“It is very difficult to time markets,” the co-founder and chief executive of First National Financial LP, Canada’s largest non-bank residential mortgage lender, said. “There seems to be pressure on house prices going down — and I wouldn’t be surprised if they went down further — but, just as easily, they could bounce up. So, if you are thinking of buying a house for the long term, I would probably say, ‘Go ahead and buy.
For example, year-over-year residential sales volumes were down in Vancouver by 45.5 per cent in October. Pundits and market watchers are predicting a decline of between 20 and 30 per cent in Canadian home prices. And borrowers who opted for variable-rate mortgages are now being squeezed by rising interest rates and their resulting higher loan payments.
In the sky-is-falling scenario, the average variable-rate mortgage holder will soon be unable to afford the increased payments. They then sell at a discount, or else default on the mortgage, and the entire lending industry — not to mention the economy — comes tumbling down.