Canada’s economic engine ultimately determines the mortgage rates we pay. And these days, that engine is running at a lower RPM than in the past.
“Canada’s economy is in a new age,” says Desjardins Economics. In a report released last week it states that economic growth potential “will remain between 1.5% and 2.0% from now until 2030.”
If this call is even remotely true (remote being the most we can expect from an economic forecast), then we’ll have gone from a 3.3% real average growth rate since the 1960s to as low as 1.5% for the next 15+ years. A healthy growth rate is closer to 2.5%.
Is it any wonder then that Desjardins concludes: “…interest rate equilibrium levels will be lower than in the past?” At these stunted growth levels, even risk-haters may start considering variable mortgage rates.
Each year about 300,000 Canadians buy their very first home — at least, that’s how many did in the years 2009-2013 (source: Altus Group via The Globe and Mail).
Typical first-timers have been purchasing homes that are roughly 11.6% cheaper than the national average. That implies up to a $355,000 price tag for today’s typical first-time purchase, much higher than previous reports have estimated.
Canada’s commercial mortgage market continues to expand, with more than $30 billion in loan originations in 2013. That’s according to Jones Lang LaSalle (JLL) in a recent report entitled Commercial Property Financing Renaissance.
Ten percent of our fellow citizens say it’s okay to inflate income when applying for a mortgage. Nine percent say they’ve already lied on one or more credit applications.
And that’s just the percentage that admit it.
These discouraging figures were released by Equifax Canada this week. Equifax’s Tim Ashby, VP of Personal Solutions, says, “Make no mistake, lying on your loan application is a type of mortgage fraud.”
The problem is, the cheaters in question don’t think that mortgage fraud is a serious crime, and/or they don’t think they’ll get caught.