Mortgage broker: “In a fragile housing market you don’t want to impose too many restraints”; Credit Counsellor: “Some people should never buy a home”

It seems the “real estate community” will say anything they can to keep the market as hot as possible, for as long as possible, regardless of the ultimate consequences for borrowers. Like the credit counsellor, we see reason for alarm. -vreaa

These from the Financial Post 22 Jan 2010 ‘Don’t Bite Off More Mortgage Than You Can Chew’ –

The real estate community is fighting against changes that would make it harder to buy a home. This month, the Canadian Association of Accredited Mortgage Professionals (CAAMP) produced a study it says shows an overwhelming percentage of Canadians are shielded from potential interest rate hikes because they opted for fixed-rate products. But that study also showed a huge portion of those consumers would be in big trouble if they had to come up with a larger down payment. Will Dunning, chief economist for CAAMP, said 65% had down payments that were worth 10% or less of the value of the home being bought. “Absolutely,” says Mr. Dunning, about whether a change would take some consumers out of the market. “In a fragile housing market you don’t want to impose too many restraints.”

“They might buy a home with a smallish down payment but then they furnish it on their credit card,” said Ms. Jaggernath, director of education at the Vancouver-based Credit Counselling Society. “It is not unusual to see people spending 60% of their net income on housing costs.” More than one person has walked into her agency with credit problems caused by taking on too much house. “Some people want to travel to Mexico three times a year but they can’t. Some people should never buy a home,” says Ms. Jaggernath. It’s too bad we can’t go on vacation with 5% down and pay for it over the next 35 years. There would be a lot of Canadians lying on a Mexican beach right now.