the end of this year

Let's see what happens.

[ercchry]

I’m talking about existing home owners... I’d say half of what I see are 50+ year olds who have been in the same home for 20 years and we’re maxing out every single metric (income, LTV, debt ratios, which are waaay higher than anything a big bank does)

[MalibuStacy]

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Agree ercchry, you dealing with this day-to-day puts you on a different perspective. It can be for the better or maybe sometimes makes you a bit jaded.

Anyways, still appreciate the perspective. Partially hope you are wrong so I don't lose 5% of my home value by the end of this year

Let's see what happens.

I expect to. Bit this is how things go sometimes. Just ride the storm and make sound decisions

[ercchry]

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Agree ercchry, you dealing with this day-to-day puts you on a different perspective. It can be for the better or maybe sometimes makes you a bit jaded.

Anyways, still appreciate the perspective. Partially hope you are wrong so I don't lose 5% of my home value by the end of this year

Let's see what happens.

Yeah I think there is a disconnect as this is one of those things that will show up in many areas of the industry, my bad on the thread title... but that is the most glaringly obvious problem that will instantly show up on July 1st (well, like 6 weeks later as contracts enter prior to are fine)

First time buyers are not my problem anymore, but everyone will feel the lack of those buyers for some time. Alberta especially as we already have our own issues here, which are not seen in other parts of the country. Makes me puke when I see these smaller cities in Ontario still seeing huge gains in value from even a couple years ago. These markets are the reason they are trying to curb values, which we do NOT need here... future access to capital will be a massive issue here as the exposed uninsurable refis in Alberta have no recourse to lenders and they will not be giving you 80% LTV here if we start to see a dramatic market “correction” (ha! That’s for Buster)

[max_boost]

So are you saying I can get an aspen house for 18% discount soon? I’m okay with that

[ercchry]

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So are you saying I can get an aspen house for 18% discount soon? I’m okay with that

Only if you’re not pulling that 5% down from your heloc

[ThePenIsMightier]

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Just because their house is for sale doesn't mean they are willing to take a 10%+ hit on their house or that they are desperate. Hard to judge people's situation until you put in the house offer and see what happens.

That's true but it's also true that ___% of sellers are willing to take a 10% hit and I'm seeing a whole lot more sellers enter the area. Plus, these houses haven't been listed for 120+ days, yet. Time ain't healing these types of wounds...

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Only if you are doing a cmhc mortgage with less than 20 percent down...

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Uh, ffs... no, unless it’s a refi, purchase over $1m, a rental, or amortization over 30yr it’s god damn insured

If you put 20% down, your mortgage is not insured. It's that not the rule, anymore?? Or, are you pointing out that new home buyers can't afford this, so it shouldn't be part of the discussion.

[nzwasp]

They should just change it to you need 20% down minimum to buy a house. You can’t buy with less than that. I think that would cool the house pricing everywhere except Toronto and Vancouver where people are just buying outright. Prices will never go down atleast in Vancouver where the coastal pricing is in such high demand.

[ExtraSlow]

The housing market is permanently distorted by government policy. There's entire departments in Ottawa dedicated to distorting the housing market.

I seriously think liberals will roll out some "affordability" campaign this calendar year.