The influential Washington Post lauded a more conservative Canadian mortgage market than that in the United States. It cited both Canada’s more tightly regulated banking and mortgage structure and Canadians’ more conservative attitudes to savings and debt leveraging as key factors in avoiding the much deeper problems in the American economy and its housing market.
While Canada did not escape unscathed from the global financial crisis and ensuing recession, their effect in Canada was greatly diminished compared to the U.S as a result of Canada’s “policy, regulation and consumer behavior.”
“Heading into the crisis,” according to the Washington Post, “banks (in Canada) were under stricter rules, forced to set aside more capital that U.S. firms and managed with a more conservative bent.” And significantly, “government agencies such as the Canada Mortgage and Housing Corp. hewed closely to policies in which they supported the housing market by offering mortgage insurance, but unlike Fannie Mae and Freddie Mac in the United States, they were never expected to encourage homeownership as a social and economic end.”
TD Bank’s chief economist, Craig Alexander, told the Washington Post that Canada’s housing market “has been rational throughout the crisis responding to the dynamics of supply and demand.” He contrasts the health of the Canadian mortgage and housing market with that of “a U.S. housing market driven by loose lending standards and by Wall Street demand for mortgages to be bundled and sold as securities.”
