A story titled, “Canada’s dirty subprime secret,” appears in today’s Globe and Mail and claims that Canadian leaders are simply wrong about the extent to which the subprime mortgage mess will affect Canadians. According to the Globe’s report, it’s a bigger problem than we might have expected and its effects are already being felt in British Columbia and Alberta where “lenders are foreclosing on the homes of overextended borrowers at an alarming pace.”
Since the subprime mortgage meltdown in the United States, Canadian leaders have assured the public that a similar tidal wave of foreclosures can’t hit here. They have cited the prudence and market dominance of Canada’s five most prominent banks, the conservatism of Canadian consumers and the tiny, 7-per-cent market share of subprime lenders, which is much lower than their 22-per-cent market share in the United States. Just four days ago in a speech, Prime Minister Harper said: “We have avoided the extreme of the unregulated, or barely regulated, financial and mortgage industries that has caused such grief around the world.”
However, The Globe’s investigation shows that while Canada’s real estate sector hasn’t suffered as much as its counterpart in the United States, the Prime Minister and others have grossly underestimated the impact of that small portion of subprime lenders. Until recently, companies who touted their low standards with slogans such as “We Say Yes When The Banks Say No!” and “No Income Verification” proliferated here.
Read the Globe and Mail story here.
I’m always happy to answer your Saskatoon real estate questions. All of my contact info is here. Please feel free to call or email.
Royal LePage Saskatoon Real Estate