Mortgages Canada
Mortgages Canada: Why Canadians are More Responsible Mortgage Holders than Americans
Compared to the United States, Canadians are more responsible about paying their mortgages. Canada mortgage holders haven't seen the need to walk away from their homes like Americans. Proof?
Barry Lebow of REM writes in the September 2007 article, A real estate cancer, “. . . in Canada have escaped the mortgage default problems that are causing major financial problems in the United States. . . . The Canadian Association of Mortgage Professionals (CAAMP) …tried to assure the public that Canada is not headed for the same fate as in the U.S.; it pointed out that there are many factors that have made the Canadian mortgage scene “a picture of health.”
Mortgages Canada: 3 Reasons Canadians are More Responsible Mortgage Holders than Americans
Mortgages Canada: Reason #1 Why Canadians are More Responsible Mortgage Holders than Americans. Canadians save money. Compared to their US counterparts, Canadians save more money than their American Counterparts.
The November 2007 article, Are Canadians Spenders or Savers? discussed results from an ING Direct survey, which showed that “55% of Canadians said they save regularly while many practice the most common sense approach to saving, 'paying yourself first'. Almost forty percent (38%) indicated they use some form of automatic plan to save their money.”
And their American counterparts? “A new report from the Federal Reserve Bank (Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances) finds that only 41% of Americans save regularly. Three-quarters of households carry debt.” [Source: MSNMoney.com, “Why can't Americans save a dime?” Enough said.
Mortgages Canada: Reason #2 Why Canadians are More Responsible Mortgage Holders than Americans. Canadians tend to stay away from “exotic” mortgages.
According to the latest economic data, one-third of Canadians have mortgages. Canada mortgage holders though tend to go for more conventional mortgages compared to their American counterparts. Consider this:
”Americans take out unconventional mortgages 22% of the time (versus 5% in Canada).” [Source: ReportonBusiness.com, Canadians keep loading up on debt]
What are exotic mortgages? Interest-only loans, 0% down payment loans and ARMs (adjustable rate mortgages) all fall under this heading, and have all contributed to the housing trouble in the U.S. right now.
The downside of exotic mortgages? Canada mortgage holders seem to inherently grasp it. Exotic mortgages contribute to foreclosure because they inherently cater to those who may be less savvy with their finances. Low teaser rates, less down payment, longer mortgage terms – all of these appeal to the less savvy financial person.
Compare this to conventional mortgages where you put down a hefty percent (usually 20%) and get a fixed rate for the life of the loan. Nothing exotic about it.
Mortgages Canada: Mortgage tip. If you can't afford the proposed increase in a teaser mortgages Canada rate today, you can't afford the house.
Here’s hoping Canadian mortgage holders are taking heed.
Mortgages Canada: Reason #3 Why Canadians are More Responsible Mortgage Holders than Americans. Canadians buy cheaper homes.
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