During the Christmas season, we tend to turn our attention to finances, in particular our credit card debt. When looking at the bigger picture, we then look at our accumulated household debt.
It's not that we have developed some new worries or change in our status, but rather the reassurance that we are still sticking to our game plan and everything is in order.
In the past year, some concern was expressed that Canadians were overextending themselves in terms of credit versus disposable income. The fear was if interest rates were to increase substantially or house prices were to fall significantly, we would be concerned about the adverse effects. What if the banks were to restrict credit? What if unemployment increased dramatically? We are a nation of worriers, aren't we?
Maybe that's what makes Canada's economy among the most stable in the world. We do worry. We don't take chances with our homes. We tend to take the cautious approach.
In actuality, the pace of growth in mortgage debt has slowed considerably since the latter half of 2008 and is expected to moderate further in 2011.
All indications from the Bank of Canada, all major financial institutions and the Canada Mortgage and Housing Corporation show there will not be any significant increases in interest rates in the foreseeable future.
Remember, banks and credit unions are in the business of supplying capital to their clients. That's how they stay in business. Restricting credit is not only bad for consumers; it's even worse for lenders.
We saw a dip in new house prices in Vancouver, Calgary and Toronto in 2009, but not in Winnipeg. Our market had been so greatly undervalued for decades that even a recession could not stop the correction in home values here.
Prices continued to increase throughout 2010 and are expected to remain strong in 2011 and beyond. Again, due to our conservative nature, we did not overbuild and responded to real demand rather than speculation.
In conclusion, the message here is not to stop paying attention and worrying. However, just as we would not change our pattern by breaking into a spending spree for no reason, we should also not react to every little scare commentary and stop living our lives and enjoying the fruits of our hard-earned labour.
Mike Moore is president of the Manitoba Home Builders' Association.
