Steve Eisman, the hedge fund manager who famously bet against mortgages in the United States in the run up to the 2008 financial crash, has recommended investors now bet against Canada's mortgage lenders and banks.
Eisman, founder and portfolio manager of hedge fund Emrys Partners, rose to prominence with subprime mortgage bets that were chronicled by Michael Lewis in the book "Big Short".
Eisman is wary of Canadian mortgage originator Home Capital Group in particular, according to Reuters. And investors may have taken his advice; the stock is down 4 percent since Wednesday.
(Read More: Carney Sets High Bar to Bank of England Changes)
"If housing rolls over, this company is going to have serious problems," Reuters cited him as saying at the Sohn Investment Conference. The news agency said he added that the housing market is troubled and estimated the domestic funding gap for the six big Canadian banks at roughly $427 billion.
House prices in Canada have doubled in the last ten years, according to the Teranet-National Bank Composite House Price Index. The surge in the index, which measures price changes for repeat sales of single-family homes, has stuttered this year falling back by 0.09 percent in what some believe is a cooling off period.
This year's figures show a long slow winter of decline following the government's move to tighten mortgage lending rules. In July 2012, Finance Minister Jim Flaherty unveiled major changes to the limits of what state-owned Canada Mortgage and Housing Corporation (CMHC) is allowed to insure.
Last year, outgoing governor of the Bank of Canada Mark Carney added his weight to the debate by warning on numerous occasions of elevated household debt levels which represented a significant threat to the financial system.
Fears remain that Canadians aren't listening as the ratio of credit market debt (such as mortgages) to disposable income continues to rise, according to Statistics Canada, reaching 165.0 percent in the last quarter, compared with 164.7 percent in the previous.