American Sub-prime IS different than Canadian 40yr/0-down mortgages but they are not completely different either.
In both cases when the market falls the owner is in a negative equity position immediately.
There are already thousands of Calgarians who owe banks tens of thousands of dollars more than their homes are worth despite making massive oversized mortgage payments for the last 0-18 months and will remain in severe negative equity positions for years to come -- trapped in their homes indefinitely. People SHOULD be in fear, the truly scary part is that people get such bad financial advice from so-called 'experts' that they have no idea how fragile their financial positions are.
I would not make any large financial bets that the effect of one (40yr/0-down) will be that much different than the other (sub-prime). The drop might not be as fast or as low but it is still coming, even if it is just a matter of inflation eating away at values for 20 years.
Claeren.
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