Are Zero-Down Mortgages in Canada a Sign of Potential Disaster?

A large number of low-to-nothing-down-payment mortgages in Canada have experts worried that the country could be on track to a U.S. subprime mortgage-style fallout in the near future.

A growing number of buyers are reportedly “opting for loans that either allow them to borrow the money for their down payment or that provide cash back after the closing,” Bloomberg News reports.

“Massive loans” are “being taken out by borrowers with relatively low incomes,” the news service reports, with mortgages with a “high loan-to-income ratio” making up around 17% of loans this year, more than double the rate two years ago.

One Canadian investment banker, meanwhile, claims that “the number of her clients who call for advice on how to help their children make down payments” has grown “much more frequent” in recent years, a sign that many homebuyers “are getting in over their heads.”