The bank previously had an internal limit of C$1.25M on loans to borrowers with no in-country credit history, making things difficult in Vancouver, where the median price for a single-family home in the city's desirable west side is C$2.87M - up 31% over the last two years. This high-end mortgage market currently is the domain of HSBC Canada, CIBC (NYSE:CM) and Bank of Montreal (NYSE:BMO). RBC (NYSE:RY) has just an 8% market share. The move may help put to rest the myth of Chinese buyers showing up in the country with suitcases full of cash with which to buy property. It turns out they use credit as well.
The Royal Bank of Canada (RBC) has scrapped an internal limit of CAD 1.25m ($1m) on its mortgage loan size for immigrants, so as to tap into the surging demand from wealthy buyers, mostly from China, for financing on multi-million dollar houses in Vancouver. A recent survey revealed that over six months, two-thirds of buyers of detached homes in prime neighbourhoods in Vancouver had names typical of people from mainland China, with 88% of them also having a mortgage from between CAD 1.25m ($1m) to CAD 9m ($7m), backed primarily by three banks, Canadian Imperial Bank of Commerce (CIBC), Bank of Montreal (BMO) and HSBC Canada; RBC held just 8% of the loans. In Vancouver, Chinese immigrants are buying up more than half of all new condos sold since 2010, according to data compiled by Sotheby’s International Realty Canada. - what is their collateral?