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Canada’s mortgage system holds strong through economic crisis

July 3, 2010

I came across this article which talks about the success that the Canadian mortgage system had during the economic downturn we have recently experienced. I thought I would share my thoughts on this topic because as a mortgage broker, I see this type of commentary quite often and still receive questions from clients who want to know whether Canada’s mortgage market will be impacted the way it was in the United States because of all the sub-prime mortgages south of the border.

Contrary to popular belief, our mortgage market doesn’t have many Alt-A, or self stated income products that were sold during the real estate boom (i.e,. sub-prime); therefore, there aren’t as many mortgage payment delinquencies as the United States has had. It were these type of mortgage products (NINJA, Self-stated, Alt-A), along with the securitization and monetization of these products that took down the US housing and mortgage markets.

Furthermore, our mortgage legislation and regulations do not easily allow foreign banks to open-up shop in Canada, which in part has allowed for a more conservative approach to investing and mortgage underwriting from Canadian lending institutions. One thing we can be proud of as Canadians is that our mortgage system is now the envy of the financial world!