Right back where we started from

Maybe it is 2001, after all:

TSX plummets 585 points on credit fears, biggest drop seen in six years
August 16, 2007 – 13:28

One other thought:

– The thing that seems to be causing the most static in the subprime mortgage sector is the adjustable rate mortgages, like the 2/28, where the first two years there’s a low interest rate that adjusts to a higher one for the duration of the mortgage term. When housing prices were going up, borrowers could refinance to more favourable terms for the mortgage before the two years was up; now they’re holding mortgages higher than the value of homes.

My question is, aren’t all Canadian mortgages adjustable? You generally can’t lock into a rate for more than a 7-year term, even though the amortization period is most commonly 25 years. If I were to refinance now, my interest rate would jump by 3 full percentage points from my original rate. (And, unless the economy reeealllly slows down, it will be even higher by the time I do have to refinance). Anyway, while lending protocols are much more stringent in Canada, down payment rules and thresholds have changed, and house price inflation has been outpacing inflation of the economy as a whole. I’m still not convinced that some Canadians will not be caught in similar, while not identical, situations down the road as they go to refinance. Unfortunately, I can’t find the kind of statistics they have in the U.S. that show when refinancings will reach a peak.