Canadian Residential Mortgage Markets: Boring But Effective?
IMF Working Papers, June 1, 2009
Source details
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- Canadian Residential Mortgage Markets: Boring But Effective?
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Bibliographic details
- Authors: John Kiff
- Published: June 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451872774.001
Summary and main findings
- Klyuev (2008) concluded that the Canadian market for housing finance is highly advanced and sophisticated, but financing options were somewhat limited, particularly at terms longer than five years.
- This paper argues that the paucity of longer-term loans is caused by:
- a five-year maturity cap on government-guaranteed deposit insurance, and
- a prepayment penalty limit on residential mortgage loans in the Interest Act.
- Despite these constraints, the availability and cost of residential loans for prime borrowers are comparable to those in the United States.
Analysis of constraints and mechanisms
- Five-year maturity cap on government-guaranteed deposit insurance is identified as a causal factor for limited longer-term mortgage offerings.
- Prepayment penalty limit in the Interest Act is identified as a causal factor for limited longer-term mortgage offerings.
Comparative assessment
- Availability and cost of residential loans for prime borrowers in Canada are comparable to those in the United States.
Subjects and keywords
- Subject: Banking, Covered bonds, Financial institutions, Insurance, Loans, Mortgages, Residential mortgages
- Keywords: bank, bank lender, borrower mortgage accessibility, closed mortgage, cost comparison, covered bond, covered bond program, Covered bonds, Europe, fixed-rate mortgage, Fixed-Term mortgage rates, Housing, Insurance, loan, loan quality, Loans, mortgage, mortgage accessibility, mortgage insurer, mortgage market, mortgage rate, Mortgages, rate, rate lock-in, regulations, Residential mortgages, securitization rate, WP
Content in this bundle
- 1. Non-Interest Rate Mortgage Cost Comparisona