Langstaff Gateway Condos price list.Canadian version of the subprime crisis. After the collapse of Lehman Brothers and the years-long global financial disaster caused by the US subprime mortgage crisis in 2007, it seems that any negative news related to real estate has been multiplied. Canada seems to have been hit by the subprime crisis this time.Please Visit: Langstaff Gateway Condos price list to Get Your VVIP Registration Today!
Recently, there are domestic and foreign media reports, “last Wednesday, Canada’s largest non-bank mortgage supplier Home Capital Group (HCG) suffered a liquidity crisis, the share price plummeted 60%”, some domestic media said that this suspected triggered a ‘Canadian version of the subprime mortgage crisis’. However, after interviewing various people and collecting relevant information, China Business reporter found that this may only be a local, case-by-case impact, despite the high housing prices in some Canadian cities. but this has nothing to do with another “subprime crisis”.
“the reason why HCG shares plunged 60% last week was mainly because the Ontario Securities Commission (OSC,Ontario Securities Commission) accused HCG of failing to fully disclose important information about its loan business, issued redirected information, and committed perjury in its annual report.” Global real estate analyst Xian Jingtang (Kenneth Sin) told China Business reporter.
It is also because of this that some high-interest depositors have begun to withdraw and run. In addition to withdrawing money from HCC’s deposits, their high-interest savings accounts (HISA) have also become the object of withdrawals. “so this once caused a liquidity crisis for HCG, but this is only a separate event and may have ‘spillover effects’ on other companies, but the ‘subprime crisis’ is exaggerated.” He told reporters.
It is reported that HCG owns several federally regulated financial institutions, including Home Trust,Home Bank and Oaken Financial. HCG competes with large banks, credit unions and other related companies in six Canadian provinces, targeting “financial services markets that major Canadian financial institutions do not pay much attention to,” as the HCG website says.
HCG offers a full range of services, including credit cards, GIC and savings accounts, and its main profit model is to provide customers with unsecured home mortgages, who often do not have access to large bank loans, mainly because their credit history is flawed or freelancers.
HCG’s problems officially broke out last week. The OSC Securities Commission said the management of several companies violated securities laws and misled shareholders by falsifying loan documents from two years ago. HCG is understood to have been accused of falsifying the earning capacity of potential borrowers when applying for loans. HCG said at the time that none of the borrowers had solvency problems.
OSC’s announcement escalated concerns about HCG, which may over-lend to people who cannot afford to buy a house. HCG shares tumbled more than 60% last Wednesday, and depositors went on a withdrawal spree in a panic.
On Monday, HCG said it had only C $391 million left in its HISA account, down from C $521 million on Friday and C $1.4 billion a week ago. Some analysts said that in addition to some ordinary deposit accounts, HCG’s C $12.86 billion guaranteed Investment Certificate (GIC) deposits are also the foundation of its mortgage business, accounting for 1% of the Canadian mortgage market, and the speed of run may further accelerate when these short-term deposits mature.
GIC is one of the investment varieties in Canada, which has the characteristics of income guarantee within a certain period of time. The interest rate is usually higher than that of time deposits. Customers can invest in GIC in registered pension savings plans or GIC in unregistered investment accounts. There is a wide variety of GIC, generally speaking, there are Canadian dollars and US dollars, with terms ranging from 1 to 5 years. GIC can continue to do it when it expires. The minimum investment amount for GIC is C $1000.
It is precisely because there are still some hidden worries in HCG that the company has urgently applied for 2 billion Canadian dollars in loan support. According to foreign media, the helping hand is Toronto’s pension fund-Ontario Medical Institution Pension Plan (Healthcare of Ontario Pension Plan,HOOPP). HCG will first use the C $1 billion line at the cost of C $100m in borrowing costs.
To this end, HCG shares have rebounded, but there is still a lot of uncertainty, especially these credit support interest rates are quite high, the first $1 billion loan interest rate as high as 22%, can be called usury. “this may be more representative of the urgency of the shortage of funds in HCG.” Laurentian Bank analyst Marc Charbin said.