Chris Bolin
Canadians are not only confident that they are assiduously paying down their mortgages, but they also believe they have the means necessary to weather a drop in house prices, contrary to worries that household debt is out of control, a poll showed on Wednesday.
Almost three-quarters of Canadians, or 73 per cent, believe that they or their families are well-positioned in the event of tumbling home prices, according to the annual RBC Homeownership Study undertaken by Royal Bank of Canada .
The poll found that 85 per cent of respondents feel that they are doing a good or excellent job of paying down their mortgage, while 90 per cent of Canadians are confident that real estate in Canada is a good investment.
"There's been a lot of noise around debt-to-income ratios," said Marcia Moffat, RBC head of home equity financing, noting that she found it comforting that such a large segment of Canadians said they were able to handle what is typically the biggest purchase of an individual's life.
She said confidence was drawn from stable employment and rising incomes.
The survey was released a week after the Bank of Canada left its benchmark interest rate unchanged at a low 1 per cent.
The central bank and other policymakers have flagged personal debt as a danger to the economy, although the Bank of Canada last week said household debt was less of a concern than it has been in past months. Consumer spending remains strong but is easing to levels more in line with incomes, the bank said.
Worries about personal debt have twice prompted the government to introduce stricter mortgage rules to prevent overheating in the housing market.
The survey showed that Canadians, supported by a strong banking system, still have a strong interest in purchasing a home over the next two years. Interest declined slightly in the quarter, but remains high overall with 29 per cent saying it's likely they will buy.
That was down two points from 2010 but is higher than any other year since 2006, the report said. Compared with last year, however, fewer Canadians said it was better to buy now than wait.
Rising home prices were the No. 1 concern about purchasing a home followed by rising mortgage rates, the poll showed.
The poll found that 40 per cent of Canadians feel the current housing market is balanced equally between buyers and sellers, a rise of five points over 2010.
The survey of 2,103 people is considered accurate to within plus or minus 2.2 percentage points, 19 times out of 20.