A report by the Canadian Mortgage Professionals Association reveals that Canadian mortgage debt exceeded $ 1 trillion, up 7.6% from the same period last year. According to the document, the balance of residential mortgages should continue to increase, but at a slower pace.
These increases do not surprise Cash, Assistant Vice President of Sales at Multi-Prêts. “For 15 years, the average increase has been 7.5% per year across the country. The rises simply continued in 2012, “she told Silver, adding that the value of homes has also doubled in the last 10 years.
To finance the purchase of their homes
Rising home prices have prompted many consumers to borrow more to finance the purchase of their homes. In addition, low mortgage rates in the market have encouraged some Canadians to borrow and refinance their homes.
Some surprising statistics:
- Nearly 75% of homeowners who renegotiated their mortgage this year have been able to get a lower rate.
- The average mortgage rate for homeowners is 4.22%, down from 4.55% the year before.
- Of those who renewed or refinanced in the previous 12 months, 17% changed lender and 83% kept the same.
- Of the borrowers who took out a new loan in the last year, 39% consulted a major bank, 40% a mortgage broker and 21% another source.
New mortgage rules
The Canadian government has introduced new rules on mortgages, now the amortization period is 30 to 25 years. Homeowners will now be able to remortgage their homes up to 80% of their value instead of 85%.
The goal of the Canadian government is to prevent over-indebtedness of Canadian households, which reached a threshold of 152% of revenues in the fourth quarter of 2012.
Back on the mortgage credit crisis in the United States
Mortgage credit has benefited millions of Americans for many years. Just about anyone could make a bank loan to the bank to buy a house.
However, in recent months, the banking institutions have come to realize that their leaders had rather acted in their own interests and not in that of their employers by granting excessive mortgage loans to very risky customers.
The mortgage credit crisis that is currently turning into a global economic crisis is largely due to the unfair actions of these bank executives. They were forced to lend more than they should have in order to earn valuable commissions.
Since October 2008, a $ 700 billion stimulus package has been put in place to purchase high risk mortgages. An error that the banking institutions have made will have to be paid by the average citizen. We are talking here about the capitalization of the profit of mortgage credit “versus” socialization of the risk of mortgage credit.