One mortgage expert is calling into question the recent findings of a BMO Financial Group report that indicated slightly more than half of all Canadians would enter retirement with mortgage debt.

In a recent article for Canada Free Press, business valuation expert Ian Campbell took issue with the analysis of the BMO report, particularly comments attributed to Phil Soper, CEO of Royal LePage Real Estate Services. According to Campbell, Soper said the current generation is more financially sophisticated than their forebears, and are better equipped to carry the debt from home loans into retirement.

"Personal finance is not exactly the most complex of things," Campbell chides. "The only real trick to personal finance is managing discretionary expenses and not spending beyond one’s means. To suggest the current generation of +50-year-olds is more financially sophisticated than the last can be argued to imply the current generation broadly speaking has more common sense than did their parents. That is very doubtful, particularly given as a generalization what appears to be the comparative state of their personal finances."

The Canadian Imperial Bank of Commerce recently studied the debt-paying habits of Canadians who were able to get out of debt well before retirement. CIBC found those individuals made large lump-sum payments against their mortgage principal each year they were able to and often sought higher monthly payments to knock down their debts faster.

Amid all the dire predictions of a housing market collapse due to home devaluation, one credit agency is breaking from the pack to say most Canadian households will be fine if their home loses value – it's the job market they've got to look out for.

The average Canadian household would be able to withstand a drop of up to 40 percent in value, said credit rating agency DBRS. This finding from a recent report flies in the face of many of the nation's top regulators and financial rulemakers who have been reluctant to implement any changes that could slow the housing market too quickly and trigger an extreme over-correction in home prices.

DBRS stuck to its guns, however, noting that a 40 percent loss in value would certainly put added pressure on Canadians, but would likely not affect the overall rate of default on the nation's home loans. Even rising interest rates, like those called for recently by the Organization for Economic Co-operation and Development, would not have too large an impact on the country.

"However, a combination of higher interest rates, lower property values and a drastic increase in unemployment would be of great concern as mortgage defaults are closely related to employment and individual family situations," the DBRS report said. "If unemployment spikes, many financially stretched households will be forced to sell their homes, putting greater downward pressure on house prices, and turning many people into both house poor and cash poor."

In an analysis of the report, The Financial Post noted that the average home now costs almost five times the average family's gross income. This would require a family to allot as much as 37 percent of its pre-tax income to housing costs. The DBRS report found an interest rate increase of 2 percent would push the pre-tax ratio closer to 43 percent.

While DBRS may be confident in the average Canadian's ability to withstand such a situation, homeowners certainly shouldn't aim to spend 43 percent of their pre-tax income on housing. In fact, most experts, including BMO Financial Group, recommend families spend no more than one-third of their post-tax income on housing expenses. Total personal debt should top no more than 40 percent. When considering buying a house, Canadians should consult with a mortgage broker to determine how much they can afford and how to avoid paying too much on their home loans.

A recent study finds that many Canadians are choosing their financial advisers on blind trust, rather than through diligent research and fact-based decisions.

A large portion of Canadians are confused or misinformed about the role of a financial advisor, as well as their appropriate qualifications and ethical obligations to the consumer, the Financial Planning Standards Council report showed. Part of the reason, according to a recent analysis from business communications professional Talbot Boggs, is that regulations governing the financial planning industry are piecemeal at best. There are currently no government standards or professional oversights concerning competence or ethical behavior.

By performing some due diligence when selecting a financial planner, consumers can be sure to find the right person to help them achieve their financial goals. A similar process should be performed when selecting a mortgage broker. An integral part of financial planning is affording a home, and mortgage brokers can help would-be homebuyers find the best mortgage rates for their budgets. Brokers are in the market to help buyers by offering the most solid advice they can. One mortgage broker group, the Canadian Association of Accredited Mortgage Professionals, recently warned the federal government that a plan to change mortgage refinancing rules would adversely affect homeowners.

As more people are turned off from dealing with big banks, many financial services – including home loans – are shifting to the internet, according to The Montreal Gazette.

Technology, particularly cellphone technology, that can perform many bank functions wirelessly and online has been emerging in greater volume over the last few years, and with it the opportunity to conduct financial transactions without dealing directly with a bank, the source reported. One recent agreement between banks has paved the way for consumers to make credit card purchases on their smartphones. Homebuyers could soon sign for mortgages with a digital signature from their home computer, according to the Gazette.

"The technology exists," Yvon Audette, an IT advisory partner at KPMG Canada, told the source. "The only [action] I can't think about how to do digitally is a bank draft or a certified cheque. All the other bits and bytes exist to do everything digitally. So I think there's just a matter of time."

Canadians who are sick of dealing with big banks but prefer human interaction in their homebuying transactions should consult with certified mortgage brokers. Brokers have access to a large network of lenders and can help consumers get the best mortgage rates available.

The housing market continues to be the "biggest story in Canada," according to some industry experts. Recently, the Organization for Economic Co-operation and Development urged the Bank of Canada to raise interest rates sooner than later in order to cool off some of the hotter markets.

According to OECD economist Peter Jarrett, current efforts from Ottawa to slow down the market aren't working fast enough in hot spots like Toronto, where people are still taking advantage of low mortgage rates. While stricter lending rules and increased oversight of the Canadian Mortgage and Housing Corporation may be doing the trick in some areas of the country, OECD said in a report released May 21 that raising the nation's overnight lending rate this fall would go a long way toward slowing rapid housing growth.

"We feel that at least in the hottest real estate markets, particularly Toronto, that that would be a good signal that people should think twice about continuing to leverage up in order to buy more house than maybe they really need," Jarrett said.

Current rates for Canadian home loans are near record lows, with the average variable rate mortgage at roughly 3.2 percent, according to a Canadian Press analysis. OECD had recommended the Bank of Canada raise its lending rate by one-quarter of 1 percent this fall, rather than waiting until the start of 2013 as many analysts have suggested.

"If rates go up something like we are suggesting then mortgage rates will be in more like the 5 percent range," Jarrett said.

The risk from an over-extended housing market presents one of the biggest threats to Canadian banks, according to a recent report from Fitch Ratings. Stress tests performed by the agency on the six largest banks in the country showed potential losses of between $4.1 billion and $91.3 billion, based on assumed rates of housing depreciation between 1 and 10 percent over a three-year period.

"Low interest rate levels and a favorable economic environment have fueled the upward trend in Canadian house prices over the past 10 years," according to Fitch. "Over this time period, house price increases have outpaced income, leading to record levels of household debt. Despite record high debt-to-income ratios, persistently low interest rates have made an increased debt burden bearable by reducing households' debt service ratio. As a result, Canadian households have become more vulnerable to adverse shocks."

Canadian homebuyers know that, when it comes to housing, they should always listen to their mortgage broker. Now, the nation's banking regulatory agency might want to heed their advice as well.

New rules proposed by the Office of the Superintendent of Financial Institutions would present a "significant, significant change" to the way mortgages are refinanced, according to Jim Murphy, head of the Canadian Association of Accredited Mortgage Professionals. The OSFI is proposing that banks reevaluate borrowers' income levels and employment status, as well as reassess home values every time a homeowner attempts to refinance his or her mortgage. Most mortgage renewals are based on past payment history, and revised borrower assessments are almost never made.

“CAAMP strongly recommends that this concept be clarified so that mortgages continue to be renewed at maturity without requalification,” the organization said in a letter to the OSFI. "If not, homeowners who have been in compliance may no longer qualify. This would result in a number of properties hitting the market at the same time thereby driving down prices."

In analyzing the development, The Globe and Mail noted a recent Fitch Ratings report that indicated rapidly-expanding mortgage consumption was still a threat to the nation's banks. Finance ministers in Ottawa have already taken strides to curb the growth of the housing market by subjecting the Canadian Mortgage and Housing Corporation, which guarantees most of the mortgages in Canada, to OSFI oversight. This could have the effect of slowing lending as banks find they have less access to safe mortgage products.

The statement from CAAMP came in response to a series of proposals issued by the OSFI. In addition to refinance underwriting rules, the agency also commented on a proposal to limit home equity lines of credit to 65 percent of the value of a home. According to CAAMP, HELOCs are used by a number of Canadians to invest in capital markets or help finance small businesses. The OSFI should allow flexibility for those with good credit who show they would be able to afford HELOCs greater than 65 percent, Murphy said.

Home equity loans are often used by older Canadians to help finance their retirement. A recent housing market analysis from industry expert Ben Rabidoux indicated that as more Canadians approach retirement and look to turn their assets into income, the housing market will experience a significant shift. Writing in The Globe and Mail, Rabidoux suggested home prices will drop by 1 percent annually over the next decade as older Canadians sell or leverage their homes.

Despite strong feelings that the Canadian healthcare system is among the best in the world, one-third of the respondents to a recent Health Canada survey said the system is sick and in need of a cure.

The Ottawa Citizen reported on the survey, which found 34 percent of Canadians worry the healthcare system will deteriorate over the next five years. Among those who saw a negative prognosis for the country's health, most said the system is overburdened, unreliable and wasteful.

Almost paradoxically, the same survey found 43 percent of Canadians feel the current system is either good or excellent. Roughly three out of four people said they were confident they or their family members would receive quality care in the event of a medical condition.

When asked what the best course of treatment might be to cure the healthcare system, Canadians were evenly divided, according to the Citizen. Slightly more than half said the country should ramp up spending at a rate greater than that of economic growth. Slightly less than half said spending should be reined in to more closely follow population growth.

A recent report from the Fraser Institute indicated that increased spending on healthcare hasn't led to improved access. After an influx of more than $97 billion on top of system maintenance costs since 1997, access in some areas is at an all-time low. Those who worry about timely access to medical services could consider a supplemental health insurance plan. Medical Access Insurance helps Canadians find available physicians across North America.

As more Canadians heed the warning against over-borrowing in the face of low interest and mortgage rates, big banks are beginning to feel the pinch.

Over the last few years, as the housing market expanded and more people took out home loans, big banks saw their rate of growth increase considerably. Even through the first quarter of this year, banks enjoyed strong earnings. New regulations governing the Canadian Mortgage and Housing Corporation coupled with dire predictions of a housing bust from ministers and financial executives have curbed consumer borrowing, however, and most of the country's major institutions are expected to report significantly lower earnings during the second quarter.

While activity at the big banks may be tempering due to stricter rules on mortgage insurance from CMHC, secondary lenders and mortgage brokers may see their market share heating up. A recent market trend analysis from the Financial Post indicated some of the big banks may be getting out of the mortgage broker game as lending restrictions tighten. This could be good news for Canadians hoping to get a home loan without the hassle of dealing with a big bank.

A plan to increase oversight of the Canadian Mortgage and Housing Corporation has received mixed reviews in Ottawa, but at least one major housing official has signaled his support for the measure: CMHC President Karen Kinsley.

Speaking before the senate banking committee May 17, Kinsley said the increased oversight would lead to stabilization of the country's housing market, according to The Wall Street Journal. Despite a lengthy testimony, the subject of a possible housing bubble did not come up. Rather, Kinsley highlighted the CMHC's current levels of capital, reiterating that the agency has a significant monetary buffer against insolvency. A CMHC report issued earlier this year showed the agency has twice the capital required under regulations set forth by the Office of the Superintendent of Financial Institutions, reported the Journal.

The CMHC has expanded exponentially over the last few years as mortgage rates have remained near record lows, causing concern among financial ministers in Ottawa, according to The Globe and Mail. The agency, which insures a significant portion of the country's mortgages, has seen its mortgage cap raised several times in just a short period. Now, ministers are moving to curtail its expansion by cementing the cap – the maximum amount of mortgages it can insure – at $600 billion. While this action could put the squeeze on big banks, many Canadians will still be able to get home loans through secondary lenders or mortgage brokers, The Financial Post recently reported.

As regulators begin tightening their grip on the housing market to stave off a possible collapse, banks are being warned their self-regulatory actions may not be enough to see them through a market correction. Mark Zelmer, assistant superintendent in charge of regulation at the OSFI, scolded the nation's financial giants, saying that simply following minimum regulation guidelines is a poor substitute for proper risk management, Businessweek reported.

“Anybody that was just simply running the business and managing to OSFI expectations is putting a lot of faith in the regulatory framework," he said in an interview. “Ultimately, it’s the institutions that are first and foremost responsible. The regulatory framework and supervision is the safety net that stands behind that.”

In the next few weeks, OSFI is expected to issue final guidelines regarding its oversight of CMHC. The guidelines will reflect suggestions made during a comment period, which spanned from the announcement of the increased oversight until May 1, according to Businessweek.

Many Canadians use their homes to help pay for retirement, whether through a traditional home equity loan or a reverse mortgage. But one expert is warning that market changes and shifting house prices could mean that option won't be available for some.

The last 10 years or so have been an aberration as far as home prices are concerned, according to industry expert Ben Rabidoux. In a column for The Globe and Mail, he says the next 10 years are likely to be dramatically different. Over the last decade, home prices have outstripped personal income by 200 to 300 percent thanks largely to low mortgage rates. As interest rises, that trend will become impossible to maintain, he said.

At the same time, the population makeup of the country is changing. Pointing to a report from the Bank for International Settlements, Rabidoux said older Canadians typically sell assets to fund their retirement. As the country's demographics shift from young to old, there is likely to be an annual home price depreciation of roughly 1 percent due to more elderly people selling or mortgaging their existing homes, rather than younger people saving money to buy new ones.

However they decide to pay for retirement, Canadians need to start planning early on. A recent report from BMO Financial Group indicated as many as 51 percent of adults said they would likely carry mortgage debts into retirement.