Monday, November 13, 2006

Canadians Housing Market In Mortgage Debt

Appreciating home prices and housing starts buoyed by the condo sector mean the mortgage market is forecast to grow by more than 10% in 2007, slightly less than the 10.8% growth forecast for the end of 2006.

By the end of 2007, Canadians will owe $808 billion on their mortgages.

Canadians are moving into home ownership at a record rate. Canadians can expect to be another $78 billion in debt by the end of next year, thanks to the lure of home ownership. We're seeing a real social shift as people move from being renters to owners.

The record amount of home buying and consequent mortgage debt has helped erode the national savings rate to virtually zero from 20% two decades ago, causing concern that Canadians are not doing enough to cushion themselves from unexpected financial shocks.

Also Canadians have a pretty dismal savings rate. The debt load could become a problem if income and employment growth don't continue.

At what point do we take on too much debt? We certainly aren't expecting a massive give-back in the housing market and interest rates could ease next year, so we're still in good shape.


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