• It is nice to live in a city like Hamilton.  It is large enough to have all the amenities but small enough to have a small time feel.  Since I know quite a few people and they know I am a mortgage broker, I get asked the same question, aren’t rates unbelievable?  The simple answer is yes, these low mortgage rates are spectacular.  My answer usually goes like this, yes rates are incredible but prices are definitely not.  In fact, check out these statistics for first time homebuyers:

    • 33% needed help from parents either with the down payment or acting as co-signers
    • 39% were concerned about being able to meet mortgage repayment at the end of the month

    Couple the above statistics with these added statistics

    • 53% of Canadians do not save regularly
    • Over half of Canadians do not have an emergency account (51%)

    Now there is talk of the Bank of Canada lowering its overnight bank rate.  As I look into my crystal ball this is what I see.

    1. The economy is performing poorly if the Bank of Canada has to lower rates again
    2. Prices may be at the top if today’s first time homebuyers need help for the down payment.
    3. Many Canadians are very vulnerable to an economic shock. They are not prepared.  Remember we have not had a recession since 2008.
    4. If kids need help with not only the down payment but in acquiring good paying jobs, how can the lower incomes continue to push prices higher?
    5. Can you imagine what will happen to Canadians when they increase the mortgage rates? Outside debt will begin to fall behind because of the squeezed cash flow.
    6. The sustainability of home prices will end. The equilibrium of income to prices tells me prices will come down.

    I am not doom and glooming.  I am hoping Hamiltonians and Canadians prepare for the worst.  I have worked in two recessions and believe me a lot of people get hurt.  I hope I will not see a hard economic landing again because this time we are vulnerable.

    Robert Floris is an independent mortgage broker with Mortgage Architects in Hamilton.

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