The CEO Poll: What housing bubble?
Canadian execs applaud Bank of Canada warnings on housing, but say fears are waning.
Author:
Angelina Chapin
Date: December 23rd, 2010
Publication: Canadian Business Online
Recently, the Bank of Canada Governor Mark Carney warned Canadians
about a potential housing bubble that could burst in the wake of rising
interest rates. A COMPAS Inc. poll revealed that though Canadian CEOs
agree higher down payments would help homeowners better manage debt,
they are less worried about household debt than they were last year.
On a 7-point scale, where 7 means well-founded and 1 the opposite,
CEOs rated Carney’s concern about a housing bubble a 4.9, compared with
5.7 last year. “Canadian housing prices did not rise nearly as much as
in the U.S., therefore there is much less risk of a bubble,” said one
CEO. “To prevent one from starting, increase the qualification
requirements and down payments and reduce the amortization.”
Present mortgage regulations require a 5% down payment and a
maximum amortization period of 35 years. CEOs were asked whether they
thought this should be changed to a 10% down payment and 25-year
amortization period. They gave the idea a score of 5.3 on a 7-point
scale, with 7 meaning strongly agree and 1 meaning strongly disagree.
Though CEOs weren’t overly concerned about the housing bubble, they did
think it wise for the government to put measures in place so Canadians
don’t follow in the footsteps of our southern neighbours.
“The Bank’s warning should be heeded,” said one exec. “Canadians
should be wary of following the lead of our American cousins by living
on credit. We should know better, having just seen the effects of a
worldwide financial meltdown.”
To view complete results and additional polls, please click here.
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