In last weekend’s Globe and Mail there was a feature about the subprime mortgage issue that we all thought we were safe from on this side of the border. The article mentioned that subprime lenders had offered mortgages to risky borrowers in BC and Alberta, many of which have resulted in foreclosures.
The numbers and the extend of the problem seem to be unclear compared to the United States, partly due to the difference in legislation in terms of reporting such figures.
Although, what’s obvious is that many lenders acted irresponsibly by giving loans to people they knew would have difficulty repaying. Certain lenders were more than happy to ride the property wave and hand out loads of cash with ridiculously high interest rates in order to get a piece of the action. Now that borrowers can’t make their payments and the overall asset has decreased in value, one might think that they got what they deserved.
But they aren’t the only ones to blame, let’s not forget the responsibility of the borrower. Since when did it become so acceptable to live extraordinarily beyond our means? And when did it automatically become the banks fault for giving money that we were more than willing to take in order to feed our greed for bigger and better homes.
What’s currently happening in Canada’s mortgage market was inevitable and lenders have quickly started to back track by introducing more restrictions with a greater focus on less risky lending. Hopefully this will also prompt borrowers to be much more cautious and realistic. If it seems too good to be true, it normally is.
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