Interest rates aren’t going up any time soon, but when they do the rise will be rapid, mortgage industry experts say.
Because of this, mortgage lenders and brokers have a responsibility to help homebuyers assess their capacity to make higher monthly payments, and to constantly evaluate their chances for default.
“There should be some prudence and there should be counselling by mortgage brokers to ensure people do leave a little wiggle room,” Ivan Wahl, chairman and CEO of Xceed Mortgage Corp., said at an industry conference yesterday.
Wahl praised Canadian regulators for preventing the housing meltdown that has decimated the American economy, but said mortgage lenders have a responsibility to self-regulate.
The Canadian and American housing markets fared very differently during the recession. While the financial crisis in the U.S. was caused in large part by subprime mortgages, strict regulations helped the Canadian economy avoid a similar meltdown.
However, even mortgage lenders weren’t expecting the Canadian housing market to fare as well as it has.
“The last half of ’09 is better than anybody expected,” said John Webster, president and CEO of Scotia Mortgage Corp.
“We were looking at a nuclear winter ... ( for new mortgages), a 30 to 35 per cent drop, and that hasn’t happened,” agreed Stephen Smith, chairman and president of First National Financial.
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