Is this the Top of Toronto’s Housing Bubble?

I am from Toronto. It is a fabulous city. All my family is there. I’d probably live there, if not for my obsession with sunny weather. But even if I wanted to move there, I couldn’t afford to. House prices are absolutely ridiculous.

A couple weeks ago, the gov’t put a 15% tax on foreign buyers. A similar measure by Vancouver last year put a halt to Vancouver’s housing bubble.

But maybe even more important, Canada’s biggest mortgage lender, Home Capital Group, crashed as it made arrangements for an emergency line of credit. Read more here.

New Century crashed on March 8, 2017. Look what followed:

I haven’t lived in Canada for over 20 years, so I’m not intimately familiar with the mortgage application process and what not. But I believed that it was much more stringent that the US. I didn’t think there was any concept of “Liar Loans”, but maybe I’m wrong. Greed is greed and people will get very creative when chasing money.

What I’ve always been concerned about with respect to the Toronto bubble is the loans themselves. Interest rates are a historical lows and have been low for a very long time. Is this sustainable? Canada doesn’t have long term fixed interest rate loans like in the US. I believe most people are on a 5 year variable. If interest rates spiked (or even started to rise), that will be doomsday for folks who already extended themselves to buy a home within the bubble.