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I wouldn't say it's that precarious. Interest rates are near all-time lows and banks here are risk-averse, meaning they don't give out risky loans. Edit - als

I wouldn't say it's that precarious. Interest rates are near all-time lows and banks here are risk-averse, meaning they don't give out risky loans. Edit - also secured loans are less risky than unsecured loans. Your article includes housing in 'debt'.

lgeorget 7y ago
Is a loan deemed not risky by the bank necessarily not risky for the loaner? (That's a genuine question, I have no clue)
- AstralStorm 7y ago
  No. Banks have a much higher risk threshold and can repossession you. They are diversified, have qualified financial staff (mostly) and more. Neutral side is generally considered "best effort" in the axis.
  - Mikeb85 7y ago
    That ignores the fact that the government regulates what kind of loans banks can make to individuals.
  - mistermann 7y ago
    More importantly, they're backed by the CMHC so they don't have to concern themselves with risk. https://www.cmhc-schl.gc.ca https://www.cmhc-schl.gc.ca And if there's a crisis large enough that solvency of CMHC might be questionable, they don't have to worry either because the bank of Canada will gladly buy their mortgages, passing the risk onto taxpayers. https://www.macleans.ca/economy/business/the-real-canadian-bank-bailout/ https://www.macleans.ca/economy/business/the-real-canadian-b...
- Mikeb85 7y ago
  Yes, mostly. The government regulates what kind of loans banks can make to individuals.
- appleiigs 7y ago
  Yes and No. Yes - if a billionaire borrower buys a $200,000 house with a mortgage, there is little repayment risk for both borrower and banks. The mortgage payments are unlikely to stress the borrower. No - that risk can be distributed between bank and borrower. Bank provides 75% of the value of the house, so it takes more risk. However, it can reduce risk in variety of ways, including: 1) taking collateral, 2) taking a guarantee from borrower, 3) diversification, 4) off loading risk to 3rd parties.
bryanlarsen 7y ago
When the bubble bursts, the banks probably won't need bailing out, so that won't trigger a recession like happened in 2008. But a huge number of Canadians being underwater on their mortgage will make for a drastic decrease in consumer spending, which may trigger a recession...

lgeorget 7y ago

Is a loan deemed not risky by the bank necessarily not risky for the loaner? (That's a genuine question, I have no clue)

AstralStorm 7y ago
No. Banks have a much higher risk threshold and can repossession you. They are diversified, have qualified financial staff (mostly) and more. Neutral side is generally considered "best effort" in the axis.
- Mikeb85 7y ago
  That ignores the fact that the government regulates what kind of loans banks can make to individuals.
- mistermann 7y ago
  More importantly, they're backed by the CMHC so they don't have to concern themselves with risk. https://www.cmhc-schl.gc.ca https://www.cmhc-schl.gc.ca And if there's a crisis large enough that solvency of CMHC might be questionable, they don't have to worry either because the bank of Canada will gladly buy their mortgages, passing the risk onto taxpayers. https://www.macleans.ca/economy/business/the-real-canadian-bank-bailout/ https://www.macleans.ca/economy/business/the-real-canadian-b...
Mikeb85 7y ago
Yes, mostly. The government regulates what kind of loans banks can make to individuals.
appleiigs 7y ago
Yes and No. Yes - if a billionaire borrower buys a $200,000 house with a mortgage, there is little repayment risk for both borrower and banks. The mortgage payments are unlikely to stress the borrower. No - that risk can be distributed between bank and borrower. Bank provides 75% of the value of the house, so it takes more risk. However, it can reduce risk in variety of ways, including: 1) taking collateral, 2) taking a guarantee from borrower, 3) diversification, 4) off loading risk to 3rd parties.

bryanlarsen 7y ago

When the bubble bursts, the banks probably won't need bailing out, so that won't trigger a recession like happened in 2008. But a huge number of Canadians being underwater on their mortgage will make for a drastic decrease in consumer spending, which may trigger a recession...