Courtesy of todays Vancouver Sun and Statscan – Canadian home ownership levels are at their highest since 1971 but the rush to own has meant soaring debt levels and longer mortgage terms. A growing number of ‘owners’ may never pay off their mortgages, essentially renting the debt in perpetuity.
The report also shows that British Columbians are paying the highest proportion of their income among all Canadians to housing costs, as nearly a third are spending more than 30 per cent of their income to keep a roof over their heads.
More than one-third of the new mortgages being taken out in Canada are now amortized for more than 25 years, a portion labelled by one expert as “phenomenal” for a relatively new mortgage product, and the expectation is that the percentage for B.C.’s homebuyers would be at least that high.
“From the fall of 2006 through the fall of 2007, 37 per cent of all new mortgages in Canada were for amortizations longer than 25 years,” said Jim Murphy, president and chief executive of the Canadian Association of Accredited Mortgage Professionals. “Of all the mortgage products that have been introduced, the ones longer than 25 years are the most popular.
“Thirty-seven per cent is quite high. It is phenomenal for a product that is relatively new.”
Among all outstanding mortgages last year, some nine per cent were pegged with payoff dates stretching more than 25 years all the way to 40 years.
“That number will obviously increase every year,” said Murphy.
…and a little further down:
The dream of burning the mortgage appears to be a more elusive one for Canadian owners, with the percentage of mortgage-free owners declining between 2001 and 2006, bucking an expectation that aging baby boomers would be paying off their mortgages by now.
“The share of owner households with mortgages has not been at such a high level in Canada since 1981,” the report said.
Huh. I guess a bunch of people must have paid off their mortgages right after 1981? Or perhaps it was the foreclosures.
.. and in an unrelated example of how silly some of these loans have gotten, how about giving an 85 year old man a 4.8 million dollar mortgage on a 5 million dollar home?
