The US Sub-prime Mortgage Crisis: Can it happen here?
September 10, 20007 — In early July, the realization came that the US mortgage market
was on shaky ground as a result of year over year loose lending practices.
This led to ever-increasing prices and single family residential housing becoming a speculative investment
choice.
Fortunately, Canadian lending practices are much more controlled than in the US, and while there will be a few foreclosures in Canada, I don’t expect the foreclosure rate in Canada to increase significantly. However, expect a lot of noise and echo in the media of what happening in the US. Same is true of the stock and bond markets. The “sub-prime mortgage markets crisis” is real in the US, but
not really part of the Canadian landscape, even though for a short time until investors understand the difference, Canadian mortgage markets will fall on the expectation that the market is poor. What it all means is that while lenders in Canada will be a little
more careful about their lending practices, their risk is not as high as it has been in the US and so we can expect to continue to find
relatively easy financing. The result is that the confidence of this Canadian real estate market will
remain strong.