The Globe and Mail published this article a couple of months ago on the possible real estate bubble in Canada. Essentially, the author and those she spoke with raised concerns about the overall debt load of Canadians, and our ability to hold on to our homes when interest rates invariably rise.
While the Bank of Canada has held the rate steady at the last announcement, it is true that there is nowhere for them to go but up. The reporter quoted Professor Louis Gagnon, who argues that the maximum amortization should be 25 (down from 30) and the minimum down payment 10% (up from 5) in order to keep people from buying when they can’t truly afford to do so.
The federal government has been doing a lot of tweaking lately to keep people from overloading on debt in order to own a home. Perhaps these measures would help the economy; perhaps not.
You can read the entire article here.