When Canadian Homeowners Walk Away From Negative Equity, Taxpayers at Risk

As Canadian household debt hit an all-time high in 2017 (see chart), a new study by TD Bank finds that 97% of Canadian homebuyers say they wish they’d factored in their other financial obligations when determining the mortgage they could afford. (Too bad their mortgage broker/architect/advisor was not required to factor these ‘obligations’ into their loan approval consideration either.) We are not talking about extraordinary, unexpected expenses here: 54% of those surveyed wish they’d considered property taxes and maintenance costs, and a third cite overall lifestyle expenses.
Lenders have been encouraged to be more lax in their approval process, because Canadian taxpayers are backstopping some 55% of Canada’s $1.6 trillion residential mortgage loans -$496 billion through CMHC, plus 90% of the $400 billion+ underwritten by Genworth MI, plus an undisclosed exposure through Canada Guarantee co-owned with the Ontario Teachers’ Pension.

This post was published at FinancialSense on 11/09/2017.