Negative amortization stats from banks' Q3 2023 reports, where mortgage payments < interest:
BMO: $32.2 B; 22% Total Mortgage Portfolio
(up from $28.4 B in Q2 2023)
TD: $45.7 B; 18%
(up from $39.6 B in Q4 2022)
CIBC: $49.8 B; 19%
(up from $44.2 B in Q2 2023)
RBC & Scotia≈0 pic.twitter.com/39iPsthlEZ
— Hanif Bayat (@HanifBayat) September 16, 2023
Housing affordability is in crisis according to a Redfin report, with record deal collapses in August due to skyrocketing mortgage rates and home prices. About 15.7% of home contracts were terminated, the most since mortgage rates surpassed 7% in 2022. High costs are causing homebuyers to abandon deals, with the average 30-year-fixed mortgage rate at 7.27% and monthly payments 20% higher than last year. With housing affordability at historic lows, experts predict prolonged high mortgage rates and reduced housing supply, trapping homeowners.
Foreign holdings of the nation’s equities and debt have fallen by about 1.37 trillion yuan ($188 billion), or 17%, from a December-2021 peak through the end of June this year, according to Bloomberg calculations based on the latest data from the central bank. That’s before onshore shares witnessed a record $12 billion outflow in August alone.
The exodus coincides with China’s economic slump due to years of Covid restrictions, a property market crisis, and persistent tensions with the West — concerns that have helped make the “avoid China” theme one of the biggest convictions among investors in Bank of America’s latest survey. Foreign fund participation in the Hong Kong stock market has dropped by more than a third since the end of 2020.
“Foreigners are just throwing in the towel,” said Zhikai Chen, head of Asia and global EM equities at BNP Paribas Asset Management. There’s anxiety about the property market and a slowdown in consumer spending, he said. “Disappointment on those fronts has led to a lot of foreign investors rethinking their exposure.”