I’m not saying that banks can manage sub-prime write downs (“… I wouldn’t call the write down insignificant…”)

That said, are you really seeing significant moves in mortgage rates? My latest rate sheet has everything from 1-5 years in a narrow band: 5.55% to 5.94%. Compare that to Feb. this year:
1 yr = 5.2%
2 yr = 5.25%
3 yr = 5.3%
4 yr = 5.3%
5 yr = 5.19%

and September of ‘06:
1 yr = 5.1% (unchanged from September 14, was 5.25% August 23rd)
2 yr = 5.2% (unchanged from September 14, was 5.3% August 23rd)
3 yr = 5.3% (unchanged from September 14, was 5.3% August 23rd)
4 yr = 5.35% (unchanged from September 14, was 5.4% August 23rd)
5 yr = 5.28% (was 5.3% September 14 and 5.35% August 23rd)

On $100,000 the monthly diff on a 5 year rate is about $40.

Anonymous:

Can’t find it online at the FP, but in the paper itself, FP2, Best of the FP Netwoork, you’ll find Ted Carmicheal, JP Morgan Chase Canada’s chief economist making the call. You guessed it: he is styled one of the most bearish forecasters on Bay Street. He thinks 4 cuts of 25 basis points apiece will not undercut attempts to keep core inflation in the 2% range.

In other news PMI Mortgage Insurance was approved Thursday for the lucrative insured mortgage arena. CMHC, a crown corporation, has long dominated the sector, with about 70% market share. They’ve been giving up ground (not too hard to do when you start from a monopoly position and then have to compete) to Genworth and AIG. Another player makes for more competition, and that gives Canadians who require mortgage insurance more choice, which is a good thing. While it reduces CMHC’s access toe asy money it should also calm those who fear that the Canadian taxpayer is underwriting bad loans through CMHC. Who can really argue against privatizing bad loans?

Please post the link.

Four is extreme…that sounds like someone is predicting a slowdown or recession spillover effect from the U.S. into Canada.

If banks could manage subprime writedowns, why would they raise mortgage rates in October due to the credit crunch and offer less off a discount off the posted mortgage rates more recently? I guess they want to maintain high profits and please the shareholders after all?

The consumer will pay for banks bad investments whether that is in the form of higher credit card interest rates, higher mortgage rates, less of a discount off posted mortgage rates, higher bank fees, borrowing restrictions, etc., etc.

TORONTO, March 2 (Reuters) – Royal Bank of Canada (RY.TO: Quote, Profile, Research) posted a 27.6 percent rise in its first-quarter profit on Friday as a result of strong earnings across all of its business divisions, particularly in its U.S. segment.

Canada’s biggest bank said it earned C$1.49 billion or C$1.14 a share, for the three months ending Jan. 31.

versus a more recent story:

VANCOUVER, British Columbia (Reuters) – Bank of Nova Scotia became the latest Canadian bank on Tuesday to warn of writedowns in its fourth-quarter results because of turmoil in the U.S. subprime mortgage market.

Scotiabank, Canada’s second-biggest bank, said it will lop C$135 million ($141 million) after tax off the value of its nonbank asset-backed commercial paper (ABCP) and structured credit investments.

The portion of Canada’s ABCP market that is not run by the country’s big banks ground to a halt this summer when buyers dried up on fears the debt investments were exposed to the U.S. subprime market. Companies holding the paper as investments have been cutting up to 15 percent off its value.

Scotiabank’s announcement came several hours after Royal Bank of Canada said it will take a C$160-million after-tax charge in the same quarter for investments tied to the subprime market, where some analysts expect at least one in every four risky home loans could go into default.

*****

We probably haven’t seen the full extent of the write-downs, but if my math is right (someone please check it) RB made a Q1 profit about 9 times bigger than the write down. Does that make the write-down big or small? I’ll let you decide, and add only that I wouldn’t call the write down insignificant, and smaller losses in one area of a profitable balance sheet have probably hammered other stock values even more. Aside from it looking scary and moving fast (sorry, Priced Out, but what’s new about that?) can anyone hammer some numbers into perspective?

(Side note: I read today a forecast for 4 rate cuts from BoC. Remember what I said about the CBs thinking they can manage inflation, coco? I know, time will tell, but I see increasing liquidity on the horizon).

Bank of Montreal

52Wk High: 72.75

52Wk Low: 56.44

Today’s close 57.18

Only 74 cents above the low, nah nothing like their American cousins at all. lol.

Landcor didn’t even mentioned non-resident Iranians and Chinese since there purchases in BC were not significant. Lots of others thought there was proxy buying and that their purchasing was/is rampant. Maybe if one had lots of exposure to one market like Coal Harbour, this might seem true, but I dont’ know, since there is no data showing this.

Jeff, thanks for the link.

I couldn’t stop laughing reading the last few sentences of the article:

“Economic uncertainty in the U.S. spurred by the housing recession and tightening credit markets has perhaps knocked the American who would spend $500,000, Kelly said.

Americans playing in the $1-million-plus market are still interested in Whistler, but proceeding with a bit more care, he added.

“They definitely have to have something before the Olympics, whether it’s rental or purchase,” Kelly said. “Americans are big Olympic boosters, they always have been, and they want to be part of [the 2010 Games].” ”

Yes, Americans are big Olympic boosters. But how many are going to buy just because of the Olympics. These $1 Million plus players didn’t get rich buying on hype.

http://quote.yahoo.com/q?s=BMO.to Bank of montreal trades up today. FYI. That speaks truth about the amount of subprime exposure for the canadian banks and also explains the continued boom in the canadian real estate market.