How Rates Affect Canada

GORDON THOMPSON builds homes for first-time buyers. But mortgage rates of 14 to 14.5 percent have dried up his business in the last three weeks. ``The sad thing is that people come in and make a decision to buy, but when they get to the bank, they find out they don't qualify for a mortgage,'' explains Mr. Thompson, the president of Candev Building Corporation, based in Toronto. He says his company has ``nothing on the order books'' for next year.

Thompson, who is also the president of the Canadian Home Builders Association, is not alone. He says the entire Canadian housing industry has stalled, which could result in significant layoffs. The industry, Canada's largest, employs more than 300,000 workers.

Since most Canadian builders are entrepreneurs who build fewer than five houses per year, few have the funds to weather a long recession. And, with the Canadian dollar kept up by the high interest rates, few Canadian builders can compete in the US market.

The high interest rates are pinching almost all Canadians because most mortgages are linked to short-term interest rates. Unlike the US, most Canadian banks do not make 15- to 20-year fixed rate mortgages. Thus, most Canadians have to renegotiate their mortgages every two or three years. ``This is creating hardship cases for someone who is not even a first-time buyer,'' Thompson says.

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.

Loading...

Loading...

Loading...

Save for later

Save
Cancel

Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items

OK

Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items

OK

Failed to save

You have already saved this item.

View Saved Items

OK