CAAMP’s recent findings (that 86% of 2009 home buyers chose fixed rates) is being questioned by Scotia Capital economist, Derek Holt.
This is from a recent Macleans article:
- “I have difficulty with the CAAMP report,” says Holt. “I think their study grossly underestimates mortgage rate sensitivities.”
- He thinks “as many as” 50% of new mortgages are subject to rate risk because of them having variable or 1-year terms. (We haven’t seen any other published stats corroborating this sort of number.)
- Holt says: “It doesn’t even really matter if they went variable rate or fixed rate, because pretty much all of the mortgage market in Canada resets in the next five years.”
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Last modified: February 12, 2010
Bingo.
Risk assessment should include what happens on the reset, not just what happens during that first 5 years at the ultra-low 4% fixed rate.
And, those lovely 40-year / 0% down mortgages from 2006 are all coming up for renewal in 2011.
Perfect Storm?