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Thread: First time home buyers are fucked: CMHC tightening rules

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    Default First time home buyers are fucked: CMHC tightening rules

    “We expect values to drop” yeah! Doing this will help that prediction come true! Cause after a global economic catastrophe what we need is to cool the market even more, by limiting even more entry into it than say... laying off half the workforce for 3 months will naturally do

    Benchmark qualifying was put in place for this reason, they allllllmost reversed that and now they are doubling down by also decreasing GDS by 4%, not TDS... cause you know... consumer debt keeps the world spinning... but GDS. so no matter how fiscally responsible you have proven to be, you too can also feel the hurt.

    “Oh well, if you don’t have 20% down you shouldn’t be extending yourself anyways” ...well! Guess what? CMHC also does bulk portfolio insurance and you better believe these new ratios will be for almost everyone... well, unless you are cool with the premium on uninsurable loans. You’d also be surprised how many people have gifted down payments too... all this equals is a smaller customer pool... less demand... more supply... yup, good work

    https://www.bnnbloomberg.ca/housing-...turn-1.1445837

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    So little more insight...

    680 min beacon (also scores have recently been recalculated, to become lower)
    “Flex down” is gone (that’s borrowing your down payment from an unsecured source)
    Expected outcome is an 18% drop in the market
    Borrowing power is down another 9-13%... on top of the 20-25% from the benchmark change for a few years back

    People should be freaking out, current and future home owners should be pissed, especially here as our own economic factors were enough of a problem on home values

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    Trudeau will "fix" this within weeks. Young broke people are a prime demographic of liberal voters.
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    Will it really affect home value though for existing owners?
    Buy house you can afford, pretty simple.

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    Quote Originally Posted by Disoblige View Post
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    Will it really affect home value though for existing owners?
    Buy house you can afford, pretty simple.
    Uh, yeah... yeah it will... you’re talking about removing a large amount of buyers out of the market

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    Quote Originally Posted by Disoblige View Post
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    Will it really affect home value though for existing owners?
    Buy house you can afford, pretty simple.
    House prices are propped up by the values of the houses just below them in the market. You need new fresh blood to keep the whole Ponzi going.

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    Quote Originally Posted by ExtraSlow View Post
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    broke people are a prime demographic of liberal voters.
    ftfy
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
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    fact.

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    So, we’ve (where I work) already pulled back on LTV in Alberta, if the official projections are an erosion of 18% of equity... nationwide, with our depressed economy on top of that, and also being the only no recourse province left for not be surprised if its damn near impossible to refinance a home here. The shockwave of that will be huge. Many people rely of this to “fix” spiraling consumer debt

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    Let's be clear.. First time buyers are fucked because asset prices are too high. This is mostly because we did not allow mortgage rate pricing to be established by market forces.

    Price controls always come home to roost.

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    Quote Originally Posted by Buster View Post
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    Let's be clear.. First time buyers are fucked because asset prices are too high. This is mostly because we did not allow mortgage rate pricing to be established by market forces.

    Price controls always come home to roost.
    Yeah I fail the see the problem... Canadians are over leveraged and too many people own real estate. Harper started this mess back in 2006 with the whole 40 year mortgages and 0 down. Two thirds of mortgages are backed by the Government so why should we as tax payers keep allowing more and more people who do not have the means to buy homes? Who do you think is on the hook when they default? This should have been done a long time ago and now it's time to pay the piper.

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    The issue has never been with secured debt, Canadian PAY their mortgages, the true issues are still 100% unchecked and that’s easy access to unsecured debt.

    Oh, and let’s not forget that the “tax payer is on the hook” is complete nonsense... the insurance is for the lender, the default is actually also now split between lender and insurer... but the insurer actually goes after the borrower for any losses. Cmhc is incredibly profitable
    Last edited by ercchry; 06-04-2020 at 09:53 PM.

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    So the taxpayer is on the hook for half of the loss and must recover that, presumably after the lender has settled?

    Insurance is always profitable when things are good. Ask aig.

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    Quote Originally Posted by Buster View Post
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    House prices are propped up by the values of the houses just below them in the market. You need new fresh blood to keep the whole Ponzi going.
    Ok, but what's the big deal still? Seriously wondering how it affects existing owners that bad.

    Less buyers on market, more will rent then. If you own one home, no issue as you live as primary. If you own more than one home, you have more in rental market.

    Only really affects people who shouldn't be buying a home in the first place.

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    Quote Originally Posted by Disoblige View Post
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    Ok, but what's the big deal still? Seriously wondering how it affects existing owners that bad.

    Less buyers on market, more will rent then. If you own one home, no issue as you live as primary. If you own more than one home, you have more in rental market.

    Only really affects people who shouldn't be buying a home in the first place.
    This. Speaking from my experience in the last two years where I blight a condo and sold it a year later (lost 5k to market value) and then bought a nicer and better location apartment. If you can produce the 20 percent to avoid CMHC then getting a home is relatively easy and low risk. And again as stated, you can always choose to rent it out after upgrading
    Originally posted by speedog
    So more beyond armchair activism at work again?

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    Quote Originally Posted by Buster View Post
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    So the taxpayer is on the hook for half of the loss and must recover that, presumably after the lender has settled?

    Insurance is always profitable when things are good. Ask aig.
    What? Tax payer covers $0, cmhc’s portion of the loss comes out of the borrow’s pockets/future earnings/garnishment/etc

    Quote Originally Posted by Disoblige View Post
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    Ok, but what's the big deal still? Seriously wondering how it affects existing owners that bad.

    Less buyers on market, more will rent then. If you own one home, no issue as you live as primary. If you own more than one home, you have more in rental market.

    Only really affects people who shouldn't be buying a home in the first place.
    What is affordable? Just a few years back $100k in income got you $750k, currently it’s about $500k, after this $420k

    This is Econ 101, demand is artificially reduced by making homes “unaffordable”, not due to people not willing to lend and buy but due to regulations making it impossible to do so. If no one can buy at current market prices, market falls.

    Yeah if you never want to move sure. Your life never changes, comfortable losing 18% of your home value cause you were never going to realize it anyways. Sure, great. Let’s ignore the paper gains/losses cause it’s just shelter.

    I really don’t understand this viewpoint.

    I would agree RE as a whole is a house of cards. We saw this in 08 in the states and look at what that did to the economy. But it’s been built, we have to live with that. It’s been taught generationally now that “your house is your greatest investment” is it theoretically correct? No, is it the reality of the majority? Yes.

    Remember that the average human sucks, and this will cause ripples throughout. Shit, how do you think most people get businesses off the ground? Net worth and personal covenants, houses are collateral for these loans a lot of the time. You think small business needs another hit right now?

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    Quote Originally Posted by MalibuStacy View Post
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    This. Speaking from my experience in the last two years where I blight a condo and sold it a year later (lost 5k to market value) and then bought a nicer and better location apartment. If you can produce the 20 percent to avoid CMHC then getting a home is relatively easy and low risk. And again as stated, you can always choose to rent it out after upgrading
    Uh... cmhc insures 20% down... 35% down, hell... 95% down, you just don’t see it as the lender is paying it on the backend

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    Quote Originally Posted by Disoblige View Post
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    Only really affects people who shouldn't be buying a home in the first place.
    Agreed, less over-leveraging sounds pretty good to me.

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    Quote Originally Posted by ercchry View Post
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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



    What is affordable? Just a few years back $100k in income got you $750k, currently it’s about $500k, after this $420k

    This is Econ 101, demand is artificially reduced by making homes “unaffordable”, not due to people not willing to lend and buy but due to regulations making it impossible to do so. If no one can buy at current market prices, market falls.

    Yeah if you never want to move sure. Your life never changes, comfortable losing 18% of your home value cause you were never going to realize it anyways. Sure, great. Let’s ignore the paper gains/losses cause it’s just shelter.

    I really don’t understand this viewpoint.

    I would agree RE as a whole is a house of cards. We saw this in 08 in the states and look at what that did to the economy. But it’s been built, we have to live with that. It’s been taught generationally now that “your house is your greatest investment” is it theoretically correct? No, is it the reality of the majority? Yes.

    Remember that the average human sucks, and this will cause ripples throughout. Shit, how do you think most people get businesses off the ground? Net worth and personal covenants, houses are collateral for these loans a lot of the time. You think small business needs another hit right now?

    - - - Updated - - -



    Uh... cmhc insures 20% down... 35% down, hell... 95% down, you just don’t see it as the lender is paying it on the backend
    I mean, I see your point, probably gonna see a lot more rentals in an already oversaturated environment.

    This move is really only to protect the banks. Probs hanna see Gov intervention too, cause this will make it harder for Boomers to sell their McMansions to first timers.

    - - - Updated - - -

    This really only protects the banks...
    Originally posted by speedog
    So more beyond armchair activism at work again?

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    This really only expands the private mortgage market, banks were already protected... if anything it makes banks more exposed as falling prices increases their risk on existing loans

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    Private mortgage market aka ballers
    Originally posted by speedog
    So more beyond armchair activism at work again?

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    Quote Originally Posted by MalibuStacy View Post
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    Private mortgage market aka ballers
    Aka, borderline predatory lenders... aka largest growth market since OSFI’s B20 changes (benchmark qualifying)

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