Hit by the sharp decline in oil prices the Canadian economy is struggling with a property market approaching the peak of a massive bubble, according to ex-Lehman Brothers trader and a financial writer Jared Dillian. As Canada’s mortgage market is not securitized, the property crisis is expected to last much longer than in the US, where the loans are backed, Dillian said in an interview with Mauldin Economics.
The former trader says when the bubble bursts; it will be quite different from the sharp and sudden crisis in the US in 2008, due to the structure of the Canadian mortgage market. According to him, almost all mortgages in Canada are “recourse mortgages”, with homeowners behind on payments not able to able to walk away. CONTINUE