The Royal Bank has injected what appears to be a bit of common sense into the worry about whether homeowners can afford their houses. We have seen many recent alarms about an impending collapse of the housing market because people won’t be able to carry the interest. It all seemed rather overdone and now the RBC’s annual outlook suggests that Canadians agree. The bank’s survey suggests 85 per cent of respondents think they are doing a good job of paying off their loan obligations, and 73 per cent think they are well positioned even if the housing market were to drop. Maybe homeowners are too optimistic but there can be no doubt that they are a good deal more serious than many U.S. buyers about holding their homes and paying off the mortgages. The ethic is different. History may be helpful too. The story of the housing market in Canada includes the 1980s when interest rates rose to astronomical levels. That certainly slowed down purchases and depressed prices but did not collapse the entire market.
