Last month, according to a CBC News report, about 500,000 households in Canada are heavily mortgage facing the risk of difficulties in payment, in the event that interest are raised or a financial dilemma happens.
This observation, as stated in the study by the C.D. Howe Institute authored by Craig Alexander and Paul Jacobson, is apparent among homeowners who are usually young and have lower income. Moreover these groups are found mostly in housing markets of Vancouver and Toronto where houses are more expensive. Co-author Craig Alexander adds that Ottawa to focus on these "pockets of risk" and take actions to remind young homeowners to only take debt that they can handle.
The study has also states that there are half a million households with "a primary mortgage debt-to-disposable income ratio in excess of 500 percent. What is alarming is that most of those houses typically have financial cushion that secure finances for a certain time when the need arises.
According to a CBC News, Alexander said, "The share of households that have no financial buffer has been going up. There's more financial vulnerability now than there was before," Alexander reported said that Canadians have manageable debt but there is a few minority how have debt "up to the hilt" This minority are the ones who have less than $1,500 in financial assets with none enough to weather financial hurdles.
Mortgage rates have been hinting to rise as return from bonds move up ahead of the US Rate increase. This could be the biggest concern for those in danger of a financial ruin as higher rates mean higher mortgage to pay. With this Alexander then was said to have remarked, "The bigger risk is to the economy. The consumer in the economy is 55 to 60 per cent of all spending so if consumers run into problems and you have a big pullback on consumer spending, then we're going to have a much weaker economy."
