Lethbridge Real Estate and Mortgage Info

Real Estate News: Canadian Debt Increases! What About YOU?

 

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Canadians rack up debt

How do you compare to other Canadians?

"Low interest rates today do not necessarily mean low rates tomorrow," warned Bank of Canada's Mark Carney. "Risk reversals, when they happen, can be fierce; the greater the complacency, the more brutal the reckoning."

According to the TransUnion credit rating company, Canadians average $26,000 total debt on their credit cards, lines of credit, and vehicle loans. 

That's an increase over the same period last year of 4.5 per cent, or another $1,000 per person.

Average Canadians also owe just over $1 trillion in mortgaged debt.  An amount that works out to be almost $80,000 per family owed against real estate.

According to recent research by the Vanier Institute, a typical Canadian family is now has a household debt of 150 per cent of their personal disposable income. That's the highest level of debt in our history.

What that means is that for every $10,000 in disposable income a Canadian family earns, they are servicing a debt of $15,000.  See the problem?

What will happen IF/WHEN interest rates increase?

In the past 15 years, wages have increased around 2.3% per year on average, yet Canadian average mortgage debt has increased around 7.5%.  How do these consumers who are already paying such large debts manage to pay the increased payments that come with increased interest rates?

For Example,payments on variable rate mortgages and line of credits will increase substantially as interest rates rise.  A 2 or 3% increase in rates will translate into hundreds of dollars extra per month in debt servicing.

The results will be an increase in the real estate foreclosure rate and also in the personal bankruptcy rate.

Consumers need to be proactive and take control of their finances now.  They need to reorganize their debts while they are at low interest rates and prepare for the inevitable rise in rates that will inevitably come at some point in the future.

Using a mortgage broker can help you to take a good look at the financing options you have available.  Contact your trusted local mortgage broker and ask how they can help you.

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Here are a few of my favorite past articles from my Lethbridge real estate and mortgage blog you might have missed or wish to recommend them to a friend.
 

 

 

 

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Robert May is a Realtor, as well as the broker and owner of Rainbow Realty of Lethbridge Alberta . He is also a licensed Lethbridge mortgage broker and financing expert with Canada First Mortgage of Calgary Alberta. He has been in the Lethbridge real estate industry since 1993 and offers full Lethbridge real estate services to Lethbridge and surrounding area, as well as Lethbridge mortgage financing, mortgage refinancing , preapprovals, and Lethbridge loans financing to Lethbridge and Southern Alberta. He can be found online at this link: mortgage broker Lethbridge





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2 comments • Robert May - Lethbridge REALTOR ® and Mortgage Broker • June 10 2011 12:45PM