Here is an article on the Canadian Banking system and its not bad with one exception. If you dont have 25% down on a mortgage you will be using the Canadian Mortgage and housing Corps to get a 5% mortgage and then generally only if you are a first time buyer. Of course you must qualify re income and provide copies of your income tax statements for the years prior for any mortgage.
Canadian bank system gets the balance right - The Irish Times - Fri, Jul 03, 2009
Quote:
Why Canada has a stronger system
- IT HAS a more robust regulatory regime to supervise its banks.
- The banking regulator conducts regular forensic inspections of the banks and continuously demands information.
- Canadian banks have higher capital reserves and must have a minimum tier-one ratio of 7 per cent. Some 75 per cent of this must be held in ordinary shares or common equity.
- The banks are cautious lenders and Canadians are prudent borrowers.
- Customers are not allowed to take on mortgages of more than 80 per cent of a property’s value unless they buy mortgage default insurance from the government- owned Canada Mortgage and Housing Corporation (CMHC) or two state-sponsored private insurers. The minimum deposit is 5 per cent and maximum term is 35 years.
- An investor must seek government approval to acquire more than 10 per cent of a bank.
- Just 30 per cent of bank loans, all insured against default, are sold to investors in securitisation deals. This motivates the banks to ensure they hold high-quality loans.
- The five biggest banks control between 80 and 85 per cent of the domestic market.
- Canadian finance minister Jim Flaherty says bank mergers are “not a priority”. This has stopped any one bank becoming too large.
- The CMHC monitors housebuilding to ensure it does not rise significantly above 225,000 new units a year, suppressing price fluctuations.
- The biggest bank, Royal Bank of Canada, pays bonuses in its capital markets division based on pretax net income rather than revenue.
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