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The recession has done nothing to dent Canadians’ wealth, as net worths have reached a record high. At the end of 2012, the average household net worth exceeded the $400,000 threshold, surpassing our neighbours to the south once again. However, this year the gap has narrowed with a difference of about $19,000 if the dollars were held at par.

These findings are the result of the sixth-annual Wealthscapes study, which utilizes data from financial and investment statistics, financial reports, and databases for Statistics Canada and the Bank of Canada, to determine the state of Canadians’ financial health.

There are five major highlights to the report: first and foremost, Canadians rode the recovery of the United States to increased wealth. According to Peter Miron, who guided the Wealthscapes study, “[t]hey used to describe U.S. fortunes as tied to GM […] [w]ell, ours are tied with the U.S.”

In the Maritimes, Nova Scotians were able to parlay their affinity for risk with a fund and stock portfolio gain in the double digits (11%), which saw the province achieve the highest growth in liquid assets, at 7.7%. “I really love Nova Scotia,” Mr. Miron stated. “They seem to be quite happy to take risks with their money. […] The markets went up, and they did quite well because of it. That’s pretty commendable.”

In Saskatchewan, Mr. Miron sees “a lot more new wealth being generated,” which is translating into a growth in real estate holdings (up 7.7% in 2012) and liquid assets such as investments and savings (an increase of 7.4%). The province’s natural resources, specifically potash, oil, uranium and coal, are directly translating to Saskatchewan households achieving a 7.6% gain in net worth – the largest increase outside of Ontario. Regina, the capital, has the prestige of being the best-performing Canadian city in 2012, with an 11.2% gain in household net worth.

In Ontario, the Wealthscapes report highlighted that Ontarians paid off more debt that the rest of the nation in 2012, contributing to their rise as the Canadians with the highest net worth in 2012. Their consumer debt, such as credits cards and lines of credit, decreased to 3.6%, and Toronto had the largest plunge in consumer debt of all major cities, to 5%.

In Vancouver, residents are still able to boast the highest net worth of all Canadians, thanks in no small part, to their “out-of-this-world” real estate market, Mr. Miron tated. Household net worth was $662,600 in 2012, with approximately 65% connected to real estate, which is 5% higher than the national average.

In my opinion, the report highlights more fundamentally important issues than the idea of a simple average net worth calculation. It touches on regional traits in relation to risk tolerance, wealth formation strategies, spending traits and more. This may have an important effect on financial product offerings on a regional (provincially or municipally) basis, or even how real estate is marketed in these areas. In and of itself, the report provides only a broad understanding of net worth in Canada, as these numbers are skewed by the wealthiest in Canada and the poorest. A better study would have been to calculate the median net worth and its relation to the Gini coefficient – a more precise method of determining net worth and the distribution of wealth domestically. Inflation also has a role in establishing an accurate net worth vis-à-vis our U.S. counterparts, as the inflation rates have been markedly different over the past 12-months in each nation. I believe that the data is being misconstrued to reflect a general increase in net worth for the average Canadian, but what we should be concerned about is whether the middle-class is benefiting from a higher net worth.

Regardless, if you’re thinking about making a switch, purchasing a home, or refinancing your mortgage, contact your REALTOR® & Mortgage Broker, or feel free to give us a shout, and We’ll be happy to chat.

Best Regards,

Goetz Kopf
REALTOR® and Senior Private Loan Specialist - Residential & Commercial
Century 21 Desert Hills Realty and EQ Lending Corp.

And

Daman Lehal
Broker/Owner of EQ Lending Corp.

 

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