In short, it's a loan with a statistically
lower chance of default due to its characteristics and criteria.
Bonds that have a high credit worthiness and a relatively
low chance of defaulting on part or all of their debt.
This is because existing bonds in the marketplace will have their prices bid up, because they're now «safer,» because the issuing firms are making more net profits, thus
lowering the chances of defaulting.
Those moves
lowered the chance of defaults and repurchase demands, but they also made it harder for home buyers to get loans.
Not exact matches
If they used a different plan, their
chances of default are still
low, yet they are still choosing a plan that eventually displaces their debt onto tax payers.
If you have a friend who has made a late payment or
defaulted on one
of their loans your
chances of getting approved will be drastically
lowered.
This kind
of guarantee means the risk
of defaulting is extremely
low, thereby improving the
chances of securing loan approval by 100 %.
A longer repayment period keeps repayments, even on a large personal loan, quite
low and so the
chances of default are fewer.
However, if you're close to
defaulting, then the
chances of qualifying for a refinance loan may be
low.
The
lower your LTV, the more equity you have in your home, the less
chance you have
of defaulting, so overall, a
lower interest rate.
With that in mind, and even with a hot housing market, we believe there is an extremely
low chance of the kind
of defaults witnessed in the United States in 2008 given Canada's current
default rate
of circa 0.28 %.
If they used a different plan, their
chances of default are still
low, yet they are still choosing a plan that eventually displaces their debt onto tax payers.
Also, with stricter credit conditions nowadays, lenders are being more choosy in who they give loans too, reserving mortgages for mostly only
low - risk borrowers who have less
chance of default and foreclosure.