Almost 200 U.S. banks have failed since early 2008, but not a single Canadian bank has. The delinquency rate last December for home mortgages in the U.S. was 9.47%, but only 0.45% in Canada. What explains this incredible difference? Read Mark Perry's fascinating article to find out, but here's a summary:
• Full recourse mortgages
• Shorter-term fixed rates
• Mortgage insurance
• No tax deductibility of mortgage interest
• Higher prepayment penalities
• No Community Reinvestment Act
• Much larger banks
• Less mortgage securitization
Canada has largely eschewed policies which encourage home ownership and insulate homeowners from the consequences of their purchase decision, yet Canada has a higher home ownership rate than we do. We could learn a lot of lessons from our northern neighbors when it comes to banking and home ownership.
UPDATE: I noted that an Australian pointed out many of these same issues way back in Oct. '08. The origins of our housing crisis have nothing to do with free markets; it's government intervention in free markets that screws things up.