Concerns about an overheating housing market have prompted Finance Minister Jim Flaherty to threaten further tightening of mortgage lending rules. In the meantime, his department will keep a close eye on market activity.
The Finance Minister made the announcement following an October 4 meeting with economists from the private sector.
Economists’ concerns stem from the amount of household debt burdening Canadians. A report directed by Rock Lefebvre, Vice President of Research and Standards at CGA Canada, and published on iStockAnalyst.com, showed national household debt at $1.41 trillion in 2009 – an amount 2.5 times greater than in 1989. Much of this debt comes from Canadians using credit to cover household expenses.
The news comes as another warning that accumulating credit card and line of credit debt can be disastrous, if for any reason you experience a financial setback. This came true for many Canadians in the last recession.
October 4-10 is Financial Planning Week in Canada
With economic growth and housing prices predicted to cool, using credit to top up a down payment on a home is a very risky move - especially if you're prone to accumulating a monthly balance. Instead, look for a home that fits within your budget and shop around for the lowest mortgage rates to reduce your monthly payments.
When planning to buy a home, consider getting help from a financial planner. A study by the Financial Planning Standards Council of Canada reveals that fewer than two in ten Canadians engage in comprehensive financial planning. Those who do report greater feelings of emotional and financial well-being.