Home prices in Canada fall

The distinctly black skyscrapers of the Toront...
The distinctly black skyscrapers of the Toronto-Dominion Centre, designed by Mies van der Rohe. Tiếng Việt: Trung tâm Ngân hàng Toronto Dominion - Toronto, Canada. (Photo credit: Wikipedia)

 – Home Capital Group said it’s capturing mortgage business from Canadian lenders including Toronto-Dominion Bank and Canadian Imperial Bank of Commerce that are retreating from the nonprime market amid signs of a housing downturn.

“The big banks are sort of juggling around their mortgage strategy and as part of that, they’re tightening up in certain areas,” Home Capital President Martin Reid said in an interview. “We’re seeing some of the fallout.”

Canada’s banks have been exercising more caution on higher-risk mortgages after Bank of Canada Governor Mark Carney warned that record household debt remains the biggest domestic risk to the economy.
Carney last week signaled the potential for interest rate increases that would cool off a housing market that has seen prices almost triple in some Canadian cities over the past decade.

“While interest rates have been at historic lows recently, the inevitable climb looks to be coming as soon as next year,” said Katie Archdekin, head of mortgage products at Bank of Montreal, the country’s fourth-biggest bank.

Home Capital, the Toronto mortgage lender, targets the Alt-A market – uninsured loans to home buyers who often don’t qualify at chartered banks because of their work history or other circumstances.
The Alt-A market is valued at 200 billion Canadian dollars, or 201 billion American dollars.
Home Capital’s clients include self-employed workers and new immigrants to Canada. Higher revenue from loans rejected by banks will add to earnings in Home Capital’s first-quarter results, to be released on May 2.

“We see opportunities with people that are really high- caliber borrowers with good proof of income, but their circumstances are a little different,” said Chief Executive Officer Gerald Soloway, who was interviewed with Reid.

Banks are paring back loans to below-prime borrowers amid signs that housing prices are starting to fall.
The Canadian Real Estate Association said April 16 that prices in Canada dropped 1.7 percent in March from the previous month, led by a decline of 3.1 percent in Vancouver.
Finance Minister Jim Flaherty said he’s “encouraged” by signs of a housing correction in Vancouver, preferring the market to “correct itself” without government intervention.
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