The Office of the Superintendent of Financial Institutions (OSFI) is the regulator of all Canadian banks and they have recently announced they will be implementing stricter rules and regulations when it comes to obtaining a mortgage in any province. As you can imagine this is going to have a major effect on the housing industry of the country and especially the growing real estate market of Calgary. The OSFI and the Department of Finance have been warning Canadians about rising rates and changing regulations to help prepare the country in order to avoid a nationwide economic crash as seen in the United States.
The rising household debts throughout Canada are maintained mostly through mortgages and if the rates go up this could mean disaster for a lot of households. Of course the main question everyone wants to know is how high are these rates going to go and when but the OSFI is not releasing this information and perhaps they are not sure either. Although Alberta and Calgary real estate markets are performing at their top levels, the best in over 4 years, the overall Canadian economy is not looking as good. With the interest rates at their absolute lowest, experts have varying opinions as to when the move with be made to increase these rates. Some are expecting it any day while others think it won’t happen until some time next year.
A report from the Canadian Association of Accredited Mortgage Professionals has found that Canadians are making a strong effort to repay their mortgages at a quicker rate. This report is based on information gathered in April and May of 2012 over a 2,000 person survey. This is a very optimistic report with 23% of the surveyors voluntarily increasing their monthly payments. 19% of borrowers are choosing to make regular lump-sum payments when allowed by the lenders and 10% are choosing to do both.
About half of the borrowers today are paying at least $100 more a month than their minimum payment required. What this says to financial professionals is that Canadians are heeding the warnings and advice regarding interest rates and the overall stability of the economy. As the United States and the rest of the world show vulnerability and weakness in their economy this threatens any growth within Canada. By making responsible decisions when it comes to your mortgage or mortgages you are not only heeding the warnings but you are preparing yourself and your portfolio for the instability of the future. This in itself can save Canada and its residents from a major crash.