Canadian banks and real estate crash

[Jason]

What do you think will happen with Canadian banks once the Canadian RE bubble goes bust? Do you expect severe bank shares declines, more bailouts, economic distress, something else?

[trent]

I think it will be the same as it was/is in US, or worse. The irresponsible government will use our tax money to pay for the bank losses caused by non-existent lending standards and to bailout overleveraged wanna-be house owners.

[Canadian]

Banks are to share the blame along with irresponsible homebuyers for our Canadian housing bubble, however I doubt that they'll take their fair share of losses when the time comes. All bank losses will be simply put on the taxpayer's tab, and banks get to walk clean. The same cannot be said about the moronic buyers who bought in the last few years with little or nothing down. They will be crushed financially when the housing crash arrives.

[Rickson9]

Everybody predicting that rates will rise and mortgage holders will get killed need to look at government bond yields. Get a clue. The yields are low regardless of how badly you don’t want them to be.

VRMs? The chartered backs set the prime rate to follow the BoC’s overnight rate and Mark Carney isn’t raising that any time soon.

Go outside, get some sunshine. The real estate bust isn’t coming anytime soon.

[Canadian]

Go outside, get some sunshine. The real estate bust isn’t coming anytime soon.

But of course it's not coming, what was I thinking; we in Canada are so different after all :p

[trent]

Everybody predicting that rates will rise and mortgage holders will get killed need to look at government bond yields. Get a clue. The yields are low regardless of how badly you don’t want them to be.

VRMs? The chartered backs set the prime rate to follow the BoC’s overnight rate and Mark Carney isn’t raising that any time soon.

Go outside, get some sunshine. The real estate bust isn’t coming anytime soon.

You are assuming that low interest rates can keep the Canadian housing bubble inflated forever. Let me give you a clue here. The bust will happen no matter how low the interest rates are. If you don't believe me look at the Japan's example, do you have any idea how bad their housing bubble ended, despite the low interest rates they have/had for over decade? Still not convinced? Look at the US example, their housing bubble deflated while they were slashing interest rates like crazy, and it's not over yet either.

[Rickson9]

You are assuming that low interest rates can keep the Canadian housing bubble inflated forever. Let me give you a clue here. The bust will happen no matter how low the interest rates are. If you don't believe me look at the Japan's example, do you have any idea how bad their housing bubble ended, despite the low interest rates they have/had for over decade? Still not convinced? Look at the US example, their housing bubble deflated while they were slashing interest rates like crazy, and it's not over yet either.

I agree with this.

[trent]

I think our housing bubble can go on for a little longer maybe another 5-10% up, before the house of cards comes tumbling down...