40 Year Mortgage, no Down Payment?

This issue bothered me for a while now.

Since 2006 Canadian Banks have been dishing out 40 year mortgages with little or no down payments. Mortgages upward of $300,000 to new home buyers.

The Bank of Canada Governor is concerned because this extra liquidity is driving housing prices up. The policy makers are also concerned because they've witnessed what happened to our brothers and sisters south of the border.

In Canada, this kind of lending is not called sub-prime mortgages but has all the element of cause and effect as was the case with the sub-prime mortgage fiasco namely; lending money to people who could barely afford the financial load.

Why is the Bank of Canada and the policy makers so concerned?

Because, Canada always caught a cold six months after the USA sneezed.

This time the US housing market came down with a bad cold. However, Canada has been somewhat protected by a gel of black oil and a skin of glittering gold.

Make no mistake, not if but when this glitter fades and the protective gel wears out, Canada may end up with a bloody pneumonia.

In Canada as was and still is the case in the USA people will get hurt. Again those people who are the most unlikely to recover from a financial hit will have their lives turned upside down.

I do not blame those people for having a dream and striving to fulfill it. I blame those who create the illusion that this dream is attainable when in reality the only way to attain the dream is to mortgage ones life. Hell, a life sentence in Canada is 25 Years.

There might be hope that this Bull S-- will stop.

The Bank of Canada and the Policy Makers are waking-up and smelling the stench. This is good news for all those lucky ones who haven't mortgaged their lives yet.