Canada Is Not On the Verge of Housing Bubble, SMI Expert Explains

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Mortgage Expert Marcus Arkan of Syndicate Mortgages Draws a True Picture of Canada’s Housing Market by Weighing Current National Stats against Pre-Crash Scenario in the US

Marcus Arkan, CTO of Syndicate Mortgages and an experienced industry expert, has recently stated that Canadians need not fear a housing bubble. According to Mr. Arkan, the speculations regarding Canada real estate bubble has been around since the US housing market crashed.

Mr. Arkan’s analysis and statement is largely based on a report presented by Deputy Chief Economist Benjamin Tal of the Canadian Imperial Bank of Commerce (CIBC). The report which was published on 30th October sketches a detailed picture of the pre-crash environment in the US and explains how the current Canadian market is on a completely different page.

According to Mr. Arkan, CIBC’s report can be considered one of the most accurate and substantial in this aspect and a large majority of mortgage experts will agree with the comparison made by Benjamin Tal. “The household current debt-to-income ratio in Canada has surpassed the level US reached right before the crash. Yet, what saves us here is the speed at which this debt is rising. This is only one of the many factors that put Canada in a far better position and Mr. Tal has managed to mention plenty of reasons to prove the point,” stated Mr. Arkan.

Mr. Arkan said that a large number of skeptics who are warning people about an upcoming bubble may be overlooking the quality factor of the debt. CIBC’s report presents a clear chart which compares the quality of debt in the US during 2005-2006 with that of in Canada right now. The chart reveals that Canada has not witnessed any drastic change in the distribution of the credit score during the last four years. On the other hand, the risky category in the US saw a rise of ten points within four years and accounted for 22 percent of the market before it crashed.

Another major factor which, according to Mr. Arkan, made the US market vulnerable in 2005 to 2006 is the amount of mortgages that were in negative equity. According figures presented in CIBC’s report, half of all the US mortgages in 2005 to 2006 had less than five percent equity. “Low and negative equity made their mortgages extremely vulnerable even to the smallest drop in prices. In contrast to that situation, negative equity is currently nil in Canada and only a small percentage of new mortgages have less than 15 percent equity,” Mr. Arkan explained.

Mr. Arkan further added that over the next few years house prices may fall in Canada. However, Mr. Benjamin Tal believes that there are enough positive factors that may bring the market to a softer landing. “When it comes to jitters regarding a U.S.-type meltdown here at home, the only thing we have to fear is fear itself,” wrote Mr. Tal in his CIBC report.

About Syndicate Mortgages Inc.

Syndicate Mortgages Inc. is one of the leading Canadian mortgage brokerage firms. Founded in 2008 in Ontario, the company specializes in residential, commercial and construction financing across Canada. With years of experience and expertise in the mortgage industry, and access to an array of lending institutions across Canada, Syndicate is known for finding the best mortgage rates for their customers. Syndicate has branch locations across Canada. For contact, please use the following details.

Contact Details
Syndicate Mortgages Inc.
Toll Free: (888) 646-1062
Email: info(at)smibroker(dot)com

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