Real Estate Bubble 3

Here is a followup to my last blog were I disputed the fact of a real estate bubble in Canada and in particular to Real Estate in Peterborough.In todays Report on Business, Steve Ladurantaye’s column has some very interesting facts about new mortgages that were taken out in 2009.
According to a study that was done by the Canadaian Association of Accredited Mortgage professionals while examining 40,000 loans that were issued in 2009 they found that 86% were of a fixed term. These loans are considered less risky, as they are at a fixed rate over a fixed period of time, usually five years.
Therefore the majority of Canadian Mortgage borrowers are not taking undue risks and are factoring in rising interest rates in the future. Also the majority of borrowers took out mortgages below the maximum that they would be allowed under the gross debt service ratio. In fact only a small percentage ( about 4000 households v/s 13.25 million total households) are pushing their credit to the limit.
That is not to discount a variable rate mortgage. If you have a lot of equity say over 50% and little other debt you can take advantage of the lower rate ( about 2.25% ) especially over the next year. If you are about to renew or are looking to purchase this year, make an appointment with Mike Jones are mortgage manager at Centum Mortgages to discuss your plans.
Let us compare our situation to the on going mess in the U.S. According to Realty Track forclosures were up in December 14% over December 2008. This inspite of the foreclosure suspensions over the holidays by such giant lenders as Citigroup, Bank of America and Fanny Mae. To put this perspective, one in every 94 households in Nevada received notice of foreclosure, this is the worst state to the best, good old conservative Vermont with one in every 18,320 households receiving notice.
It is currently estimated that over 20% of all households are underwater ( Owe more than the house is worth ) Some how this situation has to be solved, or the U.S. economy will never be able to return to the 2006 or 2005 levels of employment.
As I wrote in my last blog, it is still a great time to buy residential or multifamily property in the the Peterborough area.