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Berkshire Hathaway just invested $400 million into the Canadian alternative mortgage market, as well as providing a $2 billion loan at 9%: https://www.forbes.c

Berkshire Hathaway just invested $400 million into the Canadian alternative mortgage market, as well as providing a $2 billion loan at 9%: https://www.forbes.com/sites/nathanvardi/2017/06/22/warren-buffett-rides-to-the-rescue-in-canada-with-1-8-billion-investment-in-lender-home-capital/#2a304f49d0bf https://www.forbes.com/sites/nathanvardi/2017/06/22/warren-b... This alone should prevent any bubbles from bursting in 2017. Especially if Home Capital Group starts lending again (see: https://www.linkedin.com/pulse/government-need-make-some-drastic-change-ameera-ameerullah https://www.linkedin.com/pulse/government-need-make-some-dra... ). Edited to note: $2.5 billion is probably not really a significant amount as far as the Canadian mortgage market is concerned (e.g., around ~700 houses in Vancouver's good neighbourhoods), but the fact Warren Buffett is behind this should calm nerves and cause the lending taps to re-open a bit in the subprime markets that are so key to the bubble. The government backed Canadian Mortgage and Housing Corporation (CMHC) won't sell default insurance for mortgages over $1 million CDN.

lubujackson 9y ago
One counter to that is Buffett doesn't try to time the market, he finds stable, productive businesses and buys in. Housing might collapse but in 10-15 years he will be profitable. Most homeowners aren't looking at things with the same perspective.
- gsylvie 9y ago
  Yeah, and frankly the deal doesn't really look that reassuring to me. HCG had already negotiated a 9.5% loan on the $2 billion CDN (around $1.5 billion USD). Buffett is letting them refinance that loan down to 9% and he's buying some stock at a 30% discount. But the general market will not look that closely at the details, and will just be reassured by the Buffett brand name.

3 ms·

Berkshire Hathaway just invested $400 million into the Canadian alternative mortgage market, as well as providing a $2 billion loan at 9%: https://www.forbes.c

by gsylvie 9y ago

lubujackson 9y ago
One counter to that is Buffett doesn't try to time the market, he finds stable, productive businesses and buys in. Housing might collapse but in 10-15 years he will be profitable. Most homeowners aren't looking at things with the same perspective.
- gsylvie 9y ago
  Yeah, and frankly the deal doesn't really look that reassuring to me. HCG had already negotiated a 9.5% loan on the $2 billion CDN (around $1.5 billion USD). Buffett is letting them refinance that loan down to 9% and he's buying some stock at a 30% discount. But the general market will not look that closely at the details, and will just be reassured by the Buffett brand name.