Quote:
Originally Posted by Peanut
I thought a huge part of the American housing bubble was their ridiculous lending practices and all the sub-prime mortgages. Which has been stated again and again that Canadian banks have never been as aggressive on the lending front (not saying they're not agressive, just not as agressive as the U.S.) and the sub-prime market here is extremely small.
The market may be inflated in Canada but the conditions are not the same to the US in 2007/2008.
Also, I don't think people on VancouverPuck or TorontoPuck would be experiencing similar doomsday threads or feelings like we are in Calgary. We're very close to the oil price here and the lay offs and the downturn is right in our faces. If we're not employed directly by the industry, many of our friends are, and many Albertan businesses support the industry indirectly. The majority of Canadians aren't as affected (or, at least, they don't think they are affected).
|
There's no question that was a significant factor. Piled on top of that you had these subprime mortgages that were securities and rated as AAA which bled through the system. When people began seeing mortgage increases though, they began defaulting. Then because they were rated as AAA securities and suddenly seeing defaults, institutions got nervous. No one could trust anyone had assets that were worth what they were saying; that's how the system froze and exactly when the central banks stepped in to guarantee these assets. (Obviously a brief overview and not all encompassing...)
This situation just doesn't exist here in Canada in the same way. A drop we see here today will be due to the overall economy slowing and not due to lending practises or due to defaults specifically due to this lending system. That of course doesn't mean we won't have these defaults, but the reason is quite different, and people are held to a higher standard in the first place which should reduce some of that default rate substantially.