COMMUNITY COLUMNIST: Mortgage forecast holds rosy...
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Dec 24, 2012  |  Vote 0    0

COMMUNITY COLUMNIST: Mortgage forecast holds rosy outlook in Canada

Hamilton Mountain News

It’s been just over six years since the first signs of a collapse of the U.S. real estate market were noticed. It took full force a year later.

Even now, houses in desirable areas of that country can be picked up for one-quarter of their value in 2007.

A home is usually the biggest investment we will ever make,  but it’s much more. We build relationships in it and bring up families in it. We can be unhappy at losing a job, but we are devastated at the loss of a home.

So it has been with trepidation we have waited for our financial bath.

Experts told us so. Some said sell your houses, get out while you can. And many did. Others delayed buying a new, or even their first home.

As recently as this summer, one major bank predicted the drop of 15 per cent or more in the value of Canadian real estate.

But now they’ve retracted that statement. You could hear the collective sigh of relief.

Many have their life savings and retirement funds sunk into their homes. To be sure, the red hot condo markets in Toronto and Vancouver have seen some slippage, but single detached homes are holding their value.

The about face came as no surprise to veteran mortgage broker Paul Whatmore of Stoney Creek. He and his agents survived the tough years of 21-per-cent mortgages and now enjoy the good times of low rates.

“I thought they (the bank) were wrong in the first place,” he says. “It made no sense. Canadian household debt had risen to 163 per cent against disposable income. But much of that increase is asset based in mortgages.”

In the U.S., the real estate market sank because of regulations that allowed people low rate mortgages with nothing down. Further, homeowners could write off the interest and that brought a bigger tax refund at the end of the year.

But when the rates went back up, people just walked away. They had nothing invested.

In Canada, tighter regulations have been politically unpopular, but few who really can’t afford to buy a house will qualify to buy one, keeping the pricing integrity for the industry.

With a rosier outlook for the Canadian housing market being pronounced, Whatmore has a few tips for those ready to get their piece of the Canadian dream.

“Canadians can use up to 42 per cent of their incomes to qualify for a house, but don’t do the limit, try and keep it to 40 per cent,” he says. “Throwing an extra $200 against the mortgage every now and then will make a huge impact. And try to put down at least a 10-per-cent downpayment. It will save you thousands in mortgage interest and save you on high ratio insurance premiums.”

Steve Ruddick is a mortgage agent at Mortgage Concepts Inc. He can be reached at steveruddick@mortgageconcepts.ca.

If you would like to write in this space, call editor Gord Bowes at 905-664-8800 ext. 335 or email editor@

hamiltounmountainnews.com to discuss.

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