Here’s some interesting tidbits taken from CAAMP’s Alternative Lending Conference last week in Toronto.
Canada will have $800 billion of mortgages outstanding this year.
Subprime loan volume will more than double in Canada within 5 years, to almost $70 billion.
Canada’s subprime markets consists mostly of high-ratio uninsured mortgages. In other words, most subprime borrowers put down less than 20% and don’t qualify for mortgage default insurance (from CMHC, Genworth, etc.).
When will U.S. subprime woes end? Ivan Wahl, Chairman of Xceed Mortgage, says we’re “only 1/4 of the way through (interest rate) resetting in the U.S.” That means a lot more defaults are on their way.
Several Canadian lenders have halted their subprime mortgages thanks to a deteriorated commercial paper market (commercial paper is how many non-bank lenders finance their mortgages). When the commercial paper market does bounce back, expect subprime interest rates to remain significantly higher for several quarters at least.
In the future look for more mortgages geared towards self-employed borrowers who’ve been on the job less than 2 years. Two years is the standard tenure lenders look for on “business for self” applications.
300,000 Canadian rent despite qualifying for a mortgage.
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