The dark side of the boom
Rock-bottom interest rates have made big mortgages look less expensive, lighting a fire under house prices. But for many homeowners, when rates start rising, it won’t end well.
A recent survey by Manulife found that one-quarter of people have just $1,000 set aside for emergencies, a dismally inadequate amount by any standard of financial planning.
.. “You’re arguing with success on a huge scale,” says Moshe Milevsky, finance professor at York University’s Schulich School of Business and author of several books on personal finance and investing. “There’s nothing that people could have done that would have resulted in a better return than housing over the past five years.”
.. The credit-monitoring firm TransUnion reported recently that 718,000 people with debt would be seriously affected if interest rates rose just 0.25 of a percentage point, and one million people would struggle to cope with a rise of one percentage point.
.. Canadians owed a record $1.68 for every $1 in after tax income.