market update: january 2019

(February 07, 2019 )

One year ago the federal government finalized the last step in a two year process that requires homebuyers to qualify at a mortgage rate 2% higher than the actual rate they can borrow at.  The policy was put in place to help cool heated real estate markets in Toronto and Vancouver.  Unfortunately, it was a blanket policy applied to the entire country when there certainly weren’t (and still aren’t), any heated markets in Alberta or most of the rest of Canada for that matter.

That policy has severely impacted the average Albertan’s ability to purchase a home.  A large number of first time homebuyers no longer qualify and those that do have had their borrowing capacity reduced by as much as $80,000.  And it’s not only buyers that have been impacted negatively.  Slower markets caused by government manipulation drive prices down, effectively stripping homeowners of their equity.  After all, their mortgage balances don’t drop when prices go down, only their equity does.

The government tells us it knows what’s best for us and is keeping us from getting too far into debt.  Of all consumer debt, isn’t mortgage debt the very best kind?  Home ownership is many Canadian’s sole savings vehicle and when they aren’t making mortgage payments, they are paying rent, and paying down their landlord’s mortgages instead.  That’s a funny way to help out “average” Canadians.  It’s time governments stop meddling and let free markets find their way.


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