The Canadian Housing Boom Fueled by China’s Billionaires

Re:The Canadian Housing Boom Fueled by China’s Billionaires by skylan_q on Wednesday August 03, 2016 @09:12AM (#12217662)

Canadian Mortgage and Housing Corporation.

They insure the banks against mortgage default. People pay a small premium on their monthly mortgage payments so that if they default, the bank is insured for the cash difference of the outstanding amount on the mortgage.

As a result, banks in Canada face no risks from mortgage default so there's no reason to deny a mortgage. Over 90% of mortgages made in the past decade are CMHC-insured.

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Re:The Canadian Housing Boom Fueled by China’s Billionaires by mrtron on Wednesday August 03, 2016 @11:12AM (#12218512)

I get what you are saying, but so far things are going very well.

By 2010 CMHC had an annual financial surplus of more than $2 billion.[6] CMHC is the largest Crown Corporation in terms of assets with some $26 billion in holdings as of 2008-2009.

If you think this insurance can cause Canadian banks to be more risky in their lending - I don't think that is currently the case.

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Re:The Canadian Housing Boom Fueled by China’s Billionaires by 49para on Wednesday August 03, 2016 @12:01PM (#12218911)

So $26B in holdings to insure $1.372T in outstanding mortgages, that seem pretty low but since the taxpayers will cover the rest, I guess it's fine to continue handing out subprime mortgages.

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Re:The Canadian Housing Boom Fueled by China’s Billionaires by acveilleux on Wednesday August 03, 2016 @01:05PM (#12219525)

They don't insure the value of the mortgage, they insure the shortfall between what the lender recoup in foreclosure vs. the outstanding loan balance.

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Re:The Canadian Housing Boom Fueled by China’s Billionaires by mrtron on Wednesday August 03, 2016 @01:27PM (#12219755)

I havent looked in detail lately - but I believe they issue bonds and the bond holders would be covering the impact of a market crash.

You would prefer if there was not such an insurance system required for home owners putting less than 20% down?

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Re:The Canadian Housing Boom Fueled by China’s Billionaires by skylan_q on Wednesday August 03, 2016 @01:38PM (#12219871)

You would prefer if there was not such an insurance system required for home owners putting less than 20% down?

I know I would. It would be like the 90's again where banks had to only loan out to people who they thought wouldn't default.

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Re:The Canadian Housing Boom Fueled by China’s Billionaires by skylan_q on Wednesday August 03, 2016 @01:32PM (#12219815)

If you think this insurance can cause Canadian banks to be more risky in their lending - I don't think that is currently the case.

This is 100% exactly how the US crash happened through Fannie Mae and Freddie Mac.

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