What Are The Odds?

I have never believed in coincidences all my life, but the last couple of weeks are just getting out of hand.

1. On Monday September 17 the federal Liberal government announced the increase of the insurable limit to 1.5M and the 30 year amortization for first time homebuyers. No one in this industry saw this coming. Bankers, lenders, insurers – no one saw it coming. It is as if this magical mystical idea fell from the heavens. Or did it? Why all of a sudden did this ‘thing’ happen?

The amazing thing about the new changes is that it puts a lot of money into the pockets of mortgage insurers. Between the new insurable cap, and the 30 year am premium, mortgage insurers stand to make tens, maybe hundreds of millions in premiums. Interestingly enough, Sagen MI Canada ( formerly Genworth ) is one of those insurers that stands to benefit. Very interestingly enough, Sagen is owned by none other than Brookfield Business Partners L.P. Brookfield Business Partners L.P. is a division of Brookfield Asset Management. Here is the best part: Mark Carney is the chair, and head of impact investing at Brookfield Asset Management. Mark Carney was hired on to the Liberal Party on Sept 9, 2024.

So, 8 days after Mark Carney joins the Liberal party a massive announcement from said Liberal Party – that no one saw coming, is announced that magically puts potentially hundreds of millions of premium dollars into Brookfield’s pockets? Call me a conspiracy theorist if you will, but the statistical odds of that one seem a little high to me.

2. It was also announced this week that in order for the current government to stay afloat as a minority, they will need to find a new bedfellow in the House Of Commons. None other than the Bloc Quebecois stepped forward this week with their manifesto. Basically in order to support the current governing Liberals, the Bloc will want to see some demands met. I thought blackmail was against the law, but I guess in politics anything goes. After this news went public this week, and it looks like we could be closer than ever to an election, doesn’t OFSI today magically leak that they are dropping the stress test on uninsurable mortgages. Its a fucking fall miracle!!!! In May of 2024 OFSI was talking about stricter lending limits, the 450% loan to income cap, and went out of their way to keep the stress test. Keep in mind that rates were even higher in April and May of 2024 than they are now. Dropping the stress test would have made more sense in May 2024 than it would now. But then again, a governing party wasn’t at risk of being toppled.

Both of these things go to show you just how much sway governments have on mortgages. It is really too bad that governments play games with our homes. And before everyone jumps down my throat about bashing a Liberal – rest assured I think all politicians are useless, it just so happens that the particular breed of useless ones are Liberal right now. Quite frankly the dog shit I scraped off my shoe this morning could do a better job running the country than the complete lineup of idiots we have right now.

Please remember that politicians do not give a shit about you, or I , or anyone but themselves. Anyone in power is only worried about staying in power. The average Canadian has not mattered to politicians for a very long time, and it is becoming more clear by the week. As I predicted last week, the stress test will be whittled away, product by product, term by term, and the stress test will eventually be removed completely. Of course they will say it has done its thing, served its purpose, and blah, blah, blah.

In the coming weeks if we start to see more and more announcements about how the government is ‘ helping homeowners’ look behind the curtain and see who is really benefiting. I guarantee you for every Canadian that is supposed to be helped by these changes we will see 3 politicians at the trough getting fat. Everyone in the current governing party has to make sure that they either stay in power, or if they think they will lose power, then they have to enrich as many of their friends and insiders as they can so that once out of power they are owed a favour.

While I am not a betting man, I would lay down a hefty chunk of change on the fact that over the coming weeks and months, political turmoil will be bullish for housing. Just make sure that you understand who exactly is getting the help from all of these announcements: hint, it isn’t the average Joe or Jane.