Also, most people pay off their mortgages in 1/2 - 2/3 the actual amortization anyway which indicates a lot of Canadians do have extra money and throw it into extra payments when they can.[/QUOTE] WINDSOR PILATES
Do you have any links to back this statement up? CAAMP did a study that showed that only 13% of Canadians make lump-sum pre-payments and of those who made pre-payments in the last 12 months pre-paid just 1% of their mortgage principal on average this worked out to $1,380 per year.
Regarding the HELOC's etc. National Bank has one product that is making them a ton of money and that is their AIO (All in one) and it has been shown to have a 50% failure rate because people can't handle the easy access to credit. Manulife One is another similar product but they ding you $14 per month per account and also offer prime plus 1.25% vs AIO prime + 0.5% so there is no value proposition there aside from good avertising. Even "your richer than you think" Scotia bank has the Step Program and everyone wants to cash in on the concept of giving people just enough rope...if you use these products properly they are great but 50% of people who sign up for them aren't. Just transferring money from your balance sheet to the banks and they will gladly take it.
They still do have second mortgages and many people are going to be surprised when they go to re-fi when the banks tell them that 90% LTV is the figure they are working with and many people will end up with B and C lenders. Generally speaking those who bought before 2005 have equity and those who bought after don't.
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