A top mortgage company official we know believes Canada’s commercial paper market will not return to normal for at least 3-4 months. (Non-bank lenders use commercial paper to finance a lot of riskier mortgages.)
By that time, people will hopefully be able to better assess the results of the Montreal Accord and buyers of mortgage-related securities might finally return to the market.
If/when that happens, don’t be surprised if Canadian subprime interest rates are noticeably higher.
In recent weeks, some subprime lenders have jacked their rates as much as 2%.
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