This year, nearly a million Australian homeowners are facing a nasty reality: Their monthly mortgage payments are spiking, overnight, by an average of $400 per month. It was the latest dump-truck delivery of salt into the open wound that is the Australian housing market, now in a historic slump thanks to unaffordably high prices and the disappearance of foreign buyers. While that might sound familiar to Canadians, this latest shock to Australia's housing market was brought about by something Canadians largely aren't familiar with: Interest-only mortgages. It's a type of loan that's popular Down Under, in the U.K. and elsewhere, where borrowers pay only the interest on their mortgage for some set period of time, commonly four or five years. Watch: Empty Vancouver mansions make for sweet student crash pads. Story continues below.

Graham Hughes/The Canadian Press Bank of Canada Governor Stephen Poloz speaks during a business luncheon in Montreal, Thurs. Feb. 21.

But should interest-only loans be part of the solution? Robert McLister, founder of mortgage site RateSpy.com, says they wouldn't pose the type of risk in Canada that they do in some other places, in part because the mortgage "stress test" applies to them, limiting how much people can borrow. "Interest-only mortgages are generally harder to qualify for," McLister said in an email to HuffPost Canada. "Unlike the irresponsible U.S. variety, pre-housing crash, Canadian (interest-only mortgages) do not increase your buying power." For that reason, McLister believes "they'll never be mainstream in Canada." Few borrowers would benefit Interest-only loans make sense for only a small fraction of homebuyers, McLister says. For instance, if you're a small business owner who needs cash to get their company running, it may make sense to lower your mortgage payments and put the difference into your business. "In limited cases, they're also sometimes suited to people with temporary cash flow concerns — families going on maternity leave, people with irregular or seasonal income, etc. But these applications make me a bit more nervous," he wrote. Securitized mortgages: another blast from the past In his speech, Poloz also suggested that Canada expand the "securitization" of mortgages. This means lenders bundling the mortgages on their books into a single "security," then selling it to investors who collect the income from mortgage payments. This process is invisible to borrowers, who keep paying the bank every month. This would give lenders new sources of funding that would reduce costs to borrowers — meaning lower interest rates on mortgages. But guess what? This idea also helped crash the U.S. economy a decade ago. When those ARM payments shot up in 2007, it turned out that a lot of those "securitized" mortgage bundles were not worth anywhere near what investors paid for them. The borrowers couldn't afford to make those mortgage payments, so there was no revenue stream. The mortgage bundles turned out to be essentially worthless little pieces of paper. That was a major trigger of the financial crisis. "Unlike the irresponsible U.S. variety, pre-housing crash, Canadian (interest-only mortgages) do not increase your buying power."Robert McLister, RateSpy.com For that reason, Poloz is urging "transparency" in mortgage bundling, which already goes on in Canada to a limited extent, backed by Canada Mortgage and Housing Corp. He wants to set up "a public database of mortgages used in securitization," where a borrower's identity would be kept secret but details of their financial circumstances would be available. As the debt crisis unfolded a decade ago, many experts noted that Canada remained relatively unscathed. They credited the country's "boring" financial system, with its lack of exciting new ways to borrow, for keeping the economy afloat. Poloz's speech this week suggests he wants to change that. "There are many other possible variations on mortgage design ... that it makes me wonder why so little has happened in our mortgage market in my lifetime," the Bank of Canada governor declared. "To be clear, the system is not broken — it has served Canadians and financial institutions well. But we should not stop looking for improvements." Given recent history — what happened in the U.S. a decade ago, and what's happening in Australia today — can you blame Canada's lenders for largely sticking to the tried and true?