January 17, 2012
Earlier this week several heads of Canada’s biggest banks warned about a possible correction in the housing market. The comments, delivered at an industry conference in Toronto, were perhaps not unexpected given that senior policy makers including Bank of Canada Governor Mark Carney have been saying pretty much the same thing for the past year. What was surprising was that only days after the comments were made Royal Bank of Canada, Toronto-Dominion Bank and Bank of Montreal have all chopped their mortgage rates.
So is the housing market headed for a correction or not? It seems the debate is far from over.
For his part, Mr Pastrick figures housing in this country is not over valued and due for a correction. Indeed, thanks to low interest rates, most consumers can afford to take on significantly more debt.
“I don’t believe we are in a bubble. I believe prices [including Vancouver] are high because of fundamentals,” he says.
Mr. Pastrick acknowledges that his views are not shared by everyone. But nor is he alone. He argues (convincingly) that despite what the heads of the big banks are saying publicly, their actions — for instance, cutting mortgage rates close to historic lows as they did this week — suggest they’re on side with him.
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