John Chan, Financial Service Expert: Mortgages, Insurance & Investments

10/25/2024

The Bank of Canada lowered their overnight rate by 0.50%. If you are wondering why, maybe the following charts will shed some light. 1) Canadian household is one of the most indebted in the developed world. 2) Consumer insolvency is rising. 3) Business closure is up 4) Mortgage arrears is trending higher.

10/17/2024

Starting December 15, 2024, two major changes will take effect:
1) 30-year amortization will be available for first-time homebuyers and all purchasers of new builds.
2) The price cap for insured mortgages will increase from $1 million to $1.5 million.

10/17/2024

To restore “housing affordability” various organizations have come out with estimates of the amount of housing units needed to be built per year for the next 6 or 7 years. Canada Mortgage and Housing Corporation came up with 637,000. The Parliamentary Budget Officer came up with 436,000 and Oxford Economics 420,000. Meanwhile Canada has never built more than 260,000 a year. In 2022, the most recent year for which data is available, only 219,942 units were built.

10/16/2024

Did you know? Builder profits are actually less than municipal fees and taxes!
Yet last year, Metro Vancouver increased development cost charges for a typical residential lot to $34,133 (from $10,027) and to $20,906 (from $6,249) for each apartment unit. Meanwhile developers are collapsing due to high interest costs and slow sales. Both of these events increase housing costs.

06/11/2024

This shows how sometimes it makes sense to use your home equity to help your children get a home while you are still alive. Reverse mortgage is more expensive, but when you use it to allow your children to start to build their equity. You will end up ahead at the end. For more details check the article here: https://alternativelending.ca/using-a-reverse-mortgage-to-help-your-children-buy-a-home/

12/02/2022

If it would take 102.1% of the income of a median household to support a mortgage for a typical home in Vancouver, then who is buying all these homes?

12/01/2022

It looks like auto loans and credit card delinquency rates in Canada are climbing. Interestingly the delinquency rate for mortgages is actually still going down. Typically, after people run into problems with their auto loans, the mortgage is next unless they don’t have a mortgage. To put things into context, the auto delinquency rate in the US right now is running at about 3.89%.

11/14/2022

Last week a gigantic event happened in the crypto space. FTX, the 4th largest crypto-exchange by trade volume, went from a valuation of about $32B to zero in 9 days. The owner Sam Bankman-Fried, touted as the next Warren Buffet and the new JP Morgan, is now under investigation. Here is the best explanation of the situation I have read. Imagine Canadian Tire printed one billion dollars of their Canadian Tire money. Using that one billion in Canadian Tire money as collateral, the company gets a 500 million dollar loan from the bank. The company uses this money to buy stadium names, politicians and influence. When someone leaked their balance sheet and people found out that most of their assets are in their own “Canadian Tire money” which has no intrinsic value, people withdrew their money from the exchange until they halted it. With the opacity of these companies, I wonder why people would leave money on any of these exchanges. A lot of people lost a lot of money, but this is not the end of it.

11/09/2022

An interesting graph from BetterDwelling.com. It is trying to show that since 1975, Canada’s real estate has appreciated more than any of the G7 countries. In fact, 2X the rate of the next closest country and thus, poised for a bigger drop. While probably true, it might not be as bad as it looks because the fundamental of each country is different. The developed world is losing population due to reduced birth rate. Canada has a very aggressive immigration policy to counter this trend. This is where the growth and support for housing will come from.

11/02/2022

Interesting piece of stats.

10/31/2022

A lengthy article on whether you should buy real estate inside a corporation/holding company.

Should you buy real estate inside a corporation? Depending on the complexity of your plans, you may need discussions with your accountant, your lawyer and your mortgage broker. Tax laws and regulation change and lending guidelines change.

10/22/2022

I did not realize that Toronto is such a centre for construction on a continental basis. Here the crane index is supposed to indicate the level of construction in a city by how many cranes it is using. By this measure, Toronto is way ahead of everyone.