Whitfield condo . Shares of the largest mortgage lenders plunged 60% in a day
Whitfield condo . Shares of the largest mortgage lenders plunged 60% in a day. Some analysts have pointed out that the huge bubble in the Canadian real estate market has opened the tip of the iceberg.Please Visit: Whitfield condo to Get Your VVIP Registration Today!
At that time, analysts predicted that there were great risks lurking in the operating performance of Home Capital Group, Canada’s largest non-bank real estate mortgage lender, in which false real estate mortgage loans and overly aggressive lending business models would have a huge impact on these real estate mortgage lenders that do not attach importance to economic fundamentals.
Over the next two years, a number of investment analysts, including Wall Street’s well-known short seller Coholders (Marc Cohodes), have pointed out that stock investors should carefully assess the huge risks in Home Capital’s business operations.
Now, the investment risks warned by these equity analysts have finally erupted. Shares in Home Capital Group, Canada’s largest mortgage supplier, tumbled more than 60 per cent on Wednesday, the biggest drop on record, after it revealed that it had signed an emergency liquidity agreement. This exposed the danger of a bubble bursting in the Canadian housing market.
Home Capital revealed on Wednesday that it borrowed C $2 billion (US $1.5 billion) from unnamed institutional investors at an interest rate of 10%, but the loan was not binding. Jaeme Gloyn, an analyst at the National Bank of Canada, points out that if other fees and expenses are added, the real interest rate on the first C $1 billion loan of Home Capital is as high as 22.5%, and the interest rate on the rest of the loan is reduced to 15% if the loan is over C $2 billion.
David Baskin, president of Toronto-based wealth management firm Baskin, pointed out that, Home Capital was simply a loan shark, and they basically exaggerated their income in order to save their financial statements. I guess they wouldn’t have done so if they hadn’t faced an existential crisis.
After the news, Home Capital group shares fell 61%, the lowest since 2003, and dragged down the entire real estate mortgage lending sector. Of this total, shares of Equitable Group fell 17%, while shares of Street Capital Group and Canada’s first National Finance Company also fell 13% and 7.6%, respectively. Analysts believe that the sharp fall in the share prices of real estate mortgage companies marks the beginning of the bursting of a huge bubble in the Canadian real estate market.