Upside Down Mortgage

Housing Bubble In Canada

Question: Was there a property bubble in Canada and Australia?

I have the impression, right or wrong, that there hasn't been an economic downturn in these two countries to the same extent as in the US and elsewhere. What's the real story then? Have the banks been bailed out in Canada and Australia and increases in unemployment and falls in house prices been experienced? Thanks for the info.

Answer: Our banks weren't too much affected in Australia due to strict lending regulations, and our four biggest banks are now 4 of only 11 AAA rated in the world, so we didn't get problems to the same degree as elsewhere. The government guaranteed savings to provide extra confidence. Our economy was very strong before the crisis, our budget was in surplus and interest rates had been raised very high to slow the economy down.

Once the crisis hit interest rates were dropped rapidly, so we aren't in as bad a position now as elsewhere. We also have had fiscal stimulus packages. Exports have dropped, and that is our main problem. Retirement savings have also been lost in the share market. House prices have dropped a bit in some cities, and unemployment has risen a little, but overall we are better off than elsewhere.

Barney Frank Created the Housing Bubble

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