HomeMortgageCanada Has Never Seen Real Mortgage Rates This Low and It’s Fueling...

Canada Has Never Seen Real Mortgage Rates This Low and It’s Fueling The Bubble

Canada’s real estate industry is sounding the alarms on higher rates, warning it’ll “punish” buyers. However, these folks are blissfully unaware that mortgage costs are near record lows. In real terms, households have never had access to mortgages this cheap, which is part of the problem. Central banks distorted credit markets to the point mortgages are free money and leverage for investors. Surprising no one, investors took the cash and inflated home prices to a record high.

Real Mortgage Rates, and How Cheap Credit Drives Prices Higher

Today we’ll be looking at the real rate of a conventional mortgage with a 5-year fixed term in Canada. A real rate is where the cost is adjusted for inflation, which is important to investors. The real return includes the erosion in purchasing power of the money the borrower returns. Negative real returns mean a lender receives less buying…

Read more at betterdwelling.com

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