Canada’s Marvelous Mortgage and Banking System? | Hacker News Reader

Canada’s Marvelous Mortgage and Banking System?

american.com

24 pointscwan10 comments

It is funny, though not surprising considering it comes from a right-wing think tank, that this article doesn't mention that Canadian banks are much more regulated wrt what they’re allowed to do with their money and higher capital requirements. The investment banking side of the business is much smaller relatively in Canada. The problem in the U.S. isn’t the retail banks; the problem is the big investment banks on Wall Street.

The Canadian capital markets don’t amount to very much, and mortgage securitization was pointless because the big five banks hold all the mortgages anyways.

After the crazy dire news events of the last year or two, I was quite surprised by my experience in selling + buying last summer in Toronto's market.

We listed our condo early on a Friday afternoon, and were inundated with offers and interest that same day. We had a buyer over-asking within the same day, and it was all done in under 24 hours. I asked my agent about this, and she said that it was typical of the activity at that time. The market was surprisingly hot. We had no problems with the bank, in spite of reading about a widespread slowdown in lending.

I'm not the only one in my social circle to have bought/sold/gotten loans last year, and I've never been sure whether this has been a product of lucky demographics (mostly technical people) or whether Toronto has largely weathered the storm.

Can any other Canadian HNers throw in a data point here?

The story of the Toronto real estate market is well described on http://guava.ca.

I was lucky to buy in January, 2009, when the prices had hit the bottom. They have gone up 10% since 2008 already.

Non-Canadians reading those stats should note that most Canadians don't buy in the winter for two reasons:

a) don't want to move in the middle of a school year b) too lazy to head out in the snow and slush

As far as I know Toronto's real estate market hasn't taken much of a hit at all during the past couple of years. I think there is growing sentiment that this is a delayed bubble waiting to burst though.

I have no data to back this up, and I'm hearing it from family/acquaintances that aren't really in real estate or economics, so take it with a grain of salt. I'm also on the other side of the continent and living in the US, so I'm a little out of touch with conditions there other than what I gather get second-hand from others.

As to the article itself, it doesn't really mention that some markets (like in Alberta) suffered real estate slumps, though from the data it looks like a lot of those people did not become insolvent, even though their house value dropped.

It's interesting to note how different the markets can be in Canada though. When oil prices skyrocketed, BC and Alberta were doing really well for themselves due to the oil sands. On the other hand, Ontario was slowing down because most of the economy is predicated on manufacturing (Ford, GM, and others have plants in Ontario; Oakville, Windsor, Oshawa, etc), exports to the US, and drawing in Hollywood with incentives to film in Toronto (though I think that they are province-wide, and not local incentives). This was mainly due to the rise of the USD-CAD conversion rate though that was coupled with the rise in oil speculation.

It'll be interesting to see how some of these things play out in the future. From listening to CBC radio during that period, I gleaned that Canada at one point was a mostly resource-based economy, but that in more recent years (for varying definitions of 'recent'), things have changed to become more dependent on the US investing money due to the benefitial USD-CAD rates. What happens if the US hits a larger slump? How will this affect Canada? Will the aggregate affect be minimal due to the rise and fall of different sections of the country negating each other?

We sold our condo in March (after two months on the market) for $12k under asking and bought a house in April for $1k under asking. We're told that if we wanted to sell our house now, we'd easily make $40k on it because things have heated up again.

We're not interested in selling, though.

Please don't, Canadian banks might be safe for those investing in them but they are horrible to customers. Customer service in Canadian banks is non-existent. Having lived in Florida (from Quebec) for half a decade, I seriously prefer the small banks in Florida. Local banks don't exist in Canada so the big ones can get away with being open 4 hours a day, charging terrible fees, and more crappy practices that are due to lack of competition

Ditto.

I also have to ask, how many of the list of items are customer friendly, or low-income friendly? Can't pre-pay earlier? A few oligopolist banks that are all-powerful? Public housing instead of the opportunity to buy? Bank re-negotiates the interest rate every 5 years?

Dealing with Canadian banks is quite irritating because they always have the upper hand on you. No 10k in the bank? Then that US$ check that you just received is going to take a month to clear. (This is in the information age!)

Wow, who still uses checks?

Maybe I'm spoiled, because here in NZ it's pretty uncommon to use cash, everything is EFT or online transfer.

I've not seen a check once since I came here.

At most I carry $0-50 on me at any time.

Also, transferring funds internationally between bank accounts (not credit card) is usually instant, or at most 1 day, depending on the settlement window of your bank compared to originating bank.

Checks seem so...80s?

First off, that should be Marvellous, if we're talking about Canada :).

Secondly, in what bizarro universe does the AEI praise anti-deregulatory Canadian policies? Cool nonetheless.

Canada remains the only industrialized country in the world that has survived the last two years of financial and economic stress without a single bank failure.

Australia hasn't had a bank failure since the early 1990s

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