Quote:
Originally Posted by BrownDrake
Sub prime loans were loans that reset at market interest rates after a 3 to 5 year period unlike the typical US mortgage rates that had locked in interest rates for 30 year terms.
Where could you ever get a locked in interest rate in Canada for 30 years? That's correct, never. By definition all mortgages in Canada are subject to market interest rates at renewal term, typically 5 years on the long ones.
As for NINJA loans, I know of a live-out nanny and a girl who works at Superstore, both with their name on a 300K mortgage in Airdrie. Its a 40 year mortgage, they didn't have to put anything down. Cheaper than rent I guess. Had to talk sense into my brother-in-law who was approved 2 years ago for a 330K mortgage, he is (was) roughneck making +/-75K per year and she works a daycare at $28K per year.
Several people out of work, are those now NINJA loans?
Banks in Canada have also been selling loans you know. Just how thorough are they when there is a quick buck to be made on a government guaranteed mortgage.
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Those aren't NINJA loans though. In the US they were talking about people who literally had no income and no job who were getting approved for mortgages. Could that happen in Canada? Sure, but it would be against the regulations in place. That is a marked difference from what was taking place in the US.
The ARM issue doesn't strike me as prevalent here either. I don't work in that field so I can't say that they don't exist, but I haven't come across one. There were 30 year mortgages available in Canada though. I called a broker I know a few years ago and asked what kind of rates there were and it was incredibly high, but available.
I recognize that the banks securitize debt in Canada as well, but the other factor is that a lot of that subprime debt was packaged up and re-rated as being AAA. So people thought that they were buying higher credit quality stuff than they really were. I don't see any evidence that this is currently taking place in Canada?
Overall, I just think that the comment that this situation is a lot like the US in 08-09 is misleading. Surely there are concerns and issues with the number of layoffs and things like that, but what we saw in 08-09 in the US had a lot of other factors that we just don't see today.