It’s certainly not what the Bank of Canada (BoC) is claiming!
The BoC recently released a document detailing what it believes to be a positive report on the Canadian Mortgage Market, but this article clearly shows how out of touch our government is.
The BoC is applauding their statistics… yet, these numbers show that the government appears to be measuring affordability as a multiple of one’s income – and not by the proven, standard method of debt servicing ratios. This is very odd and, quite frankly, I find it absurd.
So, the BoC is saying consumers who borrower above 450% of their annual salary are more prone to default or financial hardship should interest rates rise. They use 250% of annual income as a safer level. Yes, of course it’s safer. But who’s going to qualify for a mortgage using this formula?
And, why are we grouping everyone together?
There are so many different categories of people and multiple sources of income – some more reliable than others…