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Originally Posted by Slava
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.
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I think it's safe to say that all Canadian mortgages are ARM. Not in the teaser rate sense, but none the less, if rates go up here people will be affected at renewal.
And we had 40 year mortgages with 0 down here, not just 30 year. The rates were no different.One hopes that the banks did their due diligence with approvals on those.