Vancouver Homeowners Adding More Leverage
A recent report from the good folks over at Better Dwelling titled Vancouver Mortgages are Rapidly Deteriorating in Quality highlights growing concerns of subprime, and over leveraged homeowners. High-ratio mortgages with low income levels continues to grow. With home prices surging, Vancouverites are leveraging up. High ratio mortgages with loan to incomes greater than 450% are up 25% over the past two years. Risky mortgage debt now sits at 39% in Vancouver.
Fuelling the Fire
It’s no wonder CMHC’s Evan Siddall was so vocal against the BC Government’s HOME Partnership program, which entices high risk first time buyers with interest free, and payment free loans for the first 5 years. In a recent report from The Tyee Siddall ripped the ill advised program. “You will know we are holding our noses firmly on this and I would not want any other [provinces and territories] to be misled into thinking this ill-advised program represents good public policy. Siddall believes the B.C. government’s claim that the program would make home ownership more affordable for thousands of British Columbians was wrong. “I am joined by a loud chorus of economists in insisting that it will do the exact opposite.”
Crushing Affordability
The BC government originally expected to issue an astounding 2778 loans by March 31. The fact they believed it would be a good idea to add nearly 2800 additional buyers to an overheated market is truly frightening. For context, from January to March there was a grand total of 5246 apartment sales. With condo prices surging year over year by 33% in Langley, 36% in Abbotsford and 27% in Surrey handing out taxpayer money to use towards bidding wars is the last thing this market needs.
