The U.S. is currently experiencing significant fallout from years of subprime mortgage lending practices. For years 100% loans have been readily available in the States. This eventually evolved into so called "stated income" loans where little to no documentation of actual income was required. And also variable rate loans where the first several years where at very low payments with payments adjusting in the second or third year. Often the monthly payments in the first years of these loans did not even cover the interest so the loans were "negative" amortization. You would actually owe more on the loan after a couple of years.
This market seems to be collapsing on itself. Several subprime lenders have declared bankruptcy with others going public about their troubled financials. Canada has typically has a much more conservative approach to lending. When we moved to Canada in 2004 I remember the lender discussing "high ratio" loans as those being less than a 25% down payment. It has only been in the last year that I have starting hearing 100% loans advertised in Canada and even then not very heavily advertised. I believe this historically conservative lending will be one factor to help the Canadian market maintain its currently active real estate market.
That being said, Canadians seem to watch very closely what is happening in the States. Like it or not there is very much a physiological factor to the real estate market. With Canadians hearing so much about the slow downs in the U.S. real estate market it seems to be affecting buying decisions in Canada. Prices have been increasing in many Canadian markets at 20%+ per year for several years. I believe some Canadian home buyers are spooked about how high prices have gotten and are looking at what is currently happening in the U.S. real estate market and this is affecting their buying decision.
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