The mortgage market is on the brink of another boom, and it’s up to investors to decide how much they’re willing to bet on it.
Read more The mortgage market has been the most volatile in a generation, and investors are starting to worry that the market may be on the verge of a bubble.
The markets are in a frenzy, as prices have surged more than 10 per cent in the past six months.
But there are two big risks for the market: one is the prospect of a crash, which is exactly what happened in the U.S. in 2008, when the housing market crashed and housing prices fell more than 30 per cent.
The other risk is a correction.
But investors are unlikely to see a correction this time around.
The Canadian dollar has fallen to a low of 76.60 cents US, down about 20 per cent since mid-October, and the U, which traditionally has traded at about 82 cents US per euro, has also weakened.
Investors have been buying Canadian Treasurys in an attempt to defend their portfolios.
They have also been buying bonds in anticipation of a potential correction.
But the U is not going anywhere, and will likely remain in the red until it has a correction in sight.
“If the U falls, the market will likely crash,” said Chris Bancroft, chief economist at TD Securities in Toronto.
“It will be a market crash, but it will be not a crash as big as the U would be in the early days of 2008.
The market will be down, but not as bad as it would have been.”
If the market falls, there will be many fewer houses to buy, and there will not be as many people looking for a mortgage to pay off.
In a normal market, investors would be willing to buy in the hundreds of thousands, or even millions of dollars, a year.
But they won’t be buying in that level of volume unless the market is already on a correction, said Bancrockt.
If the markets continues to rally, the next step for investors would likely be a dip in the rate of interest, which would be a positive sign for the Canadian economy, said Mr Bancrooft.
Investors will likely be looking at a range of rates from the low 20s to the low 30s, which indicates the economy will be healthy.
That would be good news for Canada, because it could be a boost for the economy.
“The upside potential is really pretty significant,” said Bisco.
“If the Canadian rate goes down, it will actually help the economy.”
If there is a downturn, there would likely not be enough people to keep the economy afloat.
And if the markets crash, it would likely create more demand for houses, which could increase house prices.
And, if the U was a bubble, Canada would be one of the most vulnerable countries to the financial crisis.
If you or someone you know needs help, call the Lifeline 24-hour, free-standing toll-free financial crisis helpline on 1800 333 000.
Read more about housing, mortgage, bond, house, Canada, housing market, crisis, housing, debt crisis article The markets have been the best performing sector of the economy for more than three decades.
And investors have been picking up where they left off.
The U.K. and the Netherlands are now in the lead, according to Moody’s Investors Service.
Canada’s housing market is also strong, but investors are taking longer to take action, as the government has been delaying tax cuts and spending increases.
But even if the Canadian housing market starts a correction soon, the country will still be in a strong position to weather the downturn, said Andrew Reitz, chief market economist at UBS.
Canadian bonds have been outperforming the market for a decade.
Investors are betting on a strong economic recovery.
Investors also tend to like the yield on Canadian government bonds.
But the risk is that the Canadian mortgage market could be on a downward trajectory.
For the moment, Canada’s real estate market is the best in the world.
If the U were to crash, the U could fall and the markets could crash.
It would be the biggest crash since 2008, but the U will likely not fall as badly as it did in 2008.
However, if Canada were to go into a correction like the U did, it could result in an even bigger financial crisis than the 2008 crash, said Reitz.
There could be no comeback.
This story was produced by The Canadian Press and is part of the ABC’s Money: How to save, invest and grow.