Mortgage Stress Tester

The Canadian Mortgage Trends has created a mortgage stress tester available for everyone to use. This tool shows your mortgage payment at renewal, given an estimated future interest rate that you choose. It is my opinion that housing is currently an unwise investment given the current values of homes in the U.S. and Canada.

The media has been mentioning a housing recovery in the U.S. and although housing prices have appreciated, you must take a look at the fundamentals in the U.S. economy especially with bond yields rising, and you have more people on food stamps than ever. Just the thought of "tapering" from Bernanke had sent bond yields rising. After all, sovereign wealth funds have been slowly liquidating treasuries and if the fed was in the market buying, who would buy?

Would you loan the U.S. government money for 30 years making an abysmal 3.61%?  Looking back at history, inflation has easily been higher than 3.61% and yields historically average around 7%.

Going back to the Canadian Housing Market, Canadians are more indebted than ever. Canadian household debt-to-disposable income ratio hit 163%. The signal for interest rates from the BOC has nowhere to go but up. We'll have to see when the implosion comes, what goes up, must come down.

For the mortgage stress click here.

Feel free to leave your comments and let me know what you think.