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Market Commentary – 01/09/13

Market Commentary from First National

Here is the latest market commentary provided by First National Financial LP.

The latest reading by Statistics Canada puts Canadians’ household debt-to-income level at a whopping 164.7%.

 

That means on aggregate debts (short and long term) Canadians owe nearly $1.65 for every after-tax dollar they earn.

 

Canadians may feel uneasy at the attention this number is receiving, but keep in mind that – the majority of household debt comes from mortgages which are long term debts paid over the amortization period, not monthly.

 

So, for example, a family with a $300,000 mortgage and after-tax income of $100,000 has a debt-to-income level of 300%. That’s perfectly acceptable result in today’s market because the entirety of the mortgage isn’t owed all at once. Right now Canadians pay a little less than 8% of their after-tax income in interest charges. That’s actually down from nearly 9% back in 2000.

 

None the less, the best debt is the one that has been paid-off. And the inevitable rise in interest rates that lies ahead makes the current, sustained period of low rates an excellent time to eliminate as much debt as possible.

 

If you have questions or need some advice or help with your mortgage, please contact me.

 

Mark Delleman

(604) 889-0050

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