An economist from the University of Regina believes household debt has become a real concern due to lowered fixed interest rates for mortgages across Canada, which is encouraging more people to take on more debt.
“We’re getting towards the point where it starts to become a real concern,” Jason Childs told Global News. “We’re getting towards those levels that the Americans were in prior to 2007. Canadians are now carrying more debt to their disposal income than the Americans are.”
Childs added that “households are going to get to the point where they’re going to go stop. We can’t do this anymore. We can’t keep adding to our debt."
He fears that low rates make it too easy for Canadians to borrow.
The latest to drop its rates was the Bank of Montreal, which lowered its five-year
fixed mortgage rate to an all-time low of 2.79%. TD Bank followed suit immediately and carried on the same rate last week.
“To me that’s as low as I’ve ever seen or I’ve ever offered,” Jason Dornstauder, owner of alternative lender Focus Mortgage Solutions told Global News. “I may have offered something somewhat close to this in the past, but that’s just mind blowing to me.”
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