Those of us who write about the housing market and the virtues of the 30-year fixed home loan -- as we did Wednesday -- can calibrate our watches by how long it takes a reader to respond as follows:
"Hey, Canada doesn't have 30-year fixed mortgages, and their housing market's doing just fine!
Usually about a nanosecond.
This is a popular line of chatter for pundits too. Back in August, Matthew Yglesias of Slate.com questioned why "there's some urgent need for the government to subsidize 30-year fixed-rate mortgages. If you cross the border into Canada it's not like people are living in yurts."
That's true. Canada doesn't have fixed 30-year mortgage terms. But that's not the only difference between the U.S. and Canadian mortgage finance systems, by a long shot. I wonder whether the consumers, bankers and free-market ideologues on the Wall Street Journal editorial page who say the problem with housing in the U.S. is government interference would really be prepared to live in the Canadian system.
Actually, I don't wonder. I know they wouldn't.
Let's see why.
To begin with, the Canadian system is considerably more creditor-friendly than the U.S. Lenders typically have full recourse in cases of default, meaning they can attach all of a borrower's assets, not only the house. In the U.S. that's not permitted in 11 states, including California, and foreclosure proceedings are complicated even in the other states.
Read full article here: http://articles.latimes.com/2014/jan/16/business/la-fi-mh-canada-20140116
Related article: 5 Best Real Estate Markets for 2016
"Hey, Canada doesn't have 30-year fixed mortgages, and their housing market's doing just fine!
Usually about a nanosecond.
This is a popular line of chatter for pundits too. Back in August, Matthew Yglesias of Slate.com questioned why "there's some urgent need for the government to subsidize 30-year fixed-rate mortgages. If you cross the border into Canada it's not like people are living in yurts."
That's true. Canada doesn't have fixed 30-year mortgage terms. But that's not the only difference between the U.S. and Canadian mortgage finance systems, by a long shot. I wonder whether the consumers, bankers and free-market ideologues on the Wall Street Journal editorial page who say the problem with housing in the U.S. is government interference would really be prepared to live in the Canadian system.
Actually, I don't wonder. I know they wouldn't.
Let's see why.
To begin with, the Canadian system is considerably more creditor-friendly than the U.S. Lenders typically have full recourse in cases of default, meaning they can attach all of a borrower's assets, not only the house. In the U.S. that's not permitted in 11 states, including California, and foreclosure proceedings are complicated even in the other states.
Read full article here: http://articles.latimes.com/2014/jan/16/business/la-fi-mh-canada-20140116
Related article: 5 Best Real Estate Markets for 2016
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