Investors are demanding higher rates of return on Canadian mortgage-backed securities. Here’s a great article from MyNext Mortgage’s Boris Kogut that explains the repercussions.
According to Kogut, “The commercial paper market, one of the primary securitization sources of funding for over $30 billion of non-insured Canadian mortgages, has come to a complete standstill.” Interest rates in this mortgage finance market are up over 1/2% in just a few short weeks.
What does it mean to homeowners? Well, for one, Canadians who need “alternative” mortgage products can expect to pay higher rates–at least in the short-term.
In addition, the breadth of subprime Canadian mortgage options available to these borrowers may be limited for a while.
Nevertheless, Kogut says, “Canadian mortgage portfolios continue to exhibit strong credit performance with relatively low levels of arrears and losses.”
It’s still a totally brighter picture up here than it is south of the border.
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