Canadian Mortgage Trends came out with an article last week comparing the two housing and mortgage markets. According to the article the skeptic don't have a rational comparison.
To summarize the comparisons of our two very different markets:
Canada has a low arrears rate. Before the housing bust in the U.S. the arrears rate rose by 300%
The subprime mortgage market in the U.S. was about 20 to 30% where as Canada's is currently estimated at about 7%
More than half of mortgages in 05/06 were already in negative equity while Canada's is only about 15 to 20%
No teaser rates in Canada
Canadian housing starts have exceeded demand by about 10% In the U.S. that number was 80% before the crash.
The Debt to Income ratio that is widely published and discussed is not conclusive of a impending crash. Countries with a higher ratio than us have experienced nothing remotely resembling the U.S. crash.
Canadian credit scores have improved over the past 4 years. In the U.S. "risky" borrowers rose by 10% to comprise of 22% of the market heading up to the great recession.
Below is the link to the full article:
As I'm sure you know the Canadian Government has been tweaking mortgage rules and making more conservative as well. There's been a lot of changes over the past few years with the most happening in this year. If you have any questions around these changes or need clarification please shoot me and email or give me a call.
Tony Marchigiano | Mortgage Specialist - Mortgage Sales BC Region, RBC Royal Bank | Royal Bank of Canada | T. 604-505-7109 | F. 778-737-0054
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