The Canadian economy has been one of the strongest in the world over the last few decades, but even it took a bit of a hit during the recent downturn. Though the Canadian economy does not operate completely in conjunction with the American economy, there were some stark similarities in the way the credit markets functioned for the two countries over the last couple of years. Right now, the credit services sector of the Canadian economy is in a difficult spot and what some might call a transitional period. There are still some issues to be addressed, but things are looking up for the most part.
In 2009, Canadian credit card providers reported a spike in defaults of as much as 60%. Though only a small range credit indicator, this is significant in terms of its overall meaning for the credit sector there. More and more individual card holders were having trouble making their payments, which caused an overall credit crunch similar to the one that Americans experienced over much of 2008 and 2009. Now, the economy seems to be turning around a little bit, so the creditors are becoming a big more liberal in who they are allowing to take on these cards.
As far as the larger credit market is concerned, lending has been tightened up a bit. Canada did not experience nearly the sub-prime crunch that Americans felt, but the lenders certainly saw their share of foreclosures. From this, they learned a thing or two about what can happen when you lend money to people who just do not deserve that kind of borrowing power. These home lenders decided to tighten things up and they have been smarter about who they are lending to now. This was also helped along by the fact that bank to bank lending has become significantly more difficult over the last couple of years. The liquidity is just not there, which makes the entire market a difficult place to be for borrowers.
Overall, the Canadian credit economy is poised for a rebound in 2010, but it won’t be nearly the bounce that some are hoping. Those who want to qualify for loans there still need exemplary credit, especially if the loans they want are big ones.