Canadians Comfortable with Debt Levels
I came across this article today on the Canadian News Wire that talks about Canadian debt levels and Canadians comfort level with their debt situations.
It is quite funny how, when you follow the media and articles that they write, they seem to quite frequently present contradictory information. It was not long ago that I read an article like this one that stated that Canadians debt levels were at the highest levels in the developed world, and now I see an article today that Canadians are quite comfortable with their debt, and in fact 1/3rd of them have made pre-payments on their mortgages in the past year…which is something you don’t generally do unless you are comfortable with your debt situation.
Amongst other highlights was that 80% of homeowners have at least 20% equity in their homes and that 72% of all residential housing value is owners equity.
Based on the above, it appears to be a very strong and stable real estate market in Canada, and is well able to support higher mortgage interest rates should rise. However, I would tend to believe that the Vancouver area picture is not quite as rosy, as a detached home in Vancouver would be 2 to 3 times more than the rest of the country, which would mean a higher need for leverage and less equity.
At the moment, rates are low and all economic conditions appear to be remaining stable, and there seems to be a good equilibrium in economic policies to balance interest rates with the economy, and the balance will remain even when mortgage interest rates rise.
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