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You are correct. Only 5% of our mortgages are sub-prime. However, 5% is for the local Canadian Homes and borrowers. The problem is that the banks have, through their subsidiarys in the US have bought "bundled sub-primes" for investment purposes (also known as ABCP) Who is going to take the burden for this? How are the Canadian Banks going to recover this moneys. All their retail operations are in Canada! I work for a major Canadia bank and have seen how my employer has cut down on our Compensation after Enron and now further cuts after the sub-prime. This bank has upto now said they have lost 10 Billion in the US sub-prime and are expected to declare another 9.5 Billions in future. This s public knowledge.

To conclude the banks in Canada wil do three things
1) Hasitate Lending even for a good legitimate proposal. This out of psychological reasons .
2) Try to make money from fees charged to the clients
3) Cut Salaries and benefits of the junior executives and lower workers.

Otherwise your opinions are well balanced. This is my humble opinion.

Kanjis
Mortgage Specialist
800 265 2694

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S. kanji
I may not agree with your opinions, but I will fight to death for you be able to air your views.

If you take the losses incurred in Canada by the banks and divide the same by the average price of a home anywhere, say, Missisauga, then, they could have given each one of us in Missisauga a free home and kept the change.

This sub prime is hitting us and we don't know how?!

Now they are trying to support all of the financial institutions in the USA.
They are going to support and guarnatee the Bond and financial markets there.
They will support the Fannie and the Freddie.... and et all.
All of these are slowly unfolding and now we find that the shin bone is connected to the knee bone and the knee bone is connected to the........................ and what not. We still don't know how these dick heads in these Canadian Banks got into this financial melee. (Malaise?) Melt down?
There is more to it than meets the eye. It is mind boggling and we are into BIG figures. Running into a trillion and moving upwards.

But we are complacent here in Canada. Take a look at some of the bank losses that have taken place in the past week, here in CANADA. Canadar you say....!

Geese and ducks can't fly if there is oil upon their wings and in their eyes.
The easiest way of catching them is to get a pound of butter and plant a cube upon each one of them. Soon, the butter will melt and run down their heads and into their eyes then upon their wings and then we are free to catch those (f) sit....ng ducks. Yes we are those sitting ducks. Wait for the banks to wake up and stiff it to us in one form or the other. They will recover each and every cent, nickel and dimeing their Canadian Clients. If you haven't noticed it in the past, then, we have closed our eyes to it. We have been complacent. Wait till it hits us right between.... where the sun doesn't shine. Ouch! Ouch!

Then the housing prices will drop by 25-30%. It is heading down already and side by side we will see all of the new buildings coming up and all of the suckers diving into the schimozzle. All of this is a natural phenomenon happening here in Canada. Why?
Pure unadulterated stupidity. Wait for the Bank's to retrench a few, then a few more from the Mortgage industry and then from labour market. You will see the walls come tumbling down fall. The Domino effect will take over.

Well.... that is my two cents worth.

Hope you don't take it personally.

Freddie.

Freddie,

Your anger is noted. Your pasimistic comments is what the contemperory Canadian Newpapers and Magazines are commenting upon. This is public knowledge upon which the original question or housing market is based. However, your '2 cents worth' is penned on paper in a positively articulated manner. Your assumptions are correct and I am not disputing any of them. If you owned the bank, I can see you sueing and firing most of the higher execuitives!!

To answer your question: How did we ever get in this mess given the highly sophisticated executive employed by the Banking Industry worldwide. Herein lies the problem. I work for one such bank. My take home pay is based on my performance. These conditions creat 'greed' The banks vault is open if you can perform!

Let me give you a similar example in the air line industry in the USA that was discovered and a halt put to it by the industry. The airline brass was paid based upon the revenues. That is, year end Grand totals was what the bonus was made of, and it was very generous! This, regardless of the airlner's financial performances. It came to pass that a certain brass at United started buying all the smaller airliner airliners regardless of their financial efficiency, however the revenues of the newly purchased entity was added to the grand total revenues! The brass got paid millions of dollars based on the Grand total Revenue (Sales)! simillilary, the banks personnel are paid on the "Grand sum" regardless of the quality of the portfolio! This is " how we ever got into this mess" This has been discovered and we all know about the "quality' of the ABCP bundles made of mortgages.

I hope you can see the faulty system and that I have made things clearer. You probably knew about all this but were trying to vent your anger.

About real estate market? Generally speaking, my estemation is 25 - 35% down in the near future, but recovery after that. This is based on the optimistic views of Warren Buffet when he visited Toronto about two weeks ago to address a private members seminar of the Toronto Board of Trade.

Nameste!

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S. kanji
I may not agree with your opinions, but I will fight to death for you be able to air your views.

My layman understanding is, if you buy a house to live then doesn't matter which way the market is going - it doesn't affect you. However, on the contrary, if you wana buy to invest then that's the gamble in the volatile market conditions.

Disclaimer: I am no expert on this subject matter, except that I have bought a house and enjoying being there instead of renting.

Dear CD's,
If i understood correctly, if some one wants to busy a house for rending or investement purpose...then he/she should wait till the end of the year to get the benefit of 25 to 30 % discount..

Am i right or is there any other catches again (means..fees/interest rates..bla bla are going to compensate the discount again)

rgds
Madhu

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MK

This link is interesting

http://www.remax-oa.com/MarketReports_PDF/Oct07_MarketOutlookRptPR/MarketOutlookRptPR2007_RPT.pdf

It seams the housing market is running a bit slow. Nov stats show that there was a 13% less in Toronto and 8% in GTA. I also found that people started either removing there "for sale" signs so that they dont want to keep in the market for long period of time. And couple of secnarios they are willing to sell at lower price than the list price.

Keep me posted if there are any changes you notice.