A Yale lecturer fears parents borrowing to help their first-time home buying children enter the property market is a risky scenario that may create a potential housing bubble.
Vikram Mansharamani told Bloomberg
television that tighter lending standards in Canada and rising home prices lead new homebuyers to alternative lenders and sources of debt like home equity lines of credit to produce a down payment.
The financial book author said Canada’s housing market may be on its way to the biggest crash ever, predicting 40 per cent to 50 per cent price drops.
“Where I get very concerned is in this private mortgage market that’s starting to emerge,” he said.
“You have individual homeowners; respectable, [employed], high-credit quality homeowners who are borrowing off their home equity lines and lending to individuals that can’t get access to credit.”
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