Canadian Housing Bubble, CHMC & You

This might be a bit off topic for this site but it is a pet project of mine.  Many people believe that Canada dodged a bullet with the collapse of the US housing market.  The common theme is that ‘it is different here’.  It is but is probably not enough to stave off disaster.

If you have been following the main stream media (the dinosaur media as I call them) you will read several stories along these two themes: The cost of housing is rising (Financial Post: New house prices higher than expected) but at the same time demand is waning (CTV News: October housing starts fall to lowest level in a year).

If you followed the US collapse this is exactly how it unfolded.  The US Government intervened in the mortgage industry to advance the cause of increasing home ownership.  The US government is how saddled with trillions of dollars of mortgages that are mostly underwater (more is owed than the home is worth).

Debt ridden Canadians now hold over one trillion dollars (thats $1,000,000,000,000) of mortgages and 90% of them are insured by CHMC.  CHMC only has approximately $300,000,000 in assets so you can do the math and calculate who will be on the hook and for how much.

The Federal Government needs to get out of subsidizing peoples mortgages.  The banks need to be on the hook in the event of a default or look to private mortgage insurance which is available (I have it on my current mortgage).  The subject of Bank of Canada manipulated interest rates is an entire post in its own which I will not start here.

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