Finance Minister Jim Flaherty recently suggested it might be wise to outlaw 40-year mortgages.
"A recent Statistics Canada study showed Canadians are finding themselves with two mortgages and deeper in debt than at any time in their lives. They are increasingly house poor, and with housing values sliding, they often owe more on their properties than they're worth."
"People are incurring large mortgage, line-of-credit and credit-card debt as they spend on renovations and big-screen TVs. Older people are taking on mortgages due to divorce and to finance the home purchases of children unwilling to save for a realistic down payment."
High oil and gas prices together with increasing pressure by the Canadian to combate inflation, interest rates may not stay low for long. A quick spike up in interest rates will dampen the Canadian real estate market that is already heading for a slow down in demand.
Hi-I didn't even know that Canada had a 40 year mortgage. I had been wondering if we in the US might start doing 40 year mortgages, but with that type of information I doubt it.
Hi Pam. 40 years mortage is good for the mortgage insurance companies and the banks. It is bad for homeowners as this fuels house prices to go even higher. The plan is intended to make housing more affordable, but it is counter-productive.
Yes - the writing is on the wall. Canada needs to get rid of the 40 year Mortgage to avoid a similar Sub Prime /Credit Crisis that is unfolding in the US. I wonder when they'll pull the trigger on this one ??