By Introducing Forty Year Amortization, Canadian Government Can Fight the Inflation and Stop a Real Estate Crash!
TORONTO, Oct. 12, 2022 /CNW/ - Alex Haditaghi, founder of Radius Financial (www.Radiusfinancial.ca) and one of Canada's eminent leaders in the mortgage and fintech industry, recently issued a warning that the Canadian real estate market will experience a significant correction of up to 30%, risking $1.7 trillion worth of equity, unless the Canadian Government reacts immediately and responds with urgent policy changes.
Overall, he believes that the Canadian real estate market is healthy and strong, with good fundamentals. Mr. Haditaghi points towards Canada's high demand and low supply in housing, labor shortages and increasing wages in the labor market, low national unemployment rate, and high demand for immigration as drivers for this.
However, he cautions that public sentiments and anxieties about the real estate market– fueled by sensationalized media headlines and misinformed economic pundits—will create a self-fulfilling prophecy if the government doesn't act with urgency to protect Canadians' largest asset class.
Mr. Haditaghi believes the solution is simple and argues that the government must introduce 40-year amortization and thereby allow homeowners with existing mortgages to renew their mortgages up to 40-year amortization. He believes that this is the only solution that will allow the Canadian Government to combat inflation, without collapsing the Canadian housing market and irreparably damaging the household balance sheets, credit, and home equity of everyday Canadians along the way.
Noting that seventy-eight percent of Canadians currently have a mortgage with an interest rate below 3.0%, Mr. Haditaghi explains how recent interest rate hikes are placing tremendous pressure on Canadian households. He states that homeowners and the real estate market will feel the burden of this jarring payment increase for at least the next five years, particularly for Canadian households that are already straining under rapidly rising costs of living and relentless inflation.
He goes on to explain the urgency of acting quickly to prevent this outcome, emphasizing the fact that 95 percent of Canadian mortgage holders have mortgages with terms that renew every six months to five years. If the government doesn't respond before Canadians need to renew their mortgages at the current high rates, Mr. Haditaghi cautions that homeowners will buckle under the weight of unaffordable mortgage payments and runaway inflation within a few months.
He predicts that hardworking Canadians will have no choice but to put up their homes for sale well below what they owe to banks and mortgage companies. In turn, this would also harm the CMHC, other insurance companies, Banks and Trust companies, which would be facing mountains of claims and bad mortgage debt!
Mr. Haditaghi emphasises that if the government doesn't act soon, Canada will experience a "catastrophic" real estate crash, wiping the home equity and retirement savings of millions of Canadians across the country.
Alex Haditaghi's entire opinion piece and proposed solutions can be found here: https://radiusfinancial.ca/how-the-canadian-government-can-stop-a-real-estate-crash/
Alex Haditaghi is a serial entrepreneur in the financial service and tech sector. He is the founder and chairman of Radius Financial (Www.Radiusfinancial.ca ) Canada's #1 rated mortgage lender in 2021 and 2022,. He's worked in Canada's residential and commercial mortgage industry since 2001 and his companies have originated, processed or loaned over $45 billion in mortgages since then. He's the co-founder and former chairman of Mortgage Architects, Lending Tree Canada, and MortgageBrokers.com.
SOURCE Radius Financial Education
Alex Haditaghi , 416 528 9999, [email protected]
Share this article