A reader was kind enough to send us this graph on the right (click to enlarge).
It depicts the recent monthly growth rates, versus the prior year, of non-conforming/subprime Canadian mortgages.
As is evident from the chart, Canada’s subprime mortgage volumes started slowing in spring 2007, well before the August commercial paper meltdown. Most people consider August 2007 to be the start of the subprime market’s decline in Canada.
The graph is based on data from the Filogix monthly Mortgage Broker Market Report. Filogix operates the leading mortgage origination network in Canada.
The data reflects only mortgage broker sourced mortgages, but it’s a good proxy for the industry because brokers arrange the majority of non-traditional mortgages in Canada.
It looks a lot to me like the only thing that kept Canada from a sub-prime crisis of it’s own was the fact that things collapsed in the US before lenders here had the chance to write as many loans as they would have liked.
I remember noticing in March 2007 that the ABX indexes for mortgage backed securities were going crazy (or at the time it looked pretty crazy – now it looks like a minor blip in hindsight).
I can’t think of any other place in Canada to see this kind of information posted.
Thanks!
What exactly do these stats include. All 40 yr terms? Anything other than a regular 20% down prime?
Hi Paul,
Filogix doesn’t break down these stats by mortgage type, but generally Subprime mortgages will include mortgages that major banks and other “A” lenders will not readily approve (For example: no income verification, bad credit, abnormal debt ratios, etc.).
Long-amortization mortgages (e.g. 40-years) are not generally subprime, although some people would like to argue that they are.
Cheers,
Rob
Thanks very much. Love the blog!