Head of Canada’s Mortgage & Housing Agency Warns Home Buyers to Question Motives of Those Saying Prices Will Rise
“Please question the motivation of anyone who wants you to believe prices will go up (yes, up) with our economy in slow motion, oil being given away, millions of Canadians on income support and a greater % of mortgages not being paid than we’ve seen since the Great Depression.”
“Here’s more on our house price outlook. Some vocal real estate advisors have labelled us “panic-inducing and irresponsible,’ saying essentially that house prices don’t go down. They’re whistling past the graveyard and offering no analysis. Here’s ours. You decide.”
“Millions Of Canadians On Income Support”
Canadians use various forms of income support, but nothing highlights issues like CERB (Canada Emergency Response Benefit). The temporary emergency income support rolled out due to the pandemic had 6.7 million applicants by mid-April. At the end of May, the Canadian government estimates 8.29 million unique applicants.
Considering Canada’s labour force is just 18.6 million, that’s 44.5% of them requesting emergency aid. Even if unemployment is still in the low teens, this implies a lot more people aren’t working – and quite possibly won’t have work to go back to.
“A Greater % Of Mortgages Not Being Paid Than We’ve Seen Since The Great Depression.”
Canadians are requesting relief from their mortgage payments at a breakneck speed. The CMHC itself estimates 12% of insured mortgages are currently on payment deferral, and they expect this rate to rise to 20% by September.
More generally, the CBA estimates the big Canadian banks had 500,000 requests looking for mortgage payment deferral in the beginning of April. By the end of May, the handful of large banks had approved 721,000 mortgage payment deferrals. This represents about 15% of all mortgages on their books, and that number is still climbing.