Since you’re so knowledgable, I suggest that you go and look at the CMHC financial statements. They are available online up to 2008. What you will see there is an alarming increase in mortgage insurance being issued by the CMHC. Why has this happened??? Is it because people don’t have 25% down and want to extend their amortizations out to increase “affordability”??

Did you know up until the recent rule changes that CMHC determined “affordability” based on payments not debt? So loan amounts that were approved for CMHC insurance were based on all time record low interest rates most likely never to be seen again. Which has allowed Canadians to load up on consumer debt in the middle of the recession. This is evidenced by our consumer debt passing the americans recently.

Canada is in a bubble plain and simple. House prices double that of the US. There are regional differences, just like the US was. BC is in big big trouble and will have a collosal meltdown. Other areas will fare better because they have much stronger economies to support the prices.

Our banks are more conservative BECAUSE the government insures most of the mortgages. What bank wouldn’t like this? But what happens if we find out that CMHC didn’t know what it was doing? What happens if house prices start dropping and CMHC has to pay out on the insurance? Bubbles always burst and this one will be no different. The only question is when and to what extent the government will try to prevent the collapse.

Wasn’t too long ago that we in Manhattan thought we were immune to market price reductions that were hitting the rest of the U.S. Realtors were all reassuring us, until reality sunk in. Here we are, licking our wounds All this sounds familiar. Wonder how many of the comments people are writing are from realtors??

There is no illusion in this local neighbourhood that a working person can buy a 3 bedroom home.
Prices were high; they moderated due to the global economic situation. Now prices are back to normal for this neighbourhood.

No, the government did not “direct CMHC to insure mortgages”. The prevailing law of the land in Canada is that you can’t GET a mortgage below certain qualifying conditions (like putting up a sufficient sized downpayment) unless you buy insurance on it. That’s a good thing.

And the banks have no particular desire to then turn around and sell those mortgages to the government just because they’re insured, that doesn’t make any sense. The fact that they are insured makes them no-risk money generating machines for cripes sake, Canadian banks love holding those on their books, they’re practuically guaranteed revenue! The government, as a fiscal stimulus measure, decided to buy mortgages from the banks **that were already insured anyway** so the banks would get some cash on hand and be able to keep their credit flow going during the recession… and the banks agreed to do it.

And yes, housing prices in some Canadian markets have been rising uncomfortably fast recently, for reasons that have little to nothing to do with the CMHC… and in response you may have noticed all the Canadian banks raising their lending rates to cool things off.

The bottom line is the housing bubble in the US caused the degree of fallout it did because the US banking system has mortgage regulations that are hidously reckless. Canada doesn’t. The housing prices being over-inflated is still a concern but not like it was in the US. If people default on their mortgages in Canada they don’t just walk away from them and leave the banks writing off the loss, the banks go after their other assets and they know it. And mortgage interest isn’t tax deductible either. So people in Canada tend to be a little more careful about getting into a mortgage in the first place. And Canadian banks don’t just run around lending willy nilly to people who clearly can’t afford to maintain their payments because they DO tend to keep most of those mortgages on their books, which is why mortgage default rates in Canada are significantly more than an *order of magnitude lower* than in the US.

It is simply not remotely the same environment. You can;t just look at housing prices in Canada and housing prices in the US and say “hmmm… housing prices got too high in the US and then KABOOM!… therefore high housing prices in Canada will have the same result”. Not going to happen. Cause a problem? Quite possibly. But the kind of financial sector implosion that occured in the US isn’t much of a possibility in the Canadian system.

“Tactical nuclear munitions don’t engage public or political attention, because a single one cannot incinerate a city.” Really, on both accounts ?

“For 65 years, nuclear deterrence has prevented great-powers war: the maintenance of small nuclear inventories sustains that deterrence.” What a sorry state, Ray Bradbury wrote about that decades ago, we now know all of that, it just shows the disconnect between the populace and the politicians.

Any threat, by anybody, ushers in the “Warm Wars”.

Anyway, good first attempt, a table/grid analysing all the types, by country, by destructive power and distances would be nice.

This seems like a huge incentive for borrowers to think before they jump, so it’s hard to believe that Australians or Canadians are solely responsible for this wave of leverage. Perhaps foreign investors feel that the width of an ocean will discourage collection should they default.

The government. The CMHC is a crown corporation. The Canadian government directed them to insure hundreds of billions in mortgages. So the banks make the loans and immediately sell them to CMHC. They get all the fees and almost no risk.

Sound familiar?

Also, mortgage rates were higher here (and in Australia) to begin with due to the commodity boom. So when they fell, the impact was greater.