Re:Most Canadians Are Now Better Off Than Most Americans
by appleiigs on Friday August 30, 2019 @02:45PM
(#20841374)
Yes and No.
Yes - if a billionaire borrower buys a $200,000 house with a mortgage, there is little repayment risk for both borrower and banks. The mortgage payments are unlikely to stress the borrower.
No - that risk can be distributed between bank and borrower. Bank provides 75% of the value of the house, so it takes more risk. However, it can reduce risk in variety of ways, including: 1) taking collateral, 2) taking a guarantee from borrower, 3) diversification, 4) off loading risk to 3rd parties.
Yes - if a billionaire borrower buys a $200,000 house with a mortgage, there is little repayment risk for both borrower and banks. The mortgage payments are unlikely to stress the borrower.
No - that risk can be distributed between bank and borrower. Bank provides 75% of the value of the house, so it takes more risk. However, it can reduce risk in variety of ways, including: 1) taking collateral, 2) taking a guarantee from borrower, 3) diversification, 4) off loading risk to 3rd parties.