An article in today’s Financial Post dispels the fears of a “housing bubble” in Canada.
Canada won’t fall victim to foreclosure wave: Report
John Shmuel, Financial Post Published: Friday, May 28, 2010
Canada’s housing market won’t fall victim to the type of foreclosure wave the United States saw, according to a new report by debt-rating firm DBRS Ltd.
DBRS said in the report that Canada will continue to fare well in comparison with its neighbour to the south when the Canadian housing market corrects itself and interest rates rise. That’s because lending practices here are much more sound than in the U.S.
“The likelihood of us having the kind of situation they had in the U.S. is extremely low,” said Jerry Marriot, managing director of structured finance at DBRS. “It’s a combination of the lending practices prior to the peak in 2007 – they were more restrained, so there were better underwriting practices in Canada. We also think there are a number of factors in the Canadian market which have lent themselves to more prudent lending.”
That includes less aggressive lenders in the market, as well as systems designed to keep people paying their mortgages.