The Looming Crisis: Rising Mortgage Arrears in Canada
Adrian C. Spitters, CFP?
I Execute Tax-Efficient Investment Portfolio Solutions So That Your Business, Family, And Estate Assets Are De-Risked And Protected Against Financial Risk, Economic Threats, Inflation And Higher Taxes.
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It Starts with Gold
Gold is the foundation of a well-diversified investment portfolio that includes income-producing private alternative assets like private equity and private real estate. These investments can help fortify and de-risk your portfolio against financial institution risk, economic threats, inflation, and higher taxes. Gold has long been considered a safe haven in times of economic uncertainty. Its stable value makes it a reliable hedge against inflation and market volatility. Gold represents security and confidence, serving as a foundation for wealth preservation and acting as portfolio insurance. Contact New World Precious Metals to discuss your purchase options.
How High Interest Rates and Economic Strains are Impacting Homeowners
Canadian Mortgage Arrears: A Storm on the Horizon
The Canadian mortgage landscape is heading towards a severe crisis. According to Fitch Ratings, the mortgage arrears rate in Canada is forecasted to increase by a staggering 50% by the end of this year, reaching 0.25% to 0.3% from the previous year's record low. This dramatic rise underscores the immense financial strain on homeowners in the current economic climate (Better Dwelling) (Mortgage News Canada).
Economic Strains and High Interest Rates
High interest rates and a weakening economy are the main culprits behind this alarming trend. Many Canadians are already finding it difficult to manage their mortgage payments as financial burdens continue to mount. The combination of soaring interest rates, reduced affordability, and a slowdown in home price growth exacerbates the situation, leaving homeowners in a precarious position (Better Dwelling).
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Pent-Up Demand and Regulatory Flexibility
While some may hope that pent-up demand and flexible mortgage regulations could mitigate the damage, these measures are merely a temporary band-aid. The real issue lies in the fundamental economic weaknesses and the unsustainable financial practices that have been allowed to proliferate. Canadian banks and lenders extending loan terms and re-amortizing loans to make repayments more manageable is not a long-term solution but a desperate attempt to stave off an impending crisis (Better Dwelling).
The Role of Immigration
Canada's immigration policies have been a double-edged sword. While the influx of new residents has historically supported the housing market by adding potential buyers, the recent reduction in immigration targets threatens to destabilize this delicate balance. The full impact of this reduction remains uncertain, but it is likely to add further pressure on an already strained market (Mortgage News Canada).
Future Outlook
The economic outlook for Canada is bleak. While there are predictions that the mortgage arrears rate might stabilize and even decrease by the end of 2025, this is a false hope. The anticipated stabilization is still above pre-2024 levels, indicating a persistent underlying problem. Moreover, the likelihood of mortgage rates returning to record lows is minimal, suggesting that homeowners will continue to face financial challenges for the foreseeable future (Mortgage News Canada).
Why Consider Selling and Renting?
Given these dire conditions, selling homes and opting for rental properties might be the only viable option for many investors. Homeowners are bracing for significant mortgage rate resets, with rates expected to soar from 1.95% to over 6% in the next two years. This dramatic increase could push many already overstretched homeowners over the edge, leading to a wave of defaults and foreclosures.
Investing in purpose-built multifamily rental apartments through private real estate investment trusts (REITs) offers a safer alternative. These rental properties are poised to benefit from a massive influx of immigrants and a severe shortage of rental units, creating a robust demand for rental housing.
For full details, read the source article that inspired this article: Canadian Mortgage Arrears Rate To Rise 50% In 2024: Fitch, Better Dwelling.
Why Gold Should Be the Foundation of Your Portfolio
The Stability and Reliability of Gold
Gold's stability and reliability make it an essential cornerstone for a well-diversified portfolio. Its value remains consistent even during economic turbulence, offering protection against inflation and financial uncertainty. Unlike paper assets, gold is a tangible asset that maintains its worth over time, making it a safe haven during financial crises. In light of the potential vulnerabilities in the financial system, particularly those related to securities entitlements, owning a secure and tangible asset like gold is crucial.
Portfolio Insurance
Gold serves as portfolio insurance, providing a safety net against market fluctuations and economic downturns. When traditional investments such as stocks and bonds falter, gold often retains or even increases its value, offsetting losses in other areas of your portfolio. This characteristic makes gold an invaluable asset for anyone looking to protect their wealth from market volatility and economic instability.
Combining Gold with Real Estate Investments
Combining gold with investments in private real estate, such as multifamily rental apartments, can further enhance portfolio diversification. This approach not only safeguards wealth but also taps into the growing demand for rental properties driven by immigration and demographic changes. By investing in both gold and private real estate, investors can build a robust, resilient portfolio that mitigates risks associated with financial intermediaries and systemic financial collapse.
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Complimentary Portfolio Evaluation
As a valued reader, I am offering a complimentary portfolio evaluation to discuss how investing in alternative assets such as private equity, private real estate, precious metals, commodities, government-sanctioned flow-through tax-efficient structures, and tax-minimizing corporate insurance solutions can help to fortify and de-risk your portfolio against financial institution risk, economic threats, inflation, and higher taxes.
To book your consultation, email me at [email protected] or use my Calendly Link. Alternatively, you can contact New World Precious Metals to discuss purchasing options for physical precious metals.
In these turbulent times, it's crucial to ensure that your portfolio is well-positioned to withstand potential economic challenges and market fluctuations. By considering the incorporation of Gold, you may be able to fortify your investments and better navigate the complexities of the current financial landscape.
A Partnership for Holistic Wealth Management
As a dedicated advocate for de-risking business, family and multi-generational wealth, I am partnered with one of the leading independent private wealth management firms. My team serves high-net-worth clients nationwide. We provide professional investment management and comprehensive wealth planning solutions from a fiducially focused, client-first perspective. We provide access to sophisticated tax-advantaged strategies and solutions traditionally reserved for the ultra-affluent.
We are driven by a "capital preservation first" philosophy. Our team generates consistent, tax-efficient returns uncorrelated to public markets. By leveraging our expertise, you are granted access to key industry professionals, gaining exclusive entrance into alternative investments such as private equity, private real estate, precious metals, commodities, government-sanctioned flow-through tax-efficient structures, and tax-minimizing corporate insurance solutions offered through mutual life companies. All are designed to fortify, secure and de-risk your family, business and estate assets against financial risk, economic threats, inflation and higher taxes.
To receive a complimentary digital copy of "Who's Investing Your Money?," email me at [email protected] or book a complementary portfolio evaluation with me through my Calendly Link.
The Custodial Model: An Additional Layer of Protection
In light of the revelations in David Rogers Webb's book The Great Taking, to further safeguard wealth, the firms I work with employ a custodial model, where client assets are held securely by an independent third-party custodian rather than commingled with the firm's assets. This crucial segregation of assets provides an additional layer of protection, reducing the risk of seizure or misappropriation in a financial crisis or institutional insolvency. The custodial model offers investors a safeguarded solution to help secure their wealth separately from the investment management firm.
Watch The Great Taking Documentary
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Exploring the U.S. for Wealth Security
Amid economic uncertainty and high taxes in Canada, many affluent Canadians are considering relocating their wealth to the United States. The U.S. offers a more favourable tax environment and stronger asset protection laws. Peter J. Merrick, a renowned cross-border specialist, assists Canadians in navigating international wealth management complexities, facilitating seamless asset transfers to diversify holdings and safeguard their hard-earned assets from potential risks.
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7 个月It does look like a disaster that is approaching.