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stefan ayache

Mortgages: More than half of Canadians to carry household debt into retirement | Mortga... - 1 views

business.financialpost.com/...to-retire-with-mortgage-survey

shared by stefan ayache on 17 May 12 - No Cached
  • The one thing Canadians won’t be retiring anytime soon is their mortgage debt
  • Bank of Montreal says 51% of Canadian homeowners plan to carry their mortgage into their retirement
  • times have changed and he believes Canadians can handle the burden
  • ...12 more annotations...
  • People are more sophisticated in their approach to personal finance today than the previous generation
  • People are living longer, working longer and making real estate plans longer or further into their lives
  • Another trend, one which was not considered by the industry before, is people moving into more expensive, upscale homes after retirement
  • Another part of the trend could very well be strategic. With rates on a five-year closed mortgage at about 3.5%, paying down that debt might not seem as high a priority for many homeowners
  • The extremely low level of interest rates is acting both as an inducement for people to take on more debt than they would have in the past and on the flipside not encouraging them to save as in the past
  • People could end up working longer and it might also mean there will be that much less equity in the home you’ll be leaving to heirs
  • could also reflect the longer amortizations the mortgage industry saw
  • Traditionally, mortgages were amortized over 25 years, but that number ballooned to 40
  • the issue is how it’s affecting retirement with half of Canadian homeowners saying their debt load was hindering their ability to plan and save
  • Canadians need about 70% of their pre-retirement income to maintain the same lifestyle
  • By 60 to 69, 25% of those people still have a mortgage
  • real estate prices continue at all-time highs
Kevin Mao

Canadian banks not immune to housing bubble: OSFI official | Mortgages | Personal Finan... - 0 views

business.financialpost.com/...o-housing-bubble-osfi-official

canadian banks housing bubble mortgages finance canada

shared by Kevin Mao on 17 May 12 - No Cached
  • Canada’s banks, ranked the soundest on the planet by the World Economic Forum, aren’t immune to collapses triggered by falling housing prices
  • Previous failures of Canadian financial institutions were due to bad real estate lending and sharp falls in housing prices, and these can happen again
  • “Just because nothing happened in Canada in 2008 (a U.S.-centered crisis), does not mean that Canada is not vulnerable to a housing correction now.”
  • ...19 more annotations...
  • Finance Minister Jim Flaherty has tightened mortgage rules three times and put the federal housing agency’s books under regulator oversight
  • Bank of Canada Governor Mark Carney has repeatedly warned household debt is the economy’s biggest domestic risk.
  • Canadian housing starts rose to the highest since September 2007 last month
  • “How many new lending ‘guidelines’ can the market bear before it breaks?”
  • “The market may break because the fundamentals are not sound (i.e. overvaluation of homes), not because of OSFI guidance,” Melessanakis wrote in response.
  • Canadian existing home sales rose 0.8% in April from the previous month and 11.5% from a year earlier
  • The average home price rose 0.9% from April 2011,
  • Four Canadian banks were among the world’s six strongest in Bloomberg’s second annual rankings.
  • Lenders have been increasingly skeptical of the need for new rules to cool the housing market
  • Flaherty reduced the amortization period on mortgages backed by the government to 30 years from 35, the third time since 2008 he has tightened rules for home loans
  • Flaherty introduced legislation April 26 that includes measures to strengthen oversight of Canada Mortgage & Housing Corp.
  • The law allows OSFI to review CMHC’s books at least once a year, and prohibits banks from using insured mortgages to back covered bonds,
  • Canadian banks should not be “lulled into a false sense of security” by steps policy makers are taking to prevent another financial crisis
  • “Are the banks equipped to handle a 40% drop (what occurred in Toronto market in early 1990’s)?
  • in some places like Vancouver, maybe Toronto, obviously you’re going to have greater risk there of price volatility,”
  • OSFI’s guidelines suggest lenders limit home-equity lines of credit to 65% of the property’s value.
  • last financial institution failure in Canada occurred in 1996, when Security Home Mortgage Corp. collapsed
  • Security Home Mortgage had assets of $65-million the year before it failed.
  • Eighteen financial institutions failed in the 1990s, including Confederation Life Insurance Co., which had $19.2-billion in assets at the end of 1993. There were 23 failures in the 1980s, including Northland Bank, which had $1-billion in assets
  • Kevin Mao on 17 May 12
     
    An article about how Canadian banks are not impervious to a housing bubble.
Kevin Mao

Definitions - 12 views

Interest - "1. The charge for the privilege of borrowing money, typically expressed as an annual percentage rate. 2. The amount of ownership a stockholder has in a company, usually expressed as a...

started by Kevin Mao on 18 Apr 12 12 follow-ups, last by Kevin Mao on 18 May 12
kevinan108

Key Facts - 10 views

Ina Drew- Chief Investment Officer of JP Morgan. She was one of the few women in leadership roles on Wall Street. She was fired after her actions cost JP Morgan $3 billion dollars. She may receive ...

started by Kevin Mao on 18 Apr 12 12 follow-ups, last by kevinan108 on 18 May 12
Kostya Golovan

RBC in the running for Bank of America wealth units - The Globe and Mail - 0 views

www.theglobeandmail.com/...page1

shared by Kostya Golovan on 17 May 12 - No Cached
  • | NATHAN DENETTE/THE CANADIAN PRESS
    Enlarge this image

    RBC in the running for Bank of America wealth units

    TARA PERKINS AND REUTERS

    Globe and Mail Update
    Published
    Last updated
    0 comments

    Canada’s largest bank, Royal Bank of Canada (RY-T

  • Canada’s largest bank, Royal Bank of Canada (RY-T51.90-1.13-2.13%), is among the financial institutions looking to pick up parts of Bank of America’s wealth management business
  • In 2010 it paid $1.6-billion for U.K.-based Blue Bay Asset Management.
  • ...11 more annotations...
  • Aside from Europe, executives have recently said that RBC has also been looking to buy operations in Asia. The assets that Bank of America is looking to sell include businesses in both those regions, as well as the Middle East and Latin America.
  • they require less capital to back them up.
  • ING Group sold its private banking assets in Europe and Asia in 2010 to Julius Baer and Singapore’s Oversea-Chinese Banking Corp, respectively, for a total of about $1.9-billion.
  • The units manage about $90-billion of an estimated $2-trillion that the wealth division oversees at the second-largest U.S. bank by total assets.
  • Consolidation in the wealth management industry has been a major theme in the banking sector since the 2008 financial crisis
  • Bank of America is selling because it is shrinking the company
  • Bank of America has lagged peers in recovering from the financial crisis, largely because of huge losses and lawsuits tied to its 2008 acquisition of subprime mortgage lender Countrywide Financial.
  • Canada’s largest bank, which will release second-quarter results on May 24, has been growing its wealth management business and made acquisitions that included British fund manager BlueBay Asset Management for $1.5-billion about two years ago.
  • RBC, which has said it wants to expand its wealth operations organically and with small- and medium-sized acquisitions
  • companies generally prefer to sell the entire group in one go
  • My view is that they are going to sell it as a whole and therefore the number of banks that actually can do it will be more limited
  • Kostya Golovan on 18 May 12
     
    RBC, Canada's largest bank, has for years been looking to expand its global wealth management outreach and is now eager to pick up part of Bank of America's wealth management operation which is going on sale. The prospects of such an en devour are great given the predicted growth in number of millionaires in Asia. RBC has for years been interested in such an expansion and is now very interested in acquiring the wealth unit of Bank of America
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