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Mortgage Rules & A Hot Housing Market May Affect Your Wallet

Mortgage Rules & A Hot Housing Market May Affect Your Wallet

mortgage rates in barrie and the impact on your wallet

Canada’s housing market is overheated, mortgage rules are stricter and this could affect your wallet – in a bad way. If interest rates begin to rise many Canadians may find themselves in some financial hot water.   The exciting part is that Canada’s housing market is so hot that some home prices are on par with Hong Kong and Sydney, Australia, in relation to income. Cities like Vancouver may be overvalued because foreign investors are willing to overspend to claim their stake on Canadian soil. In some cases, property value on Canada’s west coast has increased by over 25% in a just a few years.    That might sound fantastic but in many ways it’s having quite the opposite effect, especially if you are looking to buy your first home or hoping to upgrade from your current location. You may be overspending.

Right now, we are in an incredible time where interest rates are quite low. If and when they do rise, Canadians may not be able to ‘service their debts’. In a nutshell, many of us are pretty maxed out financially as it is. If the rates go up we won’t be able to pay our bills and when we can’t pay our bills when bad things happen to the economy.

Vancouver may be an extreme case. The rest of the country (in places like Barrie for example), isn’t that far away from being in a similar, perilous situation. After all, income is relative to where you live. The average income in Vancouver is substantially higher than it is in Barrie and similarly, the average home price is also much more.

Most Canadians are also taking on mortgages and loans that are too high. Many people assume interest rates will remain at these unprecedentedly low levels and therefore take on more debt than they can handle. The federal government may begin to tighten borrowing requirements to prevent a major economic downturn.

So how can a mortgage broker help? A mortgage broker can provide solid advice and find appropriate lenders that will compliment your income. Because we deal with multiple lenders, we may be able to find an interest rate that is appropriate.

If you would like to check out the original article with comments by Bank of Canada governor Mark Carney please check it out here.

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