5833 replies to this topic

[Victoria Watcher]

Tens of thousands of Canadian borrowers could be vulnerable to defaulting on their mortgages if interest rates rise and homeowners struggle to make monthly payments, according to CEOs of the country’s largest banks.

 

Scotiabank’s new CEO said about 20,000 of the bank’s borrowers could be at risk, accounting for about 2.5 percent of the bank’s mortgage customers. The CEOs of several other major Canadian banks said Monday that small percentages of their borrowers are at risk, potentially adding up to tens of thousands of Canadians.

 

They said only a small percentage of borrowers – BMO’s Darryl White put it at 1 percent for his bank, while RBC’s Dave McKay put it in the “low single-digit percentage range” – are “vulnerable” to default.

 

These customers typically have low credit ratings and homes that aren’t worth much more than their mortgages.

 

https://canadatoday....eos-say-221023/

 

Scott Thomson, who will take over the helm at Scotiabank on February 1, said the bank’s estimated 20,000 at-risk borrowers should be a “manageable situation for us”.

 

The number of Canadians who actually default on their mortgage payments by three months or more is historically low — ranging from about 0.25 percent to 0.5 percent of mortgage holders over the past two decades, according to the Canadian Bankers Association. About 10,000 to 20,000 mortgages were in arrears for each month during this period.

Edited by Victoria Watcher, 10 January 2023 - 04:10 AM.

[Victoria Watcher]

[Mike K.]

Don’t forget, the feds are making life easier for the little guy. The stress test, crazily fast rising interest rates, inability to use stated incomes for self-employed people, an out of balance housing supply relative to growth and carbon taxation trickling down to every facet of home building are just another way the government is working for you.

[Victoria Watcher]

crazily fast rising interest rates

 

 

This is intended to reduce inflation. 

[Mike K.]

The US has higher inflation and lower interest rates, and are on the same track we are on.

The cooling economy is going to solve the inflation issue. It won’t be the tripling of interest rates, which have done little else than take large sums of money out of people’s pockets and handed them to banks.

[Victoria Watcher]

The US has higher inflation and lower interest rates, and are on the same track we are on.

The cooling economy is going to solve the inflation issue. It won’t be the tripling of interest rates, which have done little else than take large sums of money out of people’s pockets and handed them to banks.

 

Inflation takes way purchasing power for everyone.  Including those not wealthy enough to have car loans and mortgages.

 

Now, you can agree that raising interest rates isn't helping tame inflation - or not - but you can't argue inflation is harmless or less damaging than high interest rates.

[Barrrister]

Bring in way over a half million immigrants when there is a shortage of housing to start with is also not a lot of help.

[Mike K.]

Canada’s population rose by a million people in 2022. It’s hard to temper inflation when demand for goods and services is outpacing supply.

[dasmo]

This is intended to reduce inflation.

They made it clear it was to reduce wage inflation. Regular Inflation already happened and was inevitable after creating trillions of dollars without creating anything with that.

[Matt R.]

Bring in way over a half million immigrants when there is a shortage of housing to start with is also not a lot of help.

This week I learned:

There are over 100 programs at various levels of government for immigrants to work in canada.

There are at any one time approx 300,000 TFW’s in canada waiting for their PR, and every two weeks the feds change the number of “points” required, so they can hit their immigration targets.

The feds hope to have 500,000 immigrants each of the next three years, and it’s expected they will cut the points required, across the board, to hit these targets. Canada is competing with other countries with lower immigration requirements.

[dasmo]

Competing for what? 

[dasmo]

OTTAWA, ON: The Bank of Canada gave its employees $45 million in pay raises and bonuses during the pandemic even though it failed to hit its inflation target, according to records obtained by the Canadian Taxpayers Federation. https://www.taxpayer...inflation-soars

 

Wages appear set to determine the pace at which the Bank of Canada raises interest rates over the rest of the year. https://financialpos...ning-rate-hikes

 

Give your staff too much, and the country could see entrenched inflation (and higher interest rates) https://www.hcamag.c...c-deputy/420279

[dasmo]

Oh ya... competing to see who can screw the middle class the fastest.... 

[dasmo]

Just remember over the long run money loses half it's value every ten years. It looks like they are working to accelerate that now....

[Matt R.]

Competing for what?

Immigrants?

[dasmo]

Immigrants?

You got me there.

[spanky123]

Competing for what? 

 

Votes

[spanky123]

It won’t be the tripling of interest rates, which have done little else than take large sums of money out of people’s pockets and handed them to banks.

 

Not really. The banks have to borrow the money to lend it out. Most are paying 7%-8% right now to raise money from the capital markets. Sure they don't pay much interest on bank deposits but that money is being moved to GICs and other interest bearing instruments.

[dasmo]

Not really. The banks have to borrow the money to lend it out. Most are paying 7%-8% right now to raise money from the capital markets. Sure they don't pay much interest on bank deposits but that money is being moved to GICs and other interest bearing instruments.

No they don't. Money is created by them lending money they don't have...

"Money Creation in the Private Banking System

... it is important to note that the majority of money in the Canadian economy is created within the private banking system every time banks extend new loans like mortgages, consumer loans and business loans. Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money (see Appendix, Table 2).

One key similarity between money creation in the private banking system and money creation by the Bank of Canada is that both are realized by simultaneously increasing the asset and liability sides of a balance sheet. One notable difference between the two types of money creation is that there is no external limit to the total amount of money the Bank of Canada may create through its asset purchases, other than the impact the additional money created has on inflation.12 In contrast, the amount of money that a private commercial bank is permitted to create depends on the amount of the bank’s equity relative to its assets. The limiting rules, known as capital constraints, are established by Canada’s banking regulator in a set of guidelines.13 Another significant difference is that the key factor in a private commercial bank’s decision to give a loan to a private entity is the creditworthiness of the borrower, whereas the key factor in the Bank of Canada’s decision to purchase assets is its ability to achieve its inflation target." 

 

https://lop.parl.ca/...ions/201551E#a3

[dasmo]

Note: When a private commercial bank provides a new loan to a private entity, it simultaneously records the value of the loan as an asset on its balance sheet and records the deposits created for the private entity as a liability on its balance sheet. On the balance sheet of the private entity, the deposits at the commercial bank are recorded as an asset and the loan from the commercial bank is recorded as a liability.