Right now mortgages are easy to get and interest rates are dirt cheap.
But the one thing you can rely on in economic cycles is change.
What will it look like if interest rates start to rise or mortgages get a little more difficult to obtain?
Or worse, what if the CMHC wasn’t there to insure low equity mortgages and everyone required a 20% down payment?
The Globe and Mail has an article outlining some of the repercussions: lower prices, economic fall out, etc and comes to this conclusion:
For the time being, mandatory 20-per-cent down payments are merely an academic discussion. Our government wouldn’t risk such a bold change. That said, the trend of transferring more housing risk to the private sector may continue.
Other countries deem us lucky to have a proven and reliable housing finance system. Rather than dismantle it, it’s likely safer to spot the risk areas and carve out those malignancies with a scalpel. That would minimize collateral economic damage, incentivize proper risk taking, and further reduce the odds of government-funded mortgage rescues.
It would also preserve housing options for qualified Canadians who have lesser payments but can afford to own.
Read the full article here.