The US housing market is in recession. The news from the US mortgage market is getting worse by the day, and it is starting to affect the economic mood well beyond the housing market. The key message here is that things can, and do change dramatically almost overnight, with gloom quickly taking over exuberance.
Is the Canadian mortgage market at risk? So far, there are no indications that the Canadian market is facing any major difficulties. But given the speed at which prospects have changed south of the border, it is important to look beyond the headline numbers in search for any clouds in the horizon — using the recent US experience as a benchmark and a guide.
Accordingly, the following discussion examines some key credit and mortgage market indicators — zooming in on the relative performance of Canada vs. the US. While aggregate numbers such as the ratio of debt to income in both economies are necessary for such an analysis, they are clearly insufficient. Those indicators must be supplemented by a closer micro look at the distribution and the characteristics of the different sub-segments of the mortgage market.
