Canadian Banc Corp T.BK

Middle of recession is now.

[EdPaquette]

The stock market looks forward 6 months and we are 6 months away from Christmas. I believe we are bottoming here in the summer so it's upwards from here. What does everyone else think?

[Donwaan]

Greetings Ed...this is from a newsletter writer I subscribe to. Do you or anyone else share these concerns? Canadian banks are going to get into trouble with their large mortgage exposure on housing. I expect Canadian Banks will loose half their value. This will be larger than the 1980 collapse because back then $200,000 was considered a high mortgage, now it is around $800,000. A recent survey by

[EdPaquette]

Yes I share those concerns.  Mortgage repos shouldn't cost banks too much since debtors are still on the hook and can't walk away in Canada. For others who pay their mortgage, banks get bigger margins. 

[deisman03]

Mortgage holders can walk away, if the bank agrees to a minor settlement or the courts decide the bank has to suck up the loss.  It happens regularly and when push comes to shove, it mostly isn't worth the cost of taking them to court.  I know at least a half dozen folks that walked away from a mortgage/house and with very little effort were completely off the hook. One of them

[deisman03]

Just like in the US, Canadian Banks have to pass regular stress tests, which include relativley modest interest rates.  Comparing a 1980 rate to a 2022 rate, along with mortgage amounts doesn't carry much weight unless the values in comparison are extrapolated.  Banks are required to have enough readily liquid assets as well as cash on hand to handle at least one severe slide.