The year is coming to an end, and it appears that the federal government has finished with significant regulatory changes affecting home ownership and mortgage lending in Canada.
Their overall objective was to introduce measures intended to “cool” the housing market and introduce new “stress test” measures that ensure affordability in the future when rates do rise. These new measures require you to qualify based on an interest rate that is higher than the rate you pay. They’re preparing for interest rate hikes, but are interest rates on their way up?
Inflation is the main catalyst for a rising rate environment. We appear to be in an age of no inflation. Many factors contribute to this, but the primary one is diminishing pressure for wage increases, triggered by the ever-increasing shift to globalization.
Housing prices, on the other hand, have increased over the last few years. This increase, arguably, has more to do with decreasing housing supply—especially in areas where people want to live—and increasing demand.
However, whether real estate prices rise, stay the same, or even slightly drop in the short term, true stability and wealth will be created over time while you pay down your mortgage regardless of the value of your home at any given single point in time. This is the ideal time for Canadians not only to buy their first, second, or investment property, but also for implementing strategies and options to pay down their mortgage faster and accelerate their wealth building potential.