The current home capital mortgage situation has got shades of the 2008 financial crisis. The Canadian economy is not in a good place, and this has caused concern, especially regarding Home Capital Group, the Canadian mortgage lender. Analysts are warning that Home Capital’s share prices are falling after the company was accused to mislead investors on fraudulent mortgages.
This comes after news that Home Capital started an emergency credit line, with interest of over 20%, which caused investors a lot of worry on the viability of their company. As a result shares of Home Capital have dropped by over 60% in just over a week, with concern growing that it will cause Canadian bank stocks to plunge as well.
The most disturbing news is that Home Trading is currently trading at a level that is lower than what it was during the 2008 Financial Crisis. This has caused great concern, as the financial system is already weak, and fear can quickly extend throughout the market, with devastating consequences. It is predicted that bank shares are going to continue dropping, and the Canadian economy could go down the same path as the 2008 Financial Crisis.
This comes after a lot of elites openly believing that Canada is a country that will not face major economic collapse, and it will be a mistake to not prepare for any crisis. The current state of the economy is not healthy, and with the real-estate industry feeling the pinch, the outcome could be incredibly messy in the long-term.
The main focus of people right now is that the economy be stabilized. But in order to do that, the unstable housing market needs to be checked. Homer Capital has shown that Canada’s mortgage lenders and financial institutions don’t have power or immunity to stop a major economic crisis.