(PRWEB) October 19, 2012
Households in Canada are facing a 152 percent increase in the ratio of debt to personal household income. There is an ever increasing burden on Canadians, especially those living in cities like Toronto and Vancouver. The alteration in the mortgage rules of the Canadian housing market were implemented to cool down the overheated household debt market but may have some undesired effects on the economy.
The main aim of these policy changes was to discourage overseas investors of their practice of buying and selling real estate at unreasonable prices. The rules were also aimed at limiting a further rise in inflation.
According to the President of Personal and Commercial Banking at BMO Financial Group, Frank Techar believes the changes were responsible, measured, prudent and timely.
The government of Canada believes that up to five percent of potential real estate buyers will not be able to meet the mortgage requirements and will be unable to buy houses. After the economic downturn and the global financial crunch of 2008, there was a sudden rise in unemployment.
Those who are unemployed and need to refinance themselves and start from scratch will be at a huge loss. According to CEO of Syndicate Mortgages, Markus Arkan, “With no other option left, they either acquire unsecured credit at interest rates ranging from 10 percent to 18 percent, consequently damaging their credit ratings or they would be forced to lease a home for a certain period of time until they regain sufficient financial stability to buy a house.”
This will in turn affect the demand for new homes and as a result, will slow down the construction industry. The overall effect of this will be a further loss of jobs which will be harmful for the economy in the long run. Furthermore, the change of rules will be unable to improve the debt to income ratio, which will stay high.
Marcus Arkan, a mortgage expert and CEO of Syndicate Mortgages, suggests that mortgage policies should be aimed at discouraging overseas property investors and not the residents of Canada. These policies are just adding to the problems of Canadian residents and limiting their progress.
To know more about the current mortgage rates being offered, individuals can visit the Syndicate Mortgages website.
About Syndicate Mortgages Inc.
Syndicate Mortgages Inc. is one of the leading Canadian mortgage brokerage firms. Founded in 2008 in Ontario, the company specializes in residential, commercial and construction financing across Canada. With years of experience and expertise in the mortgage industry, and access to an array of lending institutions across Canada, Syndicate is known for finding the best mortgage rates for their customers. Syndicate has branch locations across Canada. For contact, please use the following details.