According to the report, more than half of Canadian buyers have taken advantage of low interest rates and are opting to borrow their maximum potential mortgage amount. The article points out that, while this could potentially have a negative impact on a buyer if housing prices do not continue to rise, the reality is that Canadians are taking advantage of the current market conditions.
The article further notes that, since the pandemic began, lenders have been increasingly willing to extend mortgages to borrowers with larger amounts of debt and lower credit scores. This is due, in part, to the decrease in overall unemployment and an overall strong economic outlook for the nation as a whole. As such, buyers with a larger debt-to-income (DTI) ratio are seeing their loan amount increased, allowing them to access larger mortgages.
In addition, the article notes that lenders are offering mortgages with longer amortization periods. Though this could potentially present risks for buyers in the long-term, it does, however, reduce the monthly payments. As such, many buyers are opting for shorter amortization periods to ensure they are not overextending themselves financially.
Overall, the article suggests that Canadians are taking advantage of the current market conditions, and are taking on larger mortgages and longer amortization periods to ensure they can afford the homes they desire. While this could have a negative impact if housing prices decrease, the majority of Canadians are making responsible financial decisions when it comes to housing.
This article was contributed on Aug 17, 2023
