Quote:
Originally Posted by Nancy
Projections likely based on $100 oil...
|
You think they have a line in a spreadsheet to put a barrel of oil price into when projecting population growth? I think they are a bit more sophisticated than that.
Quote:
Originally Posted by Shazam
The point of a down payment is so that if a property's value goes down and the borrower defaults, there's enough equity left that the bank minimizes their losses in a foreclosure. Where's the cushion on a 40/0? A 40/0 500K mortgage @ 5% after four years results in an equity position of 18K.
|
True, and that's probably why it went away. But having no buffer isn't the same as having a mortgage that has a negative equity position, the borrower is at a 70% debt servicing ratio, and is already on collections lists for 3 different cell phone companies.
Risk is based on the borrower, not the product. While a 40/0 product may attract a more marginal borrower, it doesn't necessarily mean that they'll get it; the lending rules here were far more strict and well enforced. In the US it was like they gave it to everyone based on the increase in housing prices, very little of that went on here. As I said, only a few percent of mortgages in Canada are sub-prime.
And if I remember reading correctly the typical default rate on mortgages in Canada is lower as well.
EDIT: Exactly, no one is saying it's going to be roses and unicorns, but if there's a storm coming you take shelter in the best place possible.. I think Alberta will fare better than many other places.