Subprime Mortgages in Vancouver British Columbia
What is a Subprime mortgage anyways?
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Subprime lending is the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history. Subprime lending is risky for both lenders and borrowers due to the combination of high interest rates, poor credit history, and adverse financial situations usually associated with subprime applicants. In Canada Subprime mortgages make up less than 5 percent of the market. In British Columbia we have the lowest mortgage default rate at just under 1%.
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This is why those looking for foreclosures in the Vancouver market find that it is often slim pickings. Â Although subprime lending is highly controversial. In the United Stateopponents have alleged that the subprime lending companies engage in predatory lending practices such as deliberately lending to borrowers who could never meet the terms of their loans, thus leading to default, seizure of collateral, and foreclosure. It is predicted that this year in the States some 1.6 million homes will fall under foreclosure.
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The controversy surrounding subprime lending has expanded as the result of an ongoing lending and credit crisis both in the subprime industry, and in the greater financial markets which began in the United States. This phenomenon has been described as a financial contagion which has led to a restriction on the availability of credit in world financial markets. Hundreds of thousands of borrowers have been forced to default and several major American subprime lenders have filed for bankruptcy. With many Canadians asking the question “ Will the foreclosure crisis happen here?” . Well, with less than 5% of the current Vancouver market actively using subprime mortgages the rate of foreclosure seen in the States is hard to imagine.
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