A recent article in the Financial Post opened my eyes as to what an increase in interest rates would do to Canadians who have mortgages. At Robert Floris’ Mortgage Architects office in Hamilton, we are constantly watching the future for our clients. According to the article, it stated that 3/4 of Canadians would be in trouble if the rate jumped by 1%. I stated before in our previous articles, many people are living a more expensive lifestyle they cannot afford. We should not own homes in which we are not able to still save. If a recession should appear and jobs are lost, it will seriously hamper the Canadian real estate market. Remember rising interest rates will not hurt mortgages, it will hurt many Canadians who are carrying other forms of debt. Modern culture emphasizes “live for today” and banks increase credit, not only to fatten their bottom lines but to control Canadians. We are starting to see cracks in our debt structure. The true strong north and free owes $1.67 of debt for every $1 earned. Repayment of credit cards has started to increase in terms of default rates. Need a car loan and cannot pay it for four years? The banks and finance companies are saying don’t worry, pay it in seven or eight years. Well no kidding, the longer the loan, the more interest you pay over the long run. With rates higher, the banks can make more money. If you are paying the minimum on your credit card, you will pay three times as much interest. This record amount of debt is happening while rates are at record lows. If rates continue to go higher, not only will the average Canadian suffer but so will this country. If this continues it will not end well.

Whether you are buying a home, or you have equity in your home that you would like to use to pay off high interest debt, now is the time with real estate values at record highs and rates at all time lows (but increasing).

Robert Floris is a Mortgage Agent located on the East Hamilton Mountain, serving Hamilton and the GTA and Ontario. He not only offers the best mortgage rates, but also honest advice and a financial plan at no charge to the client.

Robert can be contacted at 905-574-9200 Ext. 215 OR by email at mortgages@robertfloris.com. You can fill out an application online at https://application.malink.ca:8112/App/MARC/FLORISR/en-ca/1896 with absolutely no pressure and no obligation.

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