This year has been another solid one for the Canadian real estate market, despite the shadow cast from south of the border.

Our American neighbours have recently been wrought with diminished real estate values and increasing foreclosure rates.

The media has continually published headline after headline touting the “Subprime Meltdown,” increasing fear and concerns that all aspects of subprime mortgages will leave nothing but destruction in their wake.

Canadian mortgage lenders have reined in their lending practices as well. But have the programs scaled back due to the lenders’ lack of confidence in the marketplace? For the most part, no. The largest factor in the lenders’ decision to rein in the subprime lending in Canada has to do with the availability of mortgage funds, also known as the liquidity of mortgage money.

A portion of Canadian mortgage lenders sell off their mortgages to investors after they have underwritten and approved the loan. The reason they do this is to continually have access to new funds that they can loan out to the next borrower in the form of another mortgage.

A large number of the investors who purchase Canadian mortgages are American, and the Americans have of course had a very bad go-around with all things tagged subprime as of late.

In Canada, a mortgage applicant needs to balance the file to make up for what it is lacking or producing a greater risk; it is not a case of getting everything for nothing. For example, if a self-employed individual is not able to prove income through traditional means, the applicant must balance this with a strong credit history and an established track record of self-employment, generally at least two years in the same industry.

In the United States, this balancing of give and take when applying for a mortgage was not always instituted. An example of this is summed up in one type of mortgage which was commonly approved before the American market went astray, known as a “Ninja mortgage,” which stands for no income, no job and no assets.

Assuming that this definition described a potential borrower, it is hard to conceive how they would be in a position to make the mortgage payments in the first place. Additionally, a down payment may not have been required, or if it was required it was not substantial enough to ensure the property would not become over-mortgaged if the value of property decreased, which is exactly what has happened.

Because American investors have been hit hard, the bitter taste the word subprime has left is understandable.

Unfortunately our message about tighter qualifying criteria this side of the border has been slow to get through, resulting in less and less investors purchasing Canadian subprime mortgages, which brings us full circle to the scale-back of Canadian subprime lenders. If you can’t sell the loan it might not be beneficial to approve it.

Canada’s lending style always has been far more conservative then our American neighbours, which serves us well when we take a look at their current market conditions.

On the flip side, Canada’s economy is on fire. The real estate markets across Canada remain strong, and in Calgary specifically, the Calgary Real Estate Board’s reported increase of 13.08% over November 2006’s average selling price shows well.

The Canadian dollar has been on an exciting ride in the final quarter of 2007 as well, now landing back around parity, and the Bank of Canada has just lowered the prime lending rate to 6%. All in all the Canadian economy couldn’t look stronger.

Don’t let your misconceptions about subprime mortgages affect your borrowing decisions. These types of mortgages do still exist in Canada and for borrower’s who are challenged to qualify through traditional guidelines they can make all the difference when it comes to getting into the real estate market. Contact an experienced mortgage broker today to see if this could open up the homeownership doors you have been waiting for.

—Sharon Essington is a Mortgage Consultant with Canada Mortgage Direct. Sharon specializes in providing a creative approach to mortgage financing for individuals looking to improve their lives through real estate. To request a copy of your FREE report “Buy Sooner With No Money Down”, or for more information on this topic, call 403.239.8250.