Canadian mortgage lessons 101

Here’s a good article from the Financial Times about Mortgage Lending in Canada…..and the lessons the U.S. can learn about prudent mortgage lending…  The article points to 3 important differences between the 2 countries.

Here’s another article that points to a great study done recently by the Canadian Association of Accredited Mortgage Professionals (CAAMP).   The study showed that Canadians more cautious than our American friends when it comes to taking on debt.  And they chose fixed rates over variable rates in 86% of the cases…

It’s good to see that Canadians are perceived as cautious people, however, we shouldn’t assume that variable rate mortgages are a riskier proposition… there was a great study done by Professor Moshe Milevsky, in 2001, that compared fixed rates and variable rate mortgage….. in that study, Professor Milevsky concluded that variable rate mortgage borrowers were better off being in a variable rate mortgage….

The study was updated in 2008 and the findings were even better… the variable rate mortgage was a cheaper option than fixed rate in over 80% of the time.   Of course, we each have different needs and risk tolerances… always seek professional advice.. speak with your mortgage broker.