TBW

For borrow, MIC 4.7%, EQB 1.4% but that may have changed. I don't really like being long any of the CAD banks so don't like the pair trade. One I do like is long US banks and short cad. Not as attractive as it has been, but I think still works. Agree with Wisdom. The second mortgage mkt will change a lot on this. In the past you could borrow the downpayment and banks didn't care as mortgage was insured. Now that they actually bear the risk, they don't want super expensive debt that hurts their borrowers debt servicing ability. Also they would need to borrow to get to 20% down, big difference from borrowing to get 5% down. Doing quick math borrowing 20% at 12% would cost as much as 3% mortgage on following 80%. No one is going to do that. A big part of all this is getting the risk to be born by the originating banks. There may be further changes that make them face more risk when they do use insurance. So we have a situation where less insurance is available, banks face higher risk and capital requirements are going up. So less credit available and more expensive mortgage rates when available. Therefore house prices are going lower.

On a yield basis the cheapest to short is EQB (borrow is very cheap). I am short that too. I hear you on MIC, however with increased capital requirements don't be surprised if the div gets cut. If it doesn't get cut for that reason you may only have to pay for a year or more until the losses force them to cut to 0. If you are institutional shorting the corp bonds is the cheapest way to play this (if you know a platform that retail can do that please let me know). Otherwise I just short the stock, puts are too short dated for my liking.

I believe this is the end. The restriction on credit available is enough to topple this mkt imo. The best short I think is MIC. Too much exposure, no provisions and with their aggressive revenue model (recognize all insurance earnings in first 5yrs), on an earnings basis this will look very expensive if revs down 30 to 50%. http://investor.genworthmicanada.ca/English/media/news-releases/news-release-details/2016/Genworth-MI-Canada-Inc-Comments-on-Recently-Announced-Mortgage-Insurance-Changes/default.aspx