Quote:
Originally Posted by pseudoreality
I have a lot of issues with this program, but it being capped at 4x income is not one of them. People are too indebted. The banks keeping throwing debt at people and Canadians eat it up. No one should be borrowing the max the bank will let you get away with. That is why they put in the stress test, because banks weren't being careful enough. Also, are you sure it is a max purchase of 4x income and not a max mortgage of 4x income?
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It is 4x mortgage amount. It's fine that you don't necessarily disagree with this, but the Government shouldn't be labeling it as an aid to affordability then really. This doesn't help people afford a house that isn't within their reach, as this is just an incentive that will free up some cash flow for those that can already afford a house.
A 30-year amortization would have been far simpler, and made much more sense. Let's not forget that Canada has one of the lowest mortgage default rates in the world.
As for your point about no one should be spending to their limit and that banks are throwing debt at Canadians and we're eating it up...first off, there are plenty of people that can spend right to their limit and be just fine, because they're disciplined. The GDS/TDS ratios + strict qualifying requirements do a pretty darn good job (plus the stress test now). What should really be addressed by the Gov't is unsecured debt, but that's a completely separate topic. When I went to buy a vehicle in 2017 (first time in a few years), I went in all prepared with my T1 Generals + Notice of Assessments for the past two years, only to find out none of that was needed. They checked my credit, and that was it. "Sign here please". Are you kidding me? Credit cards, lines of credit, etc...all in the same boat. It's household debts that are at an all-time high, not mortgage debt. Not to mention they're far more punitive in terms of interest rates, so this is where people are really getting in trouble.