Will there be a housing bubble in Canada? Not likely.

TMG The Mortgage Group     One day the economy is growing and thriving, the next day, the housing bubble is about to burst and the country is stagnating. This is the fickle nature of the media. Not only was this the news a few years ago, but gloomy economic news is still reported by the media today. It seems that every new research or opinion by a financial pundit gets press time.   A closer look at the facts of what's occurring in the economy tells a clear story. Just last week, Statistics Canada reported that the economy grew the fifth month in a row, as gross domestic product (GDP) was 1.6 per cent higher in May than the same month a year ago.       On the job front, Statistics Canada found that in May, the country had its best month for job creation in more than a decade, and remained steady in June.   Also last week, the Conference Board of Canada and the Canadian Federation of Independent Business reported a surge in business confidence and that companies were preparing to boost investment and increase hirings.   The news is equally as good for the housing sector, one area analysts look at to gauge the health of the economy. Who can forget what happened to the U.S. and global economies when their housing sectors got into trouble. It didn't happen in Canada, which is one reason the country got through the recent global recession in good financial shape.   The Canadian Real Estate Association reported that home sales increased in June for the third straight month and prices also rose. This combination is cause for concern among some economists and the reason why there's new talk of a housing bubble. However, a report by TD Economics debunks that idea with some solid observations.       While it's true that household debt is high and is reaching levels seen in the U.S. just prior to that country's crisis, it's the ability to manage that debt that should be the focus. In the U.S. for example, mortgage interest rates started to climb and the delinquency rate started to rise at the same pace that household debt was rising.   Here, in Canada, households are less vulnerable for a few reasons. The first is the low interest rate environment, which is helping to keep mortgage costs down. Second, the delinquency rate here, which is the percentage of mortgages in arrears 90 days, is about a third of what was happening in the U.S. just before the fall.   Finally, Statistics Canada, in its first quarter of 2013 economic report, found that high household debt and the housing market is starting to balance, which means the new mortgage rules implemented by the federal government and the Office of the Superintendent of Financial Institutions has worked. Those changes helped to slow the growth of household debt. The result is that debt growth is at its slowest pace since 2003.   It's true that household debt is still high and condo markets in Canada are still uncertain, yet there's no real chance that interest rates will increase suddenly or that there will be a quick uptick in unemployment, which was the condition in the U.S.   The new Governor of the Bank of Canada Stephen Poloz said the prime rate will remain where it is at least until the end of 2013 and into mid-2014. This will help keep all household costs down. A confident business sector means more jobs, and could mean pay raises as well, which means households will be able manage their debt.   So read the news reports about housing bubbles with some healthy scepticism - Canada and Canadians are in good financial shape for the future.

About The Mortgage Group Canada Inc.

TMG Canada is an innovative and progressive mortgage brokerage company. With mortgage professionals serving 9 provinces and 3 territories, TMG is national in its reach helping Canadians navigate their unique mortgage options with over 50 lenders. TMG has a network of more than 800 mortgage brokers and agents and has helped more than 200,000 Canadians arrange their mortgages in the past 20 years.