Steve Dyment- Mortgage professional- Xeva Mortgage
“As rates are historically low and debt levels comparatively high, Canadians could get squeezed, should a recession arrive. There just isn’t much room to drop rates, unlike 2008, and debt levels are already elevated.
With recessions come job losses and a drop in personal discretionary income, forcing Canadians to turn to their ‘emergency fund’ – which for too many is that four-inch piece of plastic in their back pocket. While the accompanying drop in mortgage rates may provide some relief, without enough cash flow, debt levels will increase further, particularly in the costly arena of unsecured – and comparatively unregulated – personal debt.”
Lisa Pellerin- Mortgage broker Claystone Mortgage Team – Mortgage Architects
“Today, Canadians are at record levels of unsecured debt. Household debt has always been of great concern. While there has been tremendous focus on cooling the housing market and enforcing new mortgage rules, what continues to be overlooked is the building amount of unsecured debt.
With talk of a possible recession on the horizon, the impact will have Canadians scaling back on spending, therefore greatly affecting the economy. Many families are highly leveraged; add the fear of a job loss, and spending behaviour will dramatically change. Canadians will be more focused on managing their cash flow to make ends meet.”
Dillan Kelly -Mortgage professional -DLC Mortgage Excellence
“The recession is on its way if it isn’t here already. It isn’t Canadian household debt that has gotten us to this point, but high household debt will be a key factor to how the recession plays out.
A recession hits hardest on those who have high debt and low savings. Unfortunately, many Canadians are in this position. When highly leveraged, a consumer will have a limited ability to spend, and spending is what helps lift us out of a recession. The next recession may be prolonged due to consumers’ inability to spend – so hold on, as it may be a long ride.”