I came across this interesting article today that talks about the struggles in the US mortgage industry and housing market and also contrasts this to Canada. There has been a lot of news lately about US housing and mortgages being a large mess and continuing to be so almost 2 years after the initial hit, and how it is slowing economic recovery in the US. The most interesting part of the article for most Canadians is where they talk about Canada and the difference in mortgage lending between Canada and the US.
Mortgages in Canada vs. The US
The article describes that only 70% of mortgages in the US are with “A” mortgage lenders, with 30% being subprime mortgages. In Canada, 95% of mortgages are with “A” mortgage lenders, and only 5% of mortgages are with “subprime mortgage” lenders.
It was also stated how Canada was the last G7 country into recession and the first one to recover. Additionally, Canada holds mortgage borrowers accountable for shortfalls after foreclosure, whereas in the US borrowers can walk away from their homes and mortgages without any liability.
How Safe is Canadian Housing?
Based on the above facts and looking at the contrast between the US and Canada, it is clear to see the stability and security of the Canadian mortgage system and housing markets. Additionally, with the Canadian government has been making the mortgage lending rules more and more stringent to protect Canadian property values.
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